Pad Thai wasn’t the only thing people were ordering in during the COVID-19 pandemic. In fact, an increasing number of them went ahead and ordered in a doctor. One of America’s largest healthcare companies is betting the practice has a healthy future.
Healthcare giant UnitedHealth agreed Monday to acquire LHC Group, a home healthcare provider, for $5.4 billion. The simple business proposition: UH will make money, and its insurance division will save money.
LHC has more than 900 locations in 37 states, giving it a vast network of in-home health and hospice care services that can be deployed to people with illness, injury, or chronic conditions. Thanks to recent technological advancements, hospital-level care can now be delivered at home for many conditions, which saves money and resources. A 2020 study in the Journal of General Internal Medicine found healthcare costs were 52% lower for acutely ill patients who were given hospital care at home. A home trial at Johns Hopkins Medicine for elderly patients found costs went down 32% and the length of care required was reduced by a third.
UnitedHealth just so happens to own UnitedHealthcare, the largest insurer in America. In buying LHC and building out more home care, the company could create efficiencies for its insurance division, which can recommend less costly home care. It could also make a lot of money from a growing segment and position itself against a top competitor:
- Spending on home healthcare was $122 billion last year, according to the Centers for Medicare & Medicaid Services, and it is expected to rise to $226 billion by 2030.
- Humana, UnitedHealthcare’s major rival for Medicare business, bought a majority stake in at-home care provider Kindred at Home (now being rebranded as CenterWell Home Health) for $5.7 billion last year, and says it’s the largest home-health provider in the US.
The Last Word: Barring an intervention from regulators, the LHC deal is expected to close in late 2022. Unfortunately for UnitedHealth, they’re already in the Justice Department’s sights. The DoJ sued UH last month to block its $13 billion acquisition of health-technology company Change Healthcare, arguing the deal would give United too much control over healthcare data, which could help its insurance unit against competitors.