On Tuesday morning, the Wall Street Journal published a report that said UnitedHealth Group Inc. would purchase LHC Group for $5.4 billion. This deal will become a stepping stone for UnitedHealth Group to delve deeper into home-based health care.
UnitedHealth Group is willing to pay $170 in cash for every share of LHC’s stock by the end of the year. As the most significant health insurer in the country, UnitedHealth seeks to combine LHC Group with Optum Health division to reach a broader market providing healthcare services.
With the increasing population of aging baby boomers, it is likely that the demand for in-home care will increase significantly. Given the growth potential in home-based healthcare, this deal is highly strategic and will lead to high yields overall.
The LHC Group offers numerous services, including home-based health care for patients dealing with illnesses, injuries, or chronic conditions. The organization provides home health aides and nurses who execute doctors’ prescribed treatment plans. In addition, its therapists offer occupational, physical, and speech therapy.
Optum Health’s Chief Executive Wyatt Decker said the organization saw a rising demand from families and patients for home-based care.
“This trend has only just begun, of how much care can truly be delivered in the home,” he told the Wall Street Journal. “We can give care in the home, which is a lower-cost setting than nursing homes or more advanced care facilities.”
The COVID-19 pandemic affected bed availability in most hospitals across the country due to the easy transmission of the virus. This challenge led to the quick acceptance of wireless technology in healthcare and the need to monitor patients from their homes. Patients are currently more receptive to home care for various chronic conditions requiring close monitoring.
In a statement, Decker said that LHC Group has sophisticated care coordination capabilities and a human touch while dispensing its services. The LHC Group will retain its leadership team in the acquisition.
Merging with the LHC Group will enhance Optum’s value-based capabilities as LHC maintains several healthcare delivery organizations and has purchased various tech companies.
UnitedHealth’s recent moves reflect the current trend among insurance firms of increasing their relevance to consumers by acquiring healthcare assets.
Such investments in the past include those by healthcare insurance companies Aetna, which closed a deal with CVS Health for $70 billion in 2018 — and UnitedHealth’s rival Humana, which spent $5.7 billion to expand its reach in home health in 2021.
LHC Group has 30,000 employees, including frontline care providers, administrators, and support staff, who provide over 12 million in-home patient interventions each year.
The company is widely regarded as one of the best in-home care providers in the nation, with quality scores consistently running more than one-third higher than industry norms.
According to its press release, UnitedHealth ranked eighth among Fortune 500 companies in 2021 and has over 70 million staff members providing care to more than 12 million home-based patients annually.