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Home Health & Hospice Week

Mergers & Acquisitions:

Healthcare Giant To Pay $400 Million For Brookdale Home Health, Hospice Business

Published on Fri Mar 05, 2021

Senior living company expects ‘steep’ growth for majority-HCA-owned business.

If COVID has been rough for home health and hospice operators, it’s been a downright nightmare for senior living companies.

That is presumably one factor in Brookdale Senior Living Inc. deciding to sell a majority stake of its home health and hospice business to HCA Healthcare. Nashville-based HCA operates 185 hospitals and many ERs, clinics, physician practices and more across 20 states.

Brookdale, also headquartered in Nashville, reported a net income of $81.9 million on revenues of $3.5 billion for 2020, compared to a $268.3 million loss on revenues of $4.1 billion in 2019. Home health and hospice revenues made up about 10 percent of that, at $249.2 million and $95.5 million for the year, Brookdale says in the supplemental information released with its earnings report.

Both the home health and hospice revenues decreased from 2019. Home health saw a whopping 24 percent drop from $327.5 million that year, while hospice experienced a much more modest 0.8 percent drop from $96.2 million.

In contrast, Brookdale saw its home health average daily census drop by 14.6 percent in 2020 to 13,196, while its hospice ADC grew 4.9 percent to 1,658, Brookdale says in its supplemental information document.

Brookdale isn’t totally exiting the business, however. It will retain a 20 percent stake in its “Brookdale Health Care Services” unit that houses the home health and hospice business lines, the company says in a release about the sale. “The partnership provides opportunities to improve healthcare service offerings within Brookdale’s communities to enhance its residents’ experience and health outcomes,” the company says.

HCA will pay $400 million for its 80 percent stake in BHS, according to the release.

In addition to benefiting Brookdale facility residents, the BHS sale will boost the company’s bottom line, execs predict. “We believe HCA Healthcare has the ability to accelerate the growth of the home health and hospice business, and we will look to share in this growth through our retained minority interest,” Brookdale CEO Lucinda “Cindy” Baier said in the company’s Feb. 26 earnings call.

“We believe that the growth trajectory of BHS after the sale is going to be incredibly steep, and we are so excited about that, which is why we are retaining the interest,” Baier said later in the call in response to an analyst question.

OIG Stands By Its Findings For All Claims

Meanwhile, the day after Brookdale announced the sale, the HHS Office of Inspector General issued an audit report targeting the chain’s Lake Worth, Florida location. The OIG claims this Brookdale agency, doing business as Nurse on Call, did not comply with Medicare billing requirements for 46 of 100 home health claims reviewed, resulting in an overpayment of $132,500. The OIG used extrapolation to estimate that this Brookdale location received $3.3 million in overpayments for the audit period in 2016 and 2017.

Brookdale submitted claims for patients who weren’t homebound or didn’t require skilled services, the OIG’s contracted reviewer determined.

Brookdale responded to the OIG’s allegations by admitting that 16 claims were incorrectly billed and repaying their amounts. But it argued that the remaining 30 claims were valid.

The OIG’s contracted reviewer, Qualified Independent Contractor Maximus, “relied on irrelevant and out-of-context facts” instead of the patient’s record as a whole; “made repeated factual errors in its analysis, including in at least one case analyzing the wrong patient record;” and committed a number of other auditing sins, Brookdale’s attorney Brian Roark with law firm Bass, Barry & Sims says in a 22-page response letter. Brookdale also submitted 300 pages of exhibits not included with the response, the OIG notes in its report.

Unlike with other recent home health audits, the OIG doesn’t back down on any of its claims determinations. “We maintain that our findings and recommendations are valid, although we acknowledge Brookdale’s right to appeal the findings,” it says.

Note: The 60-page report is at www.oig.hhs.gov/oas/reports/region4/41806221.pdf.

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