It was reported yesterday that Gentiva Health Services, a home health and hospice company based in Atlanta, GA, was purchasing Odyssey Healthcare of Dallas, TX, one of the country's largest hospice chains, for $1 billion in cash.
Wall Street types are predicting further consolidations in the "hospices and home healthcare space," with natural synergies between home health and hospice operations. The research and brokerage firm Gabelli & Company, Inc., recently published a research report on "the attractive fundamentals of the US Hospice Market" and "clarity in the reimbursement outlook."
But one possible repercussion is that it may become harder for hospice advocates to cry poor to Congress when this kind of money is currently being tossed around to buy hospices. The National Hospice and Palliative Care Organization and others have lobbied that "two cuts are too many" for hospice providers, with productivity enhancement-based rate cuts in the health care reform law and plans to phase out hospice's wage index budget neutrality factor over the next decade.
Odyssey previously had gobbled up another big hospice chain, VistaCare. Gentiva, which in March acquired Mississippi-based Heart to Heart Hospice, is better known for its home health care operations, with 350 community locations nationwide. But it currently operates hospices in the states of Alabama, Florida, Georgia, Mississippi, South Carolina and Tennessee. The merger with Odyssey creates a hospice census of 14,000 in 30 states, making it either the largest or second largest (after VITAS Innovative Hospice Care) provider of hospice care in the country.
According to tradingmarkets.com, Gentiva's offer of $27 per share represents a 40 percent premium on Odyssey's closing stock price of last Friday (May 21). Odyssey reported in late April that it had posted an increase in first quarter 2010 net income to $13.4 million. Gentiva will raise $1.1 billion in new debt financing for the deal, using a syndicate of financial institutions. The transaction is expected to close in the third quarter of this year. Both boards have unanimously endorsed the deal.
What was not discussed, at least on Wall Street, was the two trading partners' level of commitment to an individualized response to the needs of dying patients, to finding innovative ways for enhancing quality of life when its quantity is scant, to measuring and continuously improving the quality of hospice services, or to acting as the go-to source of expert and compassionate support for all the ways people in their communities struggle with terminal illness, death and loss.