Backed by investment bank Harpeth Capital, a home-based care veteran recently threw his weight behind a new home health venture. The new company is called HomeFirst Home Healthcare, led by James Happ, who serves as president and CEO.
If Happ’s name sounds familiar, it’s because he spent some time at the leadership level of SunCrest Home Health, which is now an LHC Group Inc. (Nasdaq: LHCG) joint venture. Happ brings all of his past experiences to this next chapter, he told Home Health Care News.
“While at SunCrest, I was involved in business development,” Happ said. “We had made several acquisitions during my time there. I basically implemented a strategic planning process at SunCrest and [the company] grew very quickly and successfully. It was really all because of very effective executive leadership and operational leadership.”
As far as HomeFirst, the company was formed to buy certificates of need and state licenses of two home health agencies that served 24 counties in Tennessee. HomeFirst’s services lines include skilled nursing, private-duty care, physical therapy, occupational therapy, speech-language pathology and medical social work.
The road to HomeFirst has been a long one for Happ.
He first met with Harpeth Capital in 2007 when he was coming off of a successful run at Tender Loving Care, a home health company that would later be acquired by Amedisys Inc. (Nasdaq: AMED). At the time, he was looking to acquire a home health agency.
“We weren’t actually successful there, but [Harpeth Capital] continued on and got themselves involved in following the industry and became really impressed with the success that Suncrest had,” Happ said.
By the time Happ approached Harpeth Capital again, the investment bank was very keen on entering the home health space.
“When this opportunity presented itself here in Nashville, I approached the folks at Harpeth and they were very interested in getting involved through their Harpeth Ventures Opportunity Fund,” he said. “This is a relatively new fund that’s going to invest in health care opportunities. This is their first investment. Had they not been very comfortable with the senior leadership and their experience in the home health industry, they may have not been as excited.”
When Happ first eyed what would eventually become HomeFirst, the industry was on the verge of a major reimbursement shakeup with the upcoming Patient-Driven Groupings Model (PDGM).
“Last October, we were made aware that these two licenses were for sale,” Happ said. “We kind of slowed the acquisition process because PDGM was on the horizon. We wanted to get a feel for how that was going to be received and how that would play out within the industry.”
Five months later, the industry began seeing the impacts of the COVID-19 emergency. This only further slowed down the acquisition, according to Happ.
But then two months later, acquisition talks picked up again.
“It became clear that it was still a great opportunity for us,” Happ said. “The assets that we acquired were distressed assets. It provided an opportunity for us to acquire — at what we felt was a very attractive price. After quite a bit of due diligence, we closed on the transaction on Sept. 15.”
As HomeFirst moves forward as a company, private-duty home care is an area where Happ sees a lot of opportunities.
“Tennessee has a program called TennCare, which is a state Medicaid program, which has been popular for many years,” Happ said. “The Tennessee Medicaid program just continues to renew and improve. There are lots of other opportunities in private-duty as well, whether it’s long-term care insurance providers, or even out-of-pocket private-pay-type services. We see those opportunities expanding across the country on a daily basis.”
As a veteran in the home-based care arena, Happ’s years of experience have given him an interesting perspective.
One key change he’s seen over the years is the way the federal government both views and reimburses home health.
“The government, in the past, never really recognized efficiency,” Happ said. “They paid based upon the cost that you incurred, as long as you were under certain caps. Over the last 20 years, they’ve very slowly moved towards outcome-based reimbursement.”
Happ has also seen more overall awareness of the benefits that care in the home setting can provide.
“The home is now viewed as a place where you have to be serious about focusing on delivering care,” he said. “We’ve been in this industry now, all these years, we’re in a great position to be able to assist the government and all other health care providers that are seeing their patients at home.”
Now 90 days in, Happ is already looking to the future and thinking about expansion opportunities.
“As we get our foundation and our structure completely built down, which we’re in the midst of, then we’ll be looking for opportunities to expand in neighboring territories and states,” Happ said.