The Business Journal - Acquisitions, trends spark growth for Advanced Home Care

July 21-27, 2006

By Mark Tosczak

HIGH POINT — A Triad company that provides nursing care, medical therapy and other health care services to people in their homes is growing rapidly thanks to acquisitions, changing trends in hospital care and an aging population.

Advanced Home Care, which is owned by several area hospitals, has been growing at double-digit rates the last couple of years.  It's now solidifying its presence in the Charlotte area and plans to grow more in the Triangle and points east.

The company just annonunced plans to acquire NorthEast Pathways Homecare and Infusion Services, a service of NorthEast Medical Center in Concord.

Joel Mills, CEO of the High Point-based nonprofit home–health company, said the growth is coming from a mix of acquisitions and growth in its existing locations.

The company had $73.9 million in revenues for the fiscal year that ended Sept. 30, 2005, up from $52.3 million in 2003, according to the tax returns of it and its subsidiaries.  Mills declined to provide audited financial statements.

The business was profitable, too, netting $8.2 million in earnings last year.  Mills said he thinks Advanced Home Care is probably one of the 10 largest companies of its kind in the country.

Advanced Home Care provides a range of health care services to people in their home; everything from respiratory therapy and occupational therapy to administering intravenous drugs.

"In order for companies like ours to continue to thrive it's important that we grow in this way so we can spread the back–office expenses," he said.

Those back–office expenses include about 350 employees in its 74,000–square–foot Piedmont Centre headquarters.

While the NorthEast acquisition, which is going through due diligence, isn't expected to add many jobs locally, it will add about 100 employees to the company's roster of 700.

And more growth is on way.

We just bought a small company earlier this year in Raleigh, so we expect to expand our services in the Triangle," Mills said.  "We don't have a big presence there, so that's the place that makes the most sense for us."

After that, the company would expect to expand into Wilmington.

With the NorthEast acquisition, Advanced Home Care will have up to 20 locations in North Carolina and parts of Virginia.  Under the terms of the deal, NorthEast Medical Center will also become a part owner in the company. 

Home health care, which includes a range of services, is becoming a bigger part of the health care sector as the population ages and hospitals push to shorten patient stays.  Home health care workers provide a variety of services, from simply checking in with patients to providing physical therapy or even administering certain kinds of IV drugs.

Multiple Owners

Advanced Home Care's owners include four of the Triad's biggest hospitals — Moses Cone Health System.  Forsyth Medical Center, High Point Regional Medical Center and Alamance Regional Health System.  Several other hospitals in North Carolina and one in Virginia also own stakes in the company, which was started in the early 1980s by High Point Regional and Moses Cone.

N.C. Baptist Hospital has its own home–health service — Baptist Hospital HomeCare.

Mike Waid, the administrator of that 100–employee program, said its revenue has grown each year, and he's expecting that to continue into the future.  He cited the aging of Baby Boomers as a main driver.

"I think the Baby Boomer generation is going to come down the pike and they're going to dictate what services they want rendered where," he said.  "If we can do it in the home, they're going to want it there." 

On Monday, Baptist HomeCare added back a service line it had dropped from its offerings three or four years ago, providing durable medical equipment and home respiratory therapy.  That addition came out of strategic planning the agency did.

"When we started doing the strategies session we said 'What are we doing, what are we not doing?'" he said.

By contrast, though, the agency has decided to stay out of the personal care business.

Reimbursement levels for those services are fairly low, he said, and staff are hard to retain because they tend to jump from one agency to another.

And the Triad home health care market is likely to become more competitive. 

Shelly Sun, founder and CEO of BrightStar Healthcare, said North Carolina and other southern states are big destinations for retirees, which is also driving growth in the business.

Though her company is based in Chicago, she's targeted North Carolina as one of the states she wants to expand into.  Sun is looking to launch six new franchises in the state, including one each in Greensboro and Winston–Salem.