Fresh off its acquisition by an offshoot of Bain Capital, skilled nursing medical services provider HealthDrive made a move of its own on Wednesday by entering the senior mental health space.
The Wellesley, Mass.-based HealthDrive, which provides a variety of specialty medical offerings to skilled nursing operators, announced an agreement to purchase New England Geriatrics for an undisclosed sum.
Based in West Springfield, Mass., New England Geriatrics partners with more than 100 long-term care operators in Massachusetts and Connecticut, using its team of psychiatrists and licensed social workers to provide mental health care to about 13,000 residents of nursing homes and other care sites.
For HealthDrive, the acquisition — slated to close sometime in the first half of 2019 — served as a logical extension of its current lineup of specialty practices for nursing home operators, which include dentistry, optometry, and podiatry. Founded in 1989, the company counts Genesis HealthCare (NYSE: GEN) and FutureCare as clients.
“It’s been an area of interest for HealthDrive for many years now,” CEO Dan Baker told Skilled Nursing News. “What we were looking for is clinical operational expertise to deliver it, and we’ve looked at a number of different organizations over the years.”
The two New England-based firms had collaborated on initiatives in the past, Baker and New England Geriatrics CEO Steve Marcus said, and cover similar footprints across the Northeast. But when Marcus first launched the company in the mid-1990s, there was far less awareness of mental health disorders in the senior care space, which the CEO said affect up to eight out of every 10 residents in long-term care — with a significant incidence of depression and Alzheimer’s disease.
“If you suffered form mental illness, there was still this horrific stigma, and they would try to bring the patient to a psychiatrist’s office,” Marcus said. “Our whole mission — really our life for the last 25 years — is to be able to drop the stigmas of mental health, to be able to talk about the significant growth that we’ve had within the arena.”
New England Geriatrics operates on a similar platform as HealthDrive, partnering with skilled nursing operators on a largely cost-free basis. If a resident’s physician provides a referral for mental health services, the operator can recommend one of NEG’s doctors or counselors, which then visit residents where they live and directly bill Medicare for their interventions — with the nursing home itself not on the hook for the cost.
Managed Medicare plans, including Medicare Advantage, have also taken an increased interest in mental health services in recent years, Baker said.
“That’s been a great trend: getting these third-party payors to recognize the value of these services, and give coverage to it, and then give appropriate reimbursement,” he said.
The transaction marks HealthDrive’s first deal since the Bain Capital Double Impact Fund — a subsidiary of the Boston-based private equity giant that focuses on companies with both financial and societal upsides — bought the service provider in early January. While many skilled nursing operators struggle to justify the cost of ancillary services, both Baker and Bain Capital Double Impact Fund managing director Peter Spring see the company filling a vital niche in the future.
“It’s a way to provide care to these patients but not to be an additional strain on the skilled nursing centers,” Spring said of HealthDrive’s offerings last month.
In addition, while offering mental health or dentistry may not have a direct impact on providers’ reimbursements in the short term, the increasing movement toward outcomes-based payments — through the implementation of the Patient-Driven Payment Model (PDPM) and other value-based systems — these specialties could eventually play a role in both resident satisfaction and solid business health.
“Now, by adding mental health, you’re making that whole patient well,” Marcus said.