A pair of private equity firms on Monday announced a new partnership aimed at developing and buying inpatient rehabilitation facilities, with an eye toward underserved communities — and eventually filling gaps in the care continuum beyond the IRF.
Blue Wolf Capital Partners and Peloton Equity, LLC have teamed up to form ClearSky Health, with veteran post-acute executive Darby Brockette at the helm.
“Intensive rehabilitation services are a critical component of the post-acute care continuum at a time when many communities across the U.S. remain underserved,” ClearSky wrote in a release announcing the move. “The aging of the U.S. population, improvements in medical technology, and the increasing availability of patient-level data position high-quality inpatient rehabilitation providers to play an even more important role in the health and wellness of individuals who are living with disabilities.”
Brockette had previously served as CEO of Ernest Health, a large operator of IRFs and long-term acute care hospitals (LTACs); that company, which he helped form in 2004, was sold to Vibra Healthcare last year.
There are around 1,180 IRFs across the country, according to the most recent report from the Medicare Payment Advisory Commission (MedPAC), providing intensive therapy for residents recovering from certain medical conditions.
While IRFs remain a niche care setting — for comparison, the U.S. has more than 15,000 skilled nursing facilities — ClearSky chief operating officer Jessie Smedley told SNN that the overall move toward value-based care makes the facilities an attractive option for development and investment.
“How do we partner with our acute-care hospital to deliver that value?” Smedley said. “We see that inpatient rehab is really positioned well, especially with those patients that are more acutely ill.”
Smedley in particular listed stroke, brain injury, and spinal cord injury as specialties that could see value-based success in the inpatient rehab facility setting,
To kick off the new venture, the Austin-based ClearSky acquired four IRFs in Texas and Louisiana from Maxim Management Group, LLC — the company’s first purchase in the inpatient rehab space.
“The post-acute care sector in the U.S. is evolving towards integrated delivery models and value-based care, and we believe IRFs are well-positioned to play an important role in this transformation,” Ted Lundberg, co-founding partner at the Connecticut-based Peloton, said in a statement.
For Blue Wolf, the move marks yet another major step into the post-acute care landscape: Along with fellow PE player Kelso & Company, the New York City-based Blue Wolf backed the three-way merger of home health heavyweights Great Lakes Caring, National Home Health Care, and Jordan Health Services in 2018.
Now dubbed Elara Caring after the deal closed last spring, the combined firm is one of the nation’s largest home health providers, with 32,500 caregivers working with more than 65,000 patients across 16 states.
And though ClearSky will at first focus solely on IRFs, Smedley said the company plans to assess each of its markets for potential expansion opportunities into other rungs along the care continuum.
“Partnering by community, and filling those gaps that aren’t already filled by the local providers — I think that’s a key for us as well,” Smedley said.
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