Fresh Off Acquisition, American Health Partners Plots Diverse Post-Acute Growth — With SNFs at Center

Even before the pandemic, American Health Partners saw growth potential by expanding beyond a core of skilled nursing facilities.

The Franklin, Tenn.-based firm operates 29 SNFs through its American Health Care arm, but it also provides a wide range of other services, from home health and hospice to psychiatric care to a nurse practitioner organization. And as the provider looks to a post-COVID future, the opportunities for expansion across the continuum loom large — but with the skilled nursing facilities at the center.

“We as providers have, for a long time, been very siloed in doing one thing, and we’ve done that well — and it’s a very critical and needed service, skilled nursing,” CEO Michael Bailey told SNN this week. “But there’s other places that patients need to be serviced, and we need to step up to that opportunity and that challenge, and provide that for them.”


American Health Partners set itself up for that growth earlier this month with financial backing from the Mitchell Family Office, which acquired the firm for an undisclosed sum. SNN called Bailey to learn more about the transaction, and how operators can diversify their offerings to provide better care where patients want to receive it — while also adapting to a post-pandemic world.

How did the acquisition come about, and what are your plans for the post-COVID future?

We started this transaction some years ago. We began a long time ago looking for an investment partner with a great deal of expertise, strong financial resources in their house. The purpose of it was to allow us to strengthen our balance sheet, strengthen the foundation of our business, and then grow our business.

We’re believers here that if you’re not growing, expanding, innovating, then you’re probably getting behind — certainly in health care. We’ve done that. We’ve got seven divisions here, and we’ve tried to diversify our business lines, always using the skilled nursing facilities as the hub of those businesses. Each one works directly with the skilled nursing homes that we have.


So we sought this investment partner two years ago, frankly, and it just happened to culminate during COVID. Which is interesting, I think, in itself, but it’s worked out really well for us.

Diversification has emerged as a key area of focus for operators looking toward a future with perhaps permanently lower demand for institutional post-acute services — how do you see that playing out over the next several years?

We have seven divisions in our company. So we’ve got the skilled division, of course, which is the foundation; we’ve got 29 homes in that division that we own ourselves and manage. We’ve also got home health and hospice, which are nice divisions for us with 35 counties. We’ve got an institutional pharmacy division that services our own homes as well as several other chains in Tennessee, Mississippi, and Alabama. One of our fastest-growing divisions is our Institutional Special Needs Plan or I-SNP business.

We’ve got a psychiatric hospital division for geriatric patients, which dovetails nicely with what we’re doing in the skilled homes — and, of course, many, many of our admissions there come from nursing homes or assisted living. And then we’ve got our own division of nurse practitioners, MDs, and case management individuals; they work with the I-SNP business, and with the nursing homes, to try to improve the care, improve the health of the patients and residents in our facilities.

All those work together in concert, we believe, and have served us pretty well. I think your question was: What are we going to do with those in ’21 and beyond? We are and have been looking at expanding; we’re in several states in our I-SNP business, with hundreds — literally — of partners’ homes in that business. When we go into those states with those partners, we bring TruHealth, which is our nurse practitioner and physician business, with us into those settings.

So we’re looking at continuing to do that, to get more and more penetration in each state that we’re currently in in the I-SNP business, as well as to grow into new states. In fact, just sitting here before this call, I got a signed letter of Intent to go into a new state with a potential partner of ours. That business has got its own growth pattern.

The TruHealth nurse practitioner business will follow that. They do an excellent job of keeping the patients healthy at the bedside and not having undue, unnecessary hospital admissions — and bringing specialty care into the facilities versus sending residents out for specialty care.

The others, we expect expansion — clear expansion — into our pharmacy business. As I say, we’re already in two other states, Mississippi and Alabama; we’ve got opportunities in a number of states in addition to that.

It’s just natural; it works well with the I-SNP business, because obviously, pharmacy is a huge component of the risk, and we can mitigate that somewhat by having our own pharmacy that works directly with the nurse practitioners and physicians to help mitigate that risk. Home health and hospice, we expanded that this past year, during COVID, further into West Tennessee. We’ve signed a letter of intent to expand that into another state outside of the state of Tennessee.

I think you’ll see some expansion in each division over the next 12 months. Then further out from that, I think that’ll just continue to grow as our reputation and our business model grows out there.

I think that’s something good operators need to realize — that the federal administration and states are increasingly questioning why the nursing home is the default setting for so many people who maybe could be better served at home or community.

The administration is pushing — even before this administration — on home- and community-based services. Certainly the Biden administration is accelerating that endeavor. CMS has wanted to move patients into different settings for their needs as they age. Certainly, I believe, and we believe, that nursing homes and assisted living will continue to be a big part of that.

But as you alluded to, home health and other settings are what’s going to get a lot of attention. We as providers have, for a long time, been very siloed in doing one thing, and we’ve done that well — and it’s a very critical and needed service, skilled nursing. But there’s other places that patients need to be serviced, and we need to step up to that opportunity and that challenge, and provide that for them. I think we’re doing that in a small way here in Tennessee in some adjoining states, but we want to help other partners, if you will, to do the same thing in their respective states.

Where do you see I-SNPs fitting into that? What are you hearing from prospective partners about their I-SNP calculus?

It is a big decision. But the operators that we’ve dealt with, and we’re dealing with as partners today — we all go into these as partners. Literally, we’ve all put our money in the pot together to manage this. So our incentives and their incentives are exactly aligned.

I think the pandemic has pointed out to a number of people — or at least heightened the awareness of this — that we are always going to have challenges in skilled nursing. And if we’re going to step up and do things like infection control measures in a heightened way, like we’ve had to do here for the last year and a half, we should get paid for that. And we should build a business around that.

So I think coming out of this pandemic, you’re going to see — we already have seen — some of the folks who were on the fence and thinking about this now begin to take the next steps forward to do the I-SNP business. Medicare Advantage is here to stay. It has grown phenomenally over the last, say, 15 years that it’s been in existence, and I don’t see that changing.

It’s a wonderful product. It helps if you have a good care model, which we do — and others do, too, I’m sure, but I can only speak to ours — that keeps the patient and gives, in essence, concierge medicine at the bedside to a nursing home resident. That’s something that has been missing in the past.

If you do that, and do that effectively, you can get paid for it. You can build a nice business around it. You can help your residents; you can have a value proposition to the community and to your referral partners that says: “Come into our facility. We are a skilled nursing facility, but we also do these other things as well.” And that will help your family, that’ll help your patient if you’re the hospital, et cetera. It’s going to continue to grow and expand, I believe.

I don’t think so. I mean, certainly some owners out there are probably still paused, as you’re trying to feel your way through this, coming out of this. We’re no different, being an owner-operator ourselves. We’ve had to figure our way through this maze.

We had to figure that out, not only for the skilled nursing, but for the I-SNP: How do you do your model of care? Using telehealth when you couldn’t get in the buildings, or if you wanted [to go] in the buildings, some providers would allow that, so you had to work your way through that.

I would say that generally speaking, and specific to us, we fared pretty well, all things considered, during the pandemic. I do think that bolsters confidence in the model of care and what we do for our patients and our residents, and then allows us to say: Well, if we can do this in this terrible environment of a pandemic, then we can certainly do this outside of that, and we can improve these people’s health, let them live longer, happier, and healthier in their own bed in one of our facilities and or an assisted living facility for that matter. I do think that’s going to continue to catch people’s attention.

This interview has been condensed and edited for clarity.