Provider-Vendor Hybrid PathWell Acquires Caring Angels Home Health

The home health company PathWell began as a technology company aiming to help other operators with back-end issues. But when COVID-19 hit, it changed direction to become a provider itself, equipped with the capabilities it once exclusively sought to give to others.

PathWell has now grown into a multi-state provider through expansion and acquisitions. And on Wednesday, the company announced it acquired Caring Angels Home Health, a business with a significant presence in both Virginia and West Virginia.

“We have a really solid foundation, and now it’s just about pushing volume through that foundation,” Raman Brar, the CEO and co-founder of PathWell, told Home Health Care News. “It’s a scramble right now to acquire as many quality businesses that are available. But we’re still very selective in terms of what we buy, in terms of the quality of businesses, the patient census and the location.”

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Based in Fairfield, Connecticut, PathWell has around 100 employees, split evenly between its back-end workers and caregivers in the field. Overall, its patient census is around 400.

In addition to its provider capabilities, it still offers back-end services to other home health agencies.

Last year, PathWell acquired Shamrock, a home health care provider based in Southern Connecticut. Its acquisition of Caring Angels, which was advised by the M&A firm Agenda Health, extends its reach further down the East Coast.

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Brar entered into home health after spending most of his career in private equity. Part of that job entailed identifying macro trends, which led to an interest in home health and the industry opportunities that were surfacing.

“That’s kind of what drove me to jump on the other side of the table and get on the operational side,” Brar said. “So around three years ago, I decided to move out of private equity and start my own thing. And home health care just was a very exciting space to me personally.”

As he saw consolidation coming down the pike for the industry, Brar felt that home health needed more owners with different backgrounds in the space.

Attacking the new venture from a solely tech perspective turned out to be challenging after the onset of the pandemic, however, so Brar and PathWell switched gears.

“That path, from a tactical perspective, turned out to be slightly more challenging,” he said. “So we thought we were better off kind of doing a rollout in the space, then building some tools at the back end still.”

Despite the shift, PathWell still has more aspirations than just being a home health provider. It believes its dedication to data and technology will allow it to still play an advisory role, similar to companies like SimiTree and Fazzi Associations, the latter of which is now a part of the software company WellSky.

“The reason we decided to kind of build that ourselves was because that is how we saw the [home health business] going forward, especially with PDGM (the Patient-Driven Groupings Model),” Brar said. “So we have an internal team that’s really good, and the idea is that as we [acquire] other home health agencies, we’ll be serving them from behind the scenes, but we’re also selling that service to others.”

In other words, PathWell is not only building out its own home health business, but it’s also actively serving others with its platform. It already has a couple of agency clients that it does not own, which it offers documentation and quality assurance (QA) to, among others services.

Uniquely, though it solely operates its business in the U.S., it’s back-end team is based in India.

The company’s two goals moving forward are to expand its actual home health business through acquisitions like the Caring Angels one — in the mid-Northeast and Atlanta area — as well as growing the QA and documentation business elsewhere.

As for the acquisition piece, it’s a tough environment out there right now, Brar said. For now, PathWell stays away from some of the bigger states for competitive reasons. The company cannot yet compete with the larger home health players in M&A, so it has to pounce on opportunistic deals.

“Moving into West Virginia was really exciting because it’s a certificate of need (CoN) state with much more limited competition compared to even Virginia,” Brar said. “It comes with challenges because it’s further away from Connecticut, but it’s a good opportunity to get into a state that is underserved.”

There are barriers to growth still for PathWell, but Brar is confident that the business can overcome them through its technological capabilities.

Brar says that PathWell is specifically well-versed in digital transfer, which he believes makes it an outlier.

“If we look at a lot of our competitors, including the businesses we buy, they’re great people delivering great service, but there’s just not that transfer of knowledge,” Brar said. “So with that high churn, which is very natural in the industry, the ball gets dropped. And so we think that’s our biggest competitive advantage.”

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