Five Star Dips Its Toes in Home Care, Considers Scaling Up

As the baby boom generation ages in the coming years, demand for private-pay senior living is expected to soar—but so too is demand for at-home care. Recognizing this, many independent living and assisted living companies are taking a closer look than ever before at the opportunity and risks in expanding their services to include private-pay personal care in people’s homes.

Newton, Massachusetts-based Five Star Senior Living (Nasdaq: FVE), the nation’s fourth-largest provider by resident capacity in 2016, is among these companies.

Five Star recently has gone big on ancillary services, using the strategy to drive revenue. After making a play to expand its therapy services through its new Ageility platform, home care is another service line that the organization is considering.


Five Star CEO Bruce Mackey (pictured above) and COO Scott Herzig recently spoke with Senior Housing News for a newly released report on the home care opportunity for senior living providers. They discussed Five Star’s current offerings and possible growth in Medicare-certified home health and private-pay, non-medical home care services, also called private duty.

Do you think the idea of a senior living provider owning a home care business as well makes sense?

Mackey: It makes sense to look at home care. It’s a great benefit to bring to our residents. We have a population that needs those services. I’m not sure what the percentage of residents is with those needs, but it’s high. And providing those through a Five Star entity, rather than one down the street, could make sense.


We have dipped our toe in those waters. There are two small companies under our control.

Two home care companies? Are they private duty or Medicare-certified home health providers?

Mackey: One is Medicare-certified, in Houston, and one isn’t, in Indiana.

Other providers want to avoid the complications of Medicare billing. But I suppose you’re already in that world as a short-term rehab provider?

Herzig: We’ve got a strong background, clinically speaking, with our history in skilled nursing. We work well in the Medicare environment. It’s not something that scares us.

Let’s focus on the private duty company. Can you describe that operation?

Herzig: That services our Indiana buildings.

Just serving residents in the buildings, or people in the community at large as well?

Mackey: Just providing services in Five Star buildings.

How did you come to own this home care company, and would you consider providing services outside your buildings?

Mackey: Both [the home health and home care company] came through acquisitions. We acquired various portfolios over time. Both acquisitions happened to come with home health, and we’ve kept them around. We really have been thinking about this a lot lately, does it make sense to move it outside [our buildings]? We don’t know the answer yet.

Herzig: We haven’t gone too far down the road of trying to figure out the next opportunity to grow internally or outside yet, we’re just taking baby steps now.

Why are you thinking about expanding home care now? Two big “pros” I’ve been hearing are that home care can increase revenue, and that there advantages to owning more of the continuum of care, from a referral and quality control standpoint.

Mackey: 100%, those are the reasons.

If you decide to expand Five Star’s home care, would you continue to acquire existing operations or start to create your own from scratch?

Mackey: It can be state dependent, whether to start from scratch. In pharmacy, we did both.

Herzig: We had our own pharmacy that we started from nothing internally and grew. We had them servicing our own buildings. We ended up exiting the pharmacy business about six years ago at a very large profit.

Mackey: [For home care] it really comes down to states, and how difficult it is to get a license versus finding a mom-and-pop looking to sell. There are lots of advantages to going in and taking the keys. We haven’t gone down that road far enough to kick the tires.

What are some of the concerns you have about expanding home care? Managing a mobile workforce?

Herzig: That’s a definite concern. It’s a totally different employee base. Home care attracts people who like working in the different locations and don’t mind the driving. It’s not an issue right now, considering we only do our own buildings.

What would the approach be to growing a home care business?

Mackey: Market by market. We would want to make sure what we have now works, have a platform that can scale. There are big checkboxes that we want to look at. If it makes sense, and we think we can scale it, look out.

 This interview is excerpted from the new Senior Housing News report “The Home Care Opportunity: Big Risks, Big Rewards for Senior Living Providers.”

Click here to access the complete report, to learn more about which senior living companies are entering home care, common pitfalls that stand in the way of success, and what senior living providers can gain by offering home care.

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