Before getting hired as the new president and chief executive of Loving Care Agency Inc. (LCA), Glen Cavallo was president of SolAmor Hospice. Before that, he held senior management positions with Medshares Home Health Inc., Beverly Home Care Inc. and Columbia / HCA Healthcare. With plenty of experience in homecare medical services, Cavallo expects that under his watch, Loving Care-backed by private equity firms MTS Health Investors LLC and Oaktree Capital Management LP-is poised for growth. Mergers & Acquisitions caught up with Cavallo just after he stepped in for former chief executive, Bob Creamer, in December.
What challenges does the home hospice industry face in 2013?
From my perspective, the hospice industry will face some unique challenges in 2013 but at the same time will continue to see sustained growth. As more and more baby boomers choose hospice for their loved ones or themselves, hospice will continue to make up a higher proportion of Medicare funds at end of life. Over the last 10 years, the hospice industry has grown from about $1 billion to $14 billion in funding. I see this growth as such a positive development. Hospice continues to be the most desirable and economical way to treat those at end of life. As a result, the Centers for Medicare and Medicaid Services will continue to require more documentation, quality standards and audits to insure the appropriateness of the services. Larger and more sophisticated hospices will be able to invest in the resources and technology that will be required to meet the needs and demands placed upon them. With this in mind, we will continue to see a consolidation within the industry as we saw with home health back in the late 90's.
How viable is M&A as a growth option for home health aide services?
I am bullish on home health aide services even though there is tremendous pricing pressure from managed-care organizations and Medicaid programs as well as wage pressures in some states. Organizations with strong foundations can quickly gain efficiencies and market share via acquisitions. And similar to hospice, I believe that there may be some smaller organizations out there that may benefit by being a part of a larger company that might be able to handle the fluctuations in reimbursement, staffing and recruiting challenges etc. Although I believe strongly that companies can grow organically as a result of providing excellence in customer service and care, I think there will be a place for M&A as well in 2013.
What do you hope to accomplish as the new president and CEO of Loving Care?
The former chief executive, Bob Creamer, did a remarkable job taking LCA from a family-owned regional company and transitioning it into a multi-state full service organization over the last six plus years. My task now is to take it to the next level. I plan to help LCA strengthen and grow many of the markets we serve, expand into new and underserved cities, improve our sales, marketing and customer service efforts and results, and focus on building bench strength and succession planning at every level.