A large post-acute care company with a deep presence in America’s rural areas, Intrepid USA Healthcare Services has been in the market for a new private equity partner.
Intrepid is a Texas-based provider of home health, hospice and personal care services. The company has more than 60 locations spanning 17 states. CEO John Kunysz likes to say the company has a tremendous footprint in “the hills, hollers, bayous, backwoods, barrier islands, deserts and prairies of the United States.”
A new PE partnership would be the next chapter in the company’s 53-year history.
Unlike the “rip-and-flip” relationships sometimes seen with PE investments, Intrepid is prioritizing an arrangement that would bring additional resources to the company and aid in its continued growth.
To learn more about Intrepid’s search, Home Health Care News sat down with Kunysz for our latest episode of “Disrupt.” During the conversation, Kunysz also shared his thoughts on why post-acute care has become the new “apex predator” and more.
Highlights from the conversation are below, edited for length and clarity.
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HHCN: Let’s get started with your background. I’d love to hear how you got to the point where you are now as the CEO of Intrepid.
Kunysz: I’ve been in post-acute care for four years. I joined intrepid back in April 2018. My background before that? I’ve hauled all the trash of health care. I’m a reformed CPA and bean counter out of PricewaterhouseCoopers and KPMG. I started out on the West Coast and went to undergrad at San Diego State, then UCLA for graduate school. I spent the first half of my career out West, then came to Nashville in 1996.
It was interesting. I kept bouncing around between revenue cycle, health information management. Then I got into the sexier side of health care – electronic health records and clinical-physician order entry. I probably spent more than half my career in cowboy boots and scrubs in pre-ops and ORs in major health systems and academic medical centers, but I’ve always been talking about the family medical home. I knew we would return to where it started back in the late 1800s and early 1900s, with the home being the center of all health care.
When I got into post-acute, I loved it because it’s a highly important area of health care. Suddenly, we’re now apex predators in health care, whereas the acute care system was driving all of health care for the last 60 years.
Give us more background into Intrepid. Where is the company now, and how has growth intensified over the last couple of years?
We’re in 17 states, primarily around the Ohio River Valley, the Southeast, a few far flung operations up in Minnesota, Washington and Arizona. We have some operations down in Texas. It’s a company with an incredible 53-year history, and we’re, frankly, still one of the largest platform-type plays out there that has scale, size and operations.
We have both home health, hospice and personal care, or private-duty services. Now, we don’t have all that located in every market, but we have that potential for growth. That’s one of the things that I think makes us very attractive to potential PE suitors. It’s a great asset with a tremendous footprint in what I call the hills, hollers, bayous, backwoods, barrier islands, deserts and prairies of the United States. We are, sort of, the “flyover-state home health care company.”
We’re in a lot of these rural markets, which gives us incredible defensibility and relationship capital. It’s taken 20, 30, 40 years for some of these people to build up in their communities. They’re taking care of their elementary school teachers, their little league baseball and soccer coaches.
At HHCN, we wrote an article about something Intrepid was doing, in terms of your referral sources, to stay afloat during the pandemic. Can you explain what that was and why you guys went that route?
One of the things we’ve really done is look closely at trying to stay close to our referral sources and change the typical in-person, heavily face-to-face-based model. We are using smarter technologies, such as TapCloud, which allows us to do patient and family engagement. We also worked with our referral sources differently, on pulling together different modalities of text, email — things that are less face-to-face communication.
It’s sort of interesting looking at how people have adapted to that. You’re either comfortable with Zoom, or with a disembodied voice, or you’re not. How do you operate in a virtual world? We spent a ton of time really learning how to coach people on how to use these modalities.
I was lucky that I used to run patient contact centers and call centers in my career, on the revenue cycle side. Teaching people how to use the power of voice, the power of language and words — you have to have your personality come through. That’s not natural for a lot of folks in health care because we’re used to having that intimate one-on-one personal connection with the patient at bedside or at the point of care.
Telemedicine, telehealth — which really exploded with the pandemic — they’ve been here for years, but weren’t necessarily catching on. This is because of, I think, uncomfortableness about adoption rates and people using different modalities.
Intrepid seems to be looking for a new PE partner. Why, and how does that process work?
We’ve been held by our existing private equity firm, Patriarch Partners, for 15 years now. That investment lifecycle is long due for change. This is an industry that requires a tremendous amount of capital to invest in it. We’re working with Ziegler on going through an investment banking process. It’s a very robust process being conducted kind of across the board. There’s every kind of investor you can imagine that’s excited about this platform coming to market, whether it’s the strategics that are looking to expand their additional market density, whether it is financial sponsors that already have assets, or financial sponsors that are looking at us as a platform play.
All of those are attractive. We’re pretty excited about going through this process, because we feel at the end of it, we’ll end up with a good partner to provide for that next 50 years of growth.
We’re really seeing in the marketplace, as we look at the $400 million or $500 million worth of acquisitions that are out there, these aren’t companies that have to sell. They are second- or third-generation owners. They’re running very successful companies. They want people that are more interested in the heritage and heart of their companies versus just their census and EBITDA. They don’t want to just sell out for the maximum dollar. They want to continue that family legacy and see how that’s going to change in the future.
Overall, what’s your take on PE being in the industry, and how does it affect things at a larger scale?
I think private equity is critical to health care, in general. It’s a very capital-intensive business. You’ve got to be constantly investing in new technologies and new modalities to stay current and to keep advancing. A lot of people when they look at technologies, they talk about a return on investment. I look at a return on time, because our clinicians cannot get any more time. A lot of times when you deploy technology into health care, it actually takes more time to use it. That’s not a positive. We’re looking at all kinds of things that provide more automated notes, ability to do prompted care checklists that do a better job at creating better, higher-quality clinical documentation – and do it faster for clinicians.
Back to your original question about the PE involvement — it’s critical because they bring tremendous amounts of capital to bear. The cautionary side is the modality and their mindset. When people are considering the right PE partner for their business, especially these owner-managed firms, are they going to be partnering with somebody that’s really going to grow the business over time, or are they going to grab control of the asset and rip it and flip it?
The PE firms that have a longer-term view on the industry are going to do well. You will certainly have the PE firms that can come in and do short-term acquisitions, maybe do a little bit of growth and then flip it. They’re going to do fine, too. Both are required to effectively consolidate our industry. Our industry is still highly fragmented with tremendous room for growth. Technology investments are going to drive this because we have to drive tremendous efficiencies, and find ways that create better resource utilization.
This Disrupt conversation was conducted by HHCN Editor Andrew Donlan.
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