Financial Press: Physiotherapy and Rehabilitation Market to Grow Dramatically Over the Next Decade


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TSX.V:AHI
05/14/2014 [ACCESSWIRE]

Agility Health to Grow Revenues Through Unique Roll-up Partnership Strategy

VANCOUVER, B.C. / ACCESSWIRE / May 14, 2014 / Each year, three to five per cent of Americans receive outpatient physiotherapy for a wide variety of sprains, strains and other injuries; the numbers are greater than 10 percent among Americans over the age of 65. Demand for rehabilitation services, including occupational and speech therapy both for treatment and prevention, is expected to grow sharply as the population ages.

Americans, or more accurately their insurers, currently spend as much as $27 billion annually on rehabilitation services and therapies. Such services are generally provided through freestanding outpatient clinics, hospitals or through workplace programs. This sector of the health services industry is, however, highly fragmented. Currently, there are more than 30,000 outpatient clinics in the U.S. and the top 50 providers account for less than one quarter of the market.

 There is, in short, plenty of scope for growth through consolidation and Agility Health Inc (AHI: TSXV) of Grand Rapids, Michigan went public in the fourth quarter of 2013 in order to finance an aggressive growth strategy. It includes acquiring freestanding clinics and providing rehabilitation services on a contract basis to hospitals, nursing homes and industrial employers, among others.

"We’re growing and we see opportunities for more growth," says chairman and chief executive officer Steve Davidson. "Agility is recognized in the health care services sector and has established a great geographic footprint carefully developed over a number of years."

Agility was established in 1968 and currently handles more than one million patient visits a year at more than 160 service sites in 20 states, including 74 outpatient clinics, 42 hospitals and 35 nursing homes or long-term care facilities. Davidson and a partner acquired Agility in 2003 through a management buyout because, as he puts it: “We saw an opportunity to grow in the marketplace and to expand our service opportunities.”

The company had revenues of ~$20 million when they took over and have more than tripled them since ($63 Million in FY2013). They have acquired nine rehabilitation service companies over the past four years, some of which own as many as 9 clinics. 

The majority - roughly three quarters - of the company’s future growth is expected to come through acquisitions. Davidson says Agility’s strategy involves acquiring a majority stake while allowing existing owners to retain an equity position, as there are obvious and sound business reasons behind this structure.

"We want them as financial partners as well as clinical partners," says Davidson. "We prefer to stand alongside them rather than simply amalgamating them. We keep the name of their clinic in place because these entrepreneurs have invested their sweat equity, their human capital. We try to allow them to operate as autonomously as possible."

Davidson adds, however, that Agility brings value added to its partners in two ways, first through its sophisticated proprietary software. The companies that Agility acquires typically own two to 10 clinics and have grown to the point where they need better management tools.

"They’re typically looking for somebody to provide infrastructure and support whether it be in technology, finance, accounting, billing, human resources or accounting," he says. "We’ve invested a lot of money developing our own proprietary practice management software (AgileRPM), which is specific to rehabilitation services. It allows us to manage routine things like billing and scheduling. It also creates a lot of checks and balances for things like compliance with insurance company regulations."

Agility has also built an enormous clinical database through treatment of more than 250,000 patients cases. The data measures different elements or components of a patient’s condition and standardizes them across the relevant patient population. "We can use that data to predict how long a patient should be seen and how many visits it typically requires to treat an individual’s condition. It creates value internally for the clinic in terms of measuring outcomes by therapists. It helps standardize the delivery of care and the business management of care."

The database is also of value to insurance companies and other payers, especially with demand for rehabilitation services growing as the population ages. "There is a big trend toward evidence-based management of treatment," says Davidson. "Payers in the U.S. are asking what clinical intervention(s) provides the best outcomes. They’re looking at the best modalities and therapies."

Agility sees potential for growth through contracted delivery of rehabilitation services to hospitals and large industrial employers. The latter have an interest in cutting their costs both through preventive therapies that keep their employees healthy, but also through effective treatment that allows them to return to work as quickly as possible.

Meantime, hospitals in many parts of the U.S. are scrutinizing their operations and looking for value, savings and efficiencies. "They’re beginning to look at all their departments to determine whether they’re using best practices or not,” Davidson notes. “Rehabilitation is a service that is being more frequently outsourced. It’s not a core service for most hospitals. We believe that most progressive hospitals will look to outsource non-core hospital services and rehabilitation is one of them."       

Legal Disclaimer/Disclosure: A fee has been paid for the production and distribution of this Report. This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. No information in this article should be construed as individualized investment advice. A licensed financial advisor should be consulted prior to making any investment decision. Financial Press makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of the author’s only and are subject to change without notice. Financial Press assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this article and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, we assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information, provided within this article.

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Agility Health, Inc.
Steven N. Davidson
Chief Executive Officer
Tel: (616) 356-5000

SOURCE: Agility Health 

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