LHC Group

It doesn’t take a CAT scan to figure out the U.S. health-care system is sick. Companies such as LHC Group Inc. (Nasdaq:LHCG) might be the prescription to help make it better.

Anyone who’s trekked off to the hospital for treatment knows that patients are going to be quickly whisked out the door afterwards. Home-health care demand is rising to a fever pitch, especially since more than 37 million Americans are aged 65 or older, and perhaps 10% need health-related assistance. That’s where LHC Group, a 14-year-old company in Lafayette, La., comes into play.

The home-health industry is highly fragmented, with many of the services coming from small, privately run operations — which account for roughly 90% of the business. Public companies like LHC Group and its competitors can shave costs from follow-up treatment after hospitalization for acute conditions — and better deal with insurance paperwork.

The Bayou Country base of operations should provide a hint to LHC Group’s niche: it focuses on rural-area geriatric care. LHC operates in 13 states, mostly in the South, and has 198 service locations (doubling since 2005). The 4,500 employees visit more than 60,000 patients annually.

LHC Group estimates its in-home care costs at $50 daily, compared to several hundred dollars in a nursing home or thousands during a hospital stay. With an aging population, Medicare enrollment is expected to double around 2030, from 42.5 million in 2005...

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