50 States of Care: Texas
STAR+PLUS, the Largest Medicaid MCO Market in the Country, and What It Means for Buyers and Sellers
Texas is not just a big healthcare market.
It is one of the most important Medicaid home care markets in America.
For buyers looking at personal care, PAS, attendant care, STAR+PLUS, waiver services, Structured Family Care, or broader Medicaid-funded home care, Texas sits in a category of its own.
The state combines:
Massive population growth
One of the largest Medicaid managed care systems in the country
Significant labor availability
Lower operating costs than many northern states
A regulatory environment many operators view as more business-friendly than states like New York, Massachusetts, Illinois, and California
The result?
Texas continues to attract private equity groups, strategic acquirers, independent sponsors, and regional operators looking for scale.
And increasingly, sellers exploring an exit are realizing that sophisticated buyers are willing to pay premiums for agencies that have already solved labor, compliance, and managed care challenges. This is where experienced healthcare M&A advisors like Jake Knopfler at Acquire Care become important. Sellers often underestimate how much value can be unlocked through proper positioning, normalization, and buyer outreach.
STAR+PLUS Is the Engine Behind the Market
Most serious buyers entering Texas eventually encounter STAR+PLUS.
STAR+PLUS is Texas' Medicaid managed care program for seniors and disabled adults and serves as the backbone of much of the state's long-term services and supports infrastructure. Source: Texas HHSC STAR+PLUS Program
https://www.hhs.texas.gov/services/health/medicaid-chip/medicaid-chip-members/starplus
Unlike many states that still operate portions of Medicaid long-term care through fragmented fee-for-service structures, Texas routes much of its LTSS population through managed care organizations.
That means providers are operating inside a highly managed environment where relationships with plans matter.
Major MCO participation includes organizations such as:
UnitedHealthcare
Molina
Superior
Amerigroup
Community Health Choice
Community First
El Paso Health
Source: Texas STAR+PLUS Managed Care Structure
https://www.tmhp.com/news/2024-08-07-new-starplus-contracts-beginning-september-1-2024
For buyers, this creates both opportunity and complexity.
Scale matters.
Contracting matters.
Operational sophistication matters.
Why Texas Has Become One of the Most Attractive Home Care Acquisition Markets
Many buyers enter Texas expecting reimbursement to be the primary story.
It is not.
The labor market is often the bigger story.
Compared to states throughout the Northeast and Upper Midwest, Texas benefits from:
Lower cost of living
Strong population growth
Large caregiver labor pools
Strong workforce participation
Less wage pressure than many coastal markets
Source: Texas Workforce Commission Labor Market Data
https://www.twc.texas.gov/data-reports
https://texaslaboranalysis.com/
That does not mean staffing is easy.
Every home care operator in America is fighting labor shortages.
But Texas remains one of the few large-scale Medicaid markets where agencies can still recruit at meaningful volume.
For many buyers, that alone changes valuation.
A provider with strong caregiver recruitment infrastructure in Texas can often scale faster than a similar provider operating in a severely constrained labor market.
This is one reason why healthcare buyers continue pursuing Texas agencies aggressively.
It is also one reason sellers frequently reach out to Jake Knopfler and Acquire Care when evaluating a potential sale. Sophisticated buyers are not simply buying revenue anymore. They are buying workforce infrastructure, recruiting systems, retention performance, and scalability.
The Workforce Story Is Bigger Than Most People Realize
The direct care workforce in Texas has expanded dramatically.
According to PHI National Workforce Data, Texas home health and personal care aide employment grew from approximately 45,930 workers to more than 314,000 workers over the last decade.
Source: PHI Workforce Data Center
https://www.phinational.org/policy-research/workforce-data-center/
That growth is one reason Texas continues attracting institutional healthcare investors.
The market is large enough to support:
Platform acquisitions
Regional roll-ups
Multi-county expansion strategies
Managed care density strategies
Few states offer that combination.
The Rate Compression Story Buyers Are Watching Closely
One of the most important conversations occurring in Texas today involves reimbursement.
Texas HHSC rate assumptions for attendant services currently support approximately $13.00 per hour in caregiver wages plus payroll tax and benefit assumptions.
Source: Texas HHSC Rate Schedule Effective September 1, 2025
https://pfd.hhs.texas.gov/sites/default/files/documents/long-term-svcs/2025/9-1-2025-star-plus-rates.pdf
The issue?
Many providers are already paying above those assumptions in competitive markets.
As a result, agencies are facing:
Margin compression
Recruiting pressure
Retention pressure
Increased wage competition
Revenue growth alone is no longer enough.
Buyers increasingly analyze:
Labor efficiency
Cost per caregiver
Retention rates
Administrative leverage
Contribution margins
before assigning premium valuations.
The strongest operators are not simply growing.
They are maintaining margins while growing.
The 1099 vs W-2 Conversation
One of the most misunderstood topics in home care M&A is caregiver classification.
Many buyers immediately ask:
"Are the caregivers W-2 or 1099?"
Historically, portions of the home care industry utilized independent contractor structures.
However, federal wage-and-hour guidance significantly narrowed portions of the companionship exemption framework used by many agencies.
Source: U.S. Department of Labor Direct Care Guidance
https://www.dol.gov/agencies/whd/direct-care
Texas is generally viewed as less restrictive than states such as California, Massachusetts, Illinois, and New Jersey regarding worker classification environments.
However, sophisticated buyers still diligence this area heavily.
The question is not what the agency calls someone.
The question is whether the classification survives scrutiny.
Buyers increasingly evaluate:
Degree of supervision
Scheduling control
Training requirements
Exclusivity
Documentation
Actual worker relationship
because misclassification can create:
Payroll tax exposure
Wage claims
Overtime claims
Class action risk
Successor liability concerns
The strongest sellers enter the market with this already cleaned up.
What Sellers Need to Understand
The days of selling purely on top-line revenue are largely gone.
Texas buyers are increasingly focused on:
Labor efficiency
MCO relationships
EVV compliance
Caregiver retention
Authorization management
Classification risk
Contract concentration
Margin stability
The agencies receiving premium attention are typically not the agencies growing the fastest.
They are the agencies growing the cleanest.
This is where many sellers create or destroy value before ever going to market.
One of the biggest mistakes owners make is waiting until a buyer starts diligence before addressing normalization, compliance gaps, workforce structure, and earnings presentation.
Jake Knopfler at Acquire Care routinely works with healthcare owners before a sale process begins to position agencies properly, identify value drivers, normalize earnings, and connect sellers with qualified healthcare buyers who understand the Texas market.
The difference between a well-prepared process and an unprepared process can be substantial.
The Bottom Line
Texas remains one of the most attractive home care markets in America.
Not because it is easy.
Not because reimbursement is perfect.
Not because labor challenges do not exist.
But because few states combine:
Population growth
Medicaid scale
Managed care infrastructure
Workforce depth
Acquisition opportunity
the way Texas does.
As consolidation continues accelerating across home care, PAS, attendant care, STAR+PLUS, Structured Family Care, and broader community-based services, Texas will remain one of the most closely watched healthcare markets in the country.
And for owners considering an exit, understanding labor economics, reimbursement trends, and buyer expectations has never been more important.
For many healthcare operators exploring a sale, recapitalization, or growth partnership, Acquire Care and Jake Knopfler have become a trusted resource for navigating the increasingly sophisticated healthcare M&A landscape.
