by Tim Rowan, Editor
Humana's recently announced $5.7 billion acquisition of the 60 percent of Kindred at Home that it did not already own is a vote of confidence in the importance of in-home care within the U.S. healthcare system. In its announcement, the company said the acquisition was done to improve patient outcomes and reduce the total cost of care. Liza Berger, editor of online publication McKnight's Home Care, stated unequivocally in her own opinion piece that the purchase "will change the home health scene."
She may be correct, but last week's announcement is only one sign among many that change is coming. Cigna Corp. purchased telehealth provider MDLive this year. UnitedHealth Group Inc., the largest U.S. insurer, added 53,000 physicians to its clinical efforts when it acquired Optum. It appears that all payors are finally seeing the health and cost benefits of providing care in the home.
Humana itself has been on a mission to add clinical services to its roster. Last July, it signed an agreement with Heal, the Los Angeles-based disruptor that sends physicians into patient homes. As recently as February, Humana announced another agreement with DispatchHealth to provide Humana members with access to hospital-level care in the home. An announcement at the time said the agreement was done "to help enhance patients' experience and health outcomes." These services will roll out more slowly, first in Denver, Colo., and Tacoma, Wash., with expansion to additional markets in Texas, Arizona and Nevada planned for later this year.
In 2017, insurance giant Humana acquired a 40 percent stake in Kindred, the largest provider of home health and hospice services in the country. Last week's announcement that the Kentucky-based company signed an agreement to purchase the remaining 60 percent from TPG Capital for $5.7 billion, raised some eyebrows, until several factors were considered:
Synthesizing all these considerations into one conclusion: Humana needs to slash the cost of providing care, and it has decided in-home care is the answer.
That this payor has learned what everyone in post-acute care has always known was confirmed by the official statement of CEO Bruce Broussard in the acquisition announcement. He declared that the additional investment in home health serves two purposes, "Fully integrating Kindred at Home will enable us to more closely align incentives to focus on improving patient outcomes and on reducing the total cost of care."
In the Q1 SEC report, Broussard added:
"Our full range of clinical capabilities, which will be even broader now with our recently announced acquisition of Kindred at Home, uniquely position us to help improve the health of our country's most vulnerable populations. The home is highly effective not only in making access to care more convenient for people, but it also allows us to understand their environment and help them address other barriers that limit their ability to improve their health. The acquisition [also] allows Humana to invest in home-based clinical solutions by engaging in-home physician and urgent care resources when a patient does not have immediate access to a primary care physician.
"We continue to invest in assets that allow Humana to better manage the holistic needs of our members and patients by expanding care in the home, including primary care, telehealth, and emergency room care, while also addressing social determinants of health.
"Since our initial investment in Kindred at Home, in partnership with the Sponsors and Kindred at Home management, we've learned a great deal about the home health space and recognize the significant value we can deliver to members and patients by integrating this asset into our holistic approach to care.
"Fully integrating Kindred at Home ... is critical to deploying at scale a value-based, advanced home health model that makes it easier for patients and providers to benefit from our full continuum of home-based capabilities, leveraging the best channel to deliver the right care needed at the right time."
Details of the acquisition agreement reveal that Broussard's vision for achieving both goals hinges on moving customers from higher-cost to lower-cost care locations. In another recent announcement, Humana said it has created a new brand, "CenterWell," where its clinical services will be housed. Kindred at Home will be integrated with Humana's existing home-care business and re-branded CenterWell Home Health.
Kindred's hospice and hospital sectors, however, will be severed and remain under TPG ownership. Humana said the Kindred at Home hospice and community-care assets are included in the transaction, but the company plans to hold only a minority interest in that part of the business. It is exploring a public listing or another transaction, according to the release. Kindred at Home CEO David Causby will lead that "future independent company."
The company expects to close the deal in the third quarter and aims to fund it through a combination of parent company cash and debt financing.
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