Anyone Home? Recent Acquisitions by Humana, UnitedHealth Group and CVS Health/Aetna
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November 04, 2022
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Medicare Advantage (MA) enrollment reached 28.4 million in 2022, accounting for 48% of potential enrollees (58.2 million) and 55% ($427 billion) of total Medicare spending.1 MA market share is led by UnitedHealthcare (28%, 7.9 million), followed by Humana (18%, 5.0 million), BCBS plans (14%, 4.1 million) and CVS Health/Aetna (11%, 3.1 million).2
Each of the leading MA competitors, apart from BCBS plans, has acquired a home health company during the past 12-18 months. Humana acquired the remaining 60% interest in Kindred at Home (KAH) in August 2021; UnitedHealth Group (UHG) announced its acquisition of the LHC Group in March 2022; and CVS Health/Aetna announced its acquisition of Signify Health in September 2022.3, 4, 5 Kindred is the largest home health provider, and the LHC Group is ranked third.6
UnitedHealth Group also acquired Landmark Health, a 24/7 in-home medical group for patients with multiple chronic conditions in 2021, and naviHealth, a provider of post-acute care services, including in-market care coordinators, predictive decision support and skilled nursing facility assessment tools, in 2020.7, 8
In this article, a perspective on each acquisition is provided.
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Acquired last year, Kindred at Home has been rebranded as CenterWell Home Health; Humana acquired an initial 40% stake in 2018.9 The acquisition reflects Humana’s clinical focus on the home as a desirable and convenient site of care for the consumer/patient, which is supported by recent developments highlighting the potential for “hospital-at-home,” post-acute care at home (rather than in a skilled nursing facility) and enhanced chronic care management. The goal is to “accelerate clinical innovation and create a payer-agnostic value based operating model that more closely aligns incentives that focus on improving patient outcomes and reducing the total cost of care.”10 A major portion (60%) of the KAH hospice and personal care divisions was divested in early August 2022.11
The U.S. population over 65 years old is projected to increase from approximately 56.1 million in 2020 to approximately 73.1 million in 2030, or from 16.9 percent to 20.6 percent of the total population.12 The aged group (those over 75 years old) is growing the most rapidly, and on a per beneficiary basis accounts for the highest costs.13 Higher spending among the aged reflects an increase in the number of comorbidities, worsening condition severity and a higher mortality rate. Humana’s investment is based on the belief that costs and outcomes could be better managed in this cohort.
The LHC Group, which is being acquired by UHG, has 557 home health locations, 170 hospice locations, and joint venture partnerships with 435 hospitals and health systems.14 Value-based reimbursement combined with the shift to lower-cost settings (e.g., the home) are the primary drivers of growth. Scores for quality of patient care and satisfaction are higher than the national average.15 LHC also manages Imperium Health, enabling commercial and Medicare Advantage ACOs to generate cost savings for 419,000 attributable lives.16
The COO of UnitedHealth Group, Dirk McMahon, stated in a January 2022 conference call that the “broad home-based clinical care initiatives at Optum and UnitedHealthcare are central to improving near- and longer-term health outcomes for people with medical, behavioral and social needs.”17 UHG is the largest employer of physicians in the United States with 60,000 MDs potentially focused on opportunities to enhance transitions of care and reduce emergency department visits, hospital admissions and re-admissions.18 Optum HouseCalls advance practice clinicians completed over 2.1 million home visits in 2021 to increase health plan visibility into members’ diagnoses (physiological, behavioral, functional), medications and general health.19
Signify Health, who is being acquired by CVS Health/Aetna and is a leader in health risk assessments, offers solutions to support value-based payment programs by “aligning financial incentives around outcomes, providing [enabling] tools to health plans and healthcare organizations designed to assess and manage risk and identify actionable opportunities for improved patient outcomes, [care] coordination and cost-savings.”20
The recent acquisition of Caravan Health added risk-based (e.g., advanced primary care, specialty bundles, total cost of care) and shared savings capabilities to Signify Health’s Bundled Payments for Care Improvement (BPCI) expertise. A low double-digit reduction in readmissions and a higher discharge rate to the home has been shown with the BPCI program.21
Advanced analytics are used to “identify early intervention opportunities, track episode spending, trigger alerts, foster communications within and across provider teams, and flag areas for care redesign.”22 Signify Health conducted 1.9 million in-home evaluations (IHEs) involving 10,000 credentialed clinicians (MDs, NPs, PAs) in 2021, an increase of 34% from the prior year.23 The Home and Community Services segment, inclusive of IHEs, accounted for $653.1 million and 84.5% of total revenues.24
Bottom line:
Acquisitions of home care companies by leading insurers highlights rapidly aging demographics, increasing chronic disease burden, emerging remote monitoring capabilities, and virtual technologies and value-based payment schema. Risk-adjusted Factor (RAF) score optimization was also a driver of acquisition for CVS Health; UHG already had HouseCalls. The home is no longer only a center of chronic disease management; it is also a focus for potentially acute and post-acute care. It also represents the site of care preference for most patients and eliminates the costly facility fees seen with visits to major health systems.
Footnotes:
1: Meredith Freed, Jeannie Fuglesten Biniek, Anthony Damico, and Tricia Neuman. “Medicare Advantage in 2022: Enrollment Update and Key Trends.” Kaiser Family Foundation (August 25, 2022). https://www.kff.org/medicare/issue-brief/medicare-advantage-in-2022-enrollment-update-and-key-trends/.
2: Ibid.
3: Paige Minimyer. Humana Completes Acquisition of Kindred-at-Home. Fierce Healthcare (August 18, 2021) https://www.fiercehealthcare.com/payer/humana-completes-acquisition-kindred-at-home;
4: Paige Minimyer. United Health to Acquire Home Health Provider LHC Group in $5B Deal. Fierce Healthcare (March 29, 2022) https://www.fiercehealthcare.com/payers/unitedhealth-acquire-home-health-provider-lhc-group-5b-deal
5: Press Release. CVS Health to Acquire Signify Health. September 5, 2022. https://www.cvshealth.com/news-and-insights/press-releases/cvs-health-to-acquire-signify-health
6: Andrew Donlan. “[Updated] The Top 10 Largest Home Health, Hospice Providers in 2020.” Home Health Care News (February 9, 2021). https://homehealthcarenews.com/2021/02/the-top-10-largest-home-health-hospice-providers-in-2020/.
7: Andrew Donlan. UnitedHealth’s Optum Reportedly Strikes Deal for Landmark Health. Home Health Care News (February 21, 2021) https://homehealthcarenews.com/2021/02/unitedhealths-optum-reportedly-strikes-deal-for-landmark-health/;
8: Heather Landi. Optum Scoops Up Post-Acute Care Company NaviHealth. Fierce Healthcare (May 26, 2020) https://www.fiercehealthcare.com/payer/optum-scoops-up-post-acute-care-software-startup-navihealth
9: Humana, Together With TPG Capital and Welsh, Carson, Anderson and Stowe Announce Completion of the Acquisition of Kindred at Home (July 2, 2018) https://press.humana.com/news/news-details/2018/acquisition-kindred-healthcare-inc/default.aspx#gsc.tab=0
10: “Humana Completes Acquisition of Kindred at Home.” Humana (August 17, 2021). https://press.humana.com/news/news-details/2021/Humana-Completes-Acquisition-of-Kindred-at-Home/default.aspx#gsc.tab=0.
11: Jim Parker. “Humana Completes $2.8 Billion Kindred Hospice Divestiture.” Hospice News (August 11, 2022). https://hospicenews.com/2022/08/11/humana-completes-kindred-hospice-divestiture/.
12: “2017 National Population Projections Tables: Main Series – U.S. Census Bureau Projections by Age and Sex Composition of the Population, Table 3.” United States Census Bureau (2017). https://www.census.gov/data/tables/2017/demo/popproj/2017-summary-tables.html.
13: MedPAC DataBook. Healthcare spending and the Medicare program. MedPAC (July 2020). http://medpac.gov/docs/default-source/data-book/july2020_databook_entirereport_sec.pdf?sfvrsn=0.
14: “LHC Group Investor Presentation: Oppenheimer 32nd Annual Healthcare Conference.” LHC Group (March 2022). https://d1io3yog0oux5.cloudfront.net/_7451fe93e49d78b4b506e68a33855e9e/lhcgroup/db/858/7872/pdf/LHCG_Oppenheimer+Presentation_Mar+2022+vF.pdf.
15: Ibid.
16: “About Imperium.” Imperium Health and LHC Group (last visited September 8, 2022). https://www.imperiumhealth.com.
17: Robert Holly. “UnitedHealth Group Hints at Big Home-Based Care Plans.” Home Health Care News (January 20, 2022). https://homehealthcarenews.com/2022/01/unitedhealth-group-hints-at-big-home-based-care-plans/.
18: Christopher Snowbeck. “UnitedHealth Group projects more than $300 billion in revenue next year.” Star Tribune (November 30, 2021). https://www.startribune.com/unitedhealth-group-forecasts-2022-revenue-will-hit-317-billion/600122190/.
19: “Optum HouseCalls.” Optum (last visited September 8, 2022). https://www.optum.com/content/dam/optum3/optum/en/resources/sell-sheet/wf886146-housecalls-sell-sheet.pdf.
20: “Signify Health to acquire Caravan Health, accelerating the movement to value-based healthcare.” Signify Health, Inc. (February 10, 2022). https://www.signifyhealth.com/news/signify-health-to-acquire-caravan-health-accelerating-the-movement-to-value-based-healthcare.
21: “Signify Health 2021 Annual Report.” Signify Health, Inc. (last visited September 7, 2022). https://s27.q4cdn.com/134673486/files/doc_financials/2021/ar/online/pdf/SignifyHealth-2021-Annual-Report.pdf.
22: Ibid.
24: Ibid.
25: Ibid.
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