Humana's recent announcement that it is divesting Concentra to focus on integrating healthcare with its core business—which is Medicare Advantage—highlights the current industry buzz on Medicare and Medicaid growth, as well as the integrated care delivery model. It also brings speculation as to what Humana might do next, such as what other assets it might buy or whether it might become an acquisition target itself.
The company only acquired Concentra—one of the country's largest providers of occupational health, urgent care and physical therapy services—in Dec. 2010, in a move touted as one of the first cases of an insurer moving into the healthcare space following the ACA. So what has changed during this time for Humana to decide that Concentra no longer aligns with its plans?
Tom Noland, senior vice president for Humana's corporate communications, told Healthcare Dive that the company acquired Concentra as part of a series of efforts to expand healthcare access for their membership base, which included subsequent investments in primary care platforms including owned physician services, clinics and medical services organizations.
"As the company's strategy has been refined over the past several years, the primary care platform has proven to better advance the company's integrated care delivery model than Concentra's focus on occupational injuries," he said in an email.
Noland said that while there are no further details at this time on what Humana plans to do next to further its focus, "the integrated care delivery model remains a focal point of our strategy."
Industry speculation
That, however, hasn't stopped outsiders from speculating on what's next for the company, or from considering what its strategy says about the current state of the industry; namely, that while diversification appeared a strong angle previously, the name of the game now is often focus.
Humana CEO Bruce Broussard has stated that the company will continue to invest in other healthcare primary assets. He told gurufocus.com, "what shareholders should take away from the deal is Humana is constantly looking at their portfolio and shaving of businesses that are not strategically aligned and those which are not yielding returns."
Indeed, as Louisville Business First notes, Humana's provider-services revenue in 2014 declined 0.9% from the previous year, while the company's Medicare and Medicaid segments both experienced substantial growth.
At the same time, Modern Healthcare notes that Humana does still have several subsidiaries that are not directly related, including a pharmacy benefits management company and a services unit that remotely assists seniors. Broussard and Chief Financial Officer Brian Kane, who recently came to Humana from Goldman Sachs, have stated on multiple occasions that the company will not sell its pharmacy business.
The publication quotes Ana Gupte, a managing director at Leerink Partners, speculating that Humana's next move could be to purchase a Medicaid health plan. It also adds that Broussard has hinted this year that Humana is interested in adding more Medicaid lives, specifically to boost its presence in the dual-eligible market.
Meanwhile, Bloomberg Business has recently suggested that Humana's strong Medicare business has made it a "hot target" for other large insurers that would like to move into this growing space.