Dive Brief:
- Humana has signed an agreement to sell its interest in home health, palliative and hospice care provider Gentiva valued at some $900 million to a group of investors.
- The agreement announced Wednesday didn’t disclose specific buyers or other finanical terms. Humana, which is laser-focused on boosting its profits during a difficult time for health insurers, said it intended to use proceeds from the sale for “general corporate purposes.”
- The transaction is expected to close in the third quarter this year, and shouldn’t have a material impact on Humana’s earnings, according to the company’s release.
Dive Insight:
Humana’s ownership interest in Gentiva stems from the insurer’s acquisition of Kindred at Home, one of the largest home health providers in the U.S., in 2021.
Humana announced the next year it was selling a majority interest in Kindred’s hospice, palliative and personal care divisons to PE firm Clayton, Dubilier & Rice. Those divisions were then restructured into a standalone business that was rebranded to Gentiva, and Humana was left with a 40% stake.
But now, Humana is washing its hands of Gentiva — the largest end-of-life care provider in the U.S., with more than 430 locations in 35 states, according to the insurer.
Humana did not respond to questions about the divestiture, including the strategy behind the sale. But hospice and community care can be a tricky business, due to workforce shortages, narrow margins and other challenges.
Still, the Louisville, Kentucky-based company has remained interested in building up the care delivery assets of CenterWell, its health services arm, as Humana hustles to diversify revenue and mitigate risk stemming from flagging profits in its core Medicare Advantage business.
Humana is one of many companies looking to build out their home and community care offerings, as the U.S. population gets older, sicker and increasingly interested in inexpensive and easily accessible medical services.
Humana recently completed its acquisition of Florida-based primary care organization MaxHealth, part of the payer’s larger bid to expand CenterWell’s geographic reach and patient population. Humana’s also seen “solid” growth in CenterWell’s home health business, Sanjay Shetty, CenterWell’s president, said during an April earnings call.
Though, that growth is also coinciding with higher operating costs, executives said.
Humana also did not respond to questions about what companies or groups are purchasing its minority interest in Gentiva. But worries are growing about private investors’ activity in healthcare.
PE firms have snapped up hundreds of hospitals, physician practices, skilled nursing facilities and hospices over the past decade, typically with the hopes of selling them within a few years for profit. That activity has generated wealth for investors — and widespread concern among lawmakers, academics, providers and patient advocates, given research showing that PE-owned providers can lead to poorer patient outcomes and higher costs for care.
When it comes to end-of-life care, research published last year shows that PE-owned hospice agencies reported the highest profits and lowest spending on direct patient care.
