- Humana said Monday it is launching a joint venture to expand primary care centers for seniors that will be managed by its subsidiary Partners in Primary Care.
- The payer and private equity firm Welsh, Carson, Anderson & Stowe are making an initial commitment of about $600 million. Humana will have a small minority stake while WCAS will have majority ownership. The agreement includes put and call options through which either party may buy the other's interest over the next 10 years.
- The new venture is likely to double the number of centers Partners in Primary Care operates. It currently runs 47 locations throughout Kansas, Missouri, North Carolina, South Carolina, Texas and Florida.
Patients will not need to be Humana members to go to the centers, which are intended to focus on value-based care models, wellness initiatives and social determinants of health.
The payer is likely hoping to boost interest in its Medicare Advantage offerings, however. MA plans are now allowed to offer more benefits focused on social determinants like assistance with transportation and meals. The number of MA members in plans with value-based payment designs more than tripled from 2019 to 2020, CMS has said.
Humana, the second largest provider of MA plans (following UnitedHealthcare), has been growing its membership in that area. In the company's most recent earnings report it raised its guidance for the year on the back of that increase.
The move is similar to an agreement from November in which UnitedHealthcare said it will open 14 Medicare service centers in Walgreens stores starting this year.
The deal also comes as private equity companies have ramped up their presence in the healthcare space. Those deals have tended to focus on areas such as orthopaedics as more care moves to outpatient settings. In December, struggling for-profit hospital operator Quorum Health said it was considering going private with PE giant KKR.
Good primary care is seen as vital to curbing overall healthcare costs, but access is a concern. The Medicare Payment Advisory Commission has warned of a shortage of primary care providers as more doctors turn to specialty fields.
Humana's subsidiary will receive a management fee for operating the centers that will include performance-based incentives. The payer clarified that another subsidiary that operates more than 100 senior-focused primary care centers, Conviva, is not a party to the agreement.
Humana, which will report its financial results from the fourth quarter of 2019 on Wednesday, said the joint venture announced Monday is expected to have an immaterial impact to its earnings this year.