Dive Brief:
- Humana has agreed to acquire a debt-laden Central Florida healthcare provider for $50 million as the insurer continues to build out its medical network nationwide.
- Humana’s health services subsidiary, CenterWell, has agreed to acquire The Villages Health as part of the provider’s strategic restructuring, which includes a Chapter 11 bankruptcy filing, according to a release. TVH said it decided to pursue bankruptcy after discovering significant Medicare billing errors which put it on the hook for hundreds of millions of dollars in overpayments and penalties to the U.S. government.
- The provider’s sale to CenterWell is still subject to court approval. CenterWell could also be outbid by other parties in the bankruptcy auction process for TVH’s 10 medical centers.
Dive Insight:
TVH, a provider in Florida’s Sumter County that serves a large retirement community, discovered in the fall that it had been accidentally overbilling Medicare. It reported the problems to the government and has spent the past six months working with Medicare to correct them — work that continues and is separate from TVH’s potential sale to CenterWell, according to the release.
TVH owes the federal government $361 million, according to documents filed in bankruptcy court.
And Washington is just one of the provider’s more than 200 creditors: Overall, TVH has estimated liabilities of $100 million to $500 million against estimated assets of $50 million to $100 million, per the filings.
According to TVH, reaching the deal with CenterWell, which allows it to remain operational during the sale process, was necessary to guarantee continuity of care for its more than 55,000 patients.
“This was by no means an overnight decision, nor has it been an easy one. We want to reassure our community that there will not be any effects on patient care experienced by our patient population,” Bob Trinh, TVH’s CEO, said in a statement.
CenterWell has entered into what’s known as a “stalking horse” purchase agreement to add TVH’s eight primary care centers and two specialty care centers to its portfolio of medical offices. A stalking horse bid sets the floor for a subsequent action of a bankrupt company’s assets and as such is not final.
In the release, CenterWell President Dr. Sanjay Shetty said that the division is looking forward to bringing its “personalized and integrated approach to care” to TVH. A Humana spokesperson declined to provide more details on why the company was interested in acquiring TVH.
However, Humana has been steadily building up CenterWell to provide primary care to enrollees in its insurance programs, hoping to save money and improve outcomes by better coordinating care. By owning the providers, Humana can also pay itself for providing healthcare, keeping a greater share of members’ healthcare spending in-house.
And, offering medical services to other payers too bolsters Humana’s revenue at a time when legacy health insurance businesses continue to struggle amid rising medical costs and policy turbulence.
At the end of 2024, Humana operated more than 340 primary care centers through its CenterWell Senior Primary Care and Conviva Senior Primary Care brands. The payer said in February that its primary care division expects to add up to 30 new centers this year.
CenterWell’s profits are growing steadily as its network does. The division posted operational income of $392 million in the first quarter, up 39% year over year.
