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Humana deal to buy Kindred expands value-based care to post-acute home setting

Insurer follows move by Aetna and CVS to elbow into provider space, better manage population health and lower costs with its Kindred acquisition.

Susan Morse, Managing Editor

Humana's move to acquire a 40 percent minority interest in Kindred's homecare business signals another move by an insurer to expand its business model into traditional provider care.

It follows an announcement by Aetna to partner with CVS Health in providing less expensive basic care at mini health hubs in the pharmacies.

[Also: Humana to buy Kindred's home, hospice operations, joins other insurers jumping into provider business]

Humana said the $800 million purchase of Kindred at Home, through a joint venture, provides a significant, 65 percent overlap with its Medicare Advantage membership.

"It brings to us an experienced, well-respected home health provider with robust access to extensive clinical capabilities that will allow us to accelerate our strategy to more deeply integrate with our members' lifestyles," CEO Bruce Broussard said.

[Also: Aetna, CVS merger sparks talk of Humana eyeing deal with Walmart]

The integrated care delivery model will allow Humana to better control member expenses as beneficiaries remain in the lower cost setting of their homes. The insurer can also manage chronic conditions, medication adherence and health determinants holistically, not episodically, Humana said.

Then there's the data. The data sharing between Humana and Kindred at Home will yield improved analytics and predictive modeling for population health. The deal will allow for remote monitoring, telehealth, and digital interactions between members and physicians.

This is expected to lead to reduce hospitalizations and emergency room visits.

The technology, together with a collaborative advanced payment model transforms post-acute care through a value-based approach to improve clinical outcomes and lower medical costs, according to William Fleming, Humana's president of Healthcare Services.

TPG Capital and Welsh, Carson, Anderson & Stowe, two private equity funds, along with Humana are creating a consortium to purchase all of the outstanding and issued securities of Kindred Healthcare. With the closing, TPG and WCAS will separate Kindred at Home from the specialty hospital company and form a joint venture with Humana to own Kindred at Home.

Humana will have no economic interest in the specialty hospital company.

Humana will own 40 percent of Kindred at Home, with the remaining 60 percent owned by a new entity owned by TPG and WCAS.

Currently, nearly 40,000 caregivers serve approximately 130,000 patients daily in Kindred at Home with annual revenues of approximately $2.5 billion.

"We are excited about the opportunity this acquisition provides to advance our vision for integrated care delivery, as we continue to deliver our Humana at home capabilities while building a transformative platform for the future," Broussard said. "We believe that care in the home is a vital element of improving the health of seniors living with chronic conditions, allowing them to receive services in the comfort of their home, with less time in more costly institutional settings."

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