Humana and private-equity firm Welsh, Carson, Anderson and Stowe are making an initial commitment of $600 million to develop and operate primary care centers for senior citizens.
WCAS will have majority ownership in the joint venture; Humana will own a small minority stake.
The payor-agnostic primary care centers will be managed by Humana's wholly-owned, primary care subsidiary, Partners in Primary Care, operating under the Partners in Primary Care brand.
Partners in Primary Care will receive a management fee, including performance-based incentives, for the management of all joint venture centers.
In addition, the agreement includes a series of put and call options through which Partners in Primary Care may acquire WCAS's interest in the joint venture, and through which WCAS may require Partners in Primary Care to purchase its interest in the joint venture, in stages over the next 5-10 years.
Humana said the transaction is expected to have an immaterial impact to its earnings in 2020.
WHY THIS MATTERS
The joint venture is another example of insurers getting into the primary care market through partnerships, especially with pharmacies.
In November, UnitedHealthcare announced it would open 14 Medicare service centers within Walgreens stores in five metropolitan areas.
Both Humana and UnitedHealthcare are invested in a large Medicare Advantage market.
Humana's new joint venture will expand access to value-based primary care for Medicare patients, Humana said. The integrated care model is aimed at giving physicians more time with patients to focus on both their acute health needs as well as chronic disease management.
The centers will give consumers local access to full-service primary care including pharmacy, nutrition, behavioral health, wellness support and social work support.
The venture is expected to more than double Partners' footprint of senior-focused primary care centers over three years and allow it to scale its core operations to facilitate the continued expansion.
THE LARGER TREND
Partners in Primary Care currently operates 47 centers in Kansas, Missouri, North Carolina, South Carolina and Texas, and in Florida, where the centers operate under the Family Physicians Group brand.
Humana's wholly owned Conviva operations, which operate 104 payor-agnostic senior-focused primary care centers located primarily in south Florida and Texas, is not party to this agreement.
ON THE RECORD
"There is a significant unmet need for value-based, senior-focused primary care in the U.S." said David Caluori, general partner of WCAS. "Through this new joint venture, Partners in Primary Care is now well resourced to accelerate the deployment of its proven care model in areas across the country that need it most."
"Partners in Primary Care is well positioned to meet the health needs of the growing senior population with our integrated primary care platform," said Renee' Buckingham, Segment president, Humana's Care Delivery Organization.
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