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Humana Vows To ‘Modernize’ Home Care With Kindred Stake

Signage is displayed outside the Humana Inc. office building in Louisville, Kentucky, U.S., on Saturday, Nov. 26, 2016.  clients. Photographer: Luke Sharrett/Bloomberg

Humana will acquire a 40% stake in Kindred Healthcare’s home care division for about $800 million as the insurer looks to integrate outpatient services with its Medicare health plans.

Humana’s investment in the deal is part of a larger play announced Tuesday by private equity firms TPG Capital and Welsh, Carson, Anderson Stowe to take over Kindred Healthcare for $4 billion in cash. Kindred owns an array of businesses including home health, hospice, long-term care hospitals and inpatient rehabilitation facilities.

But Humana will only be involved in the home health, hospice and community care businesses, which will be separated from Kindred and operated as a standalone company. Humana will own 40% of the proposed new Kindred at Home company with TPG and Welsh, Carson owning the remaining 60% .

“Nearly 40,000 caregivers serve approximately 130,000 patients daily in Kindred at Home with annual revenues of approximately $2.5 billion,” Humana said in announcing the deal. Humana will have no stake in the specialty hospital company.

Humana’s interest in Kindred at Home is designed to further the insurer’s population health strategy designed to keep patients out of the hospital and cared for in lower-cost outpatient settings. Kindred provides a range of healthcare services including home care and “transitional” outpatient treatment for when patients leave hospitals to recover from surgery or other illnesses.

“We are confident that these new capabilities will help Humana continue to modernize home health and meaningfully improve the member and provider experience,” Humana CEO Bruce Broussard said Tuesday in a statement. 

In Humana’s case, the insurer has a large business administering Medicare health benefits for the elderly. Closer ties with a provider of home care and related services predominantly used by the elderly would make sense.

“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 Tuesday. “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.”

Humana’s stake in Kindred is the latest deal by a health insurance company to form closer relationships with providers of lower cost medical care. The Optum unit of UnitedHealth Group earlier this month said it was buying DaVita Medical Group for $4.9 billion a week after pharmacy chain CVS Health said it would buy Aetna, the nation’s No. 3 insurer, for $69 billion.

Humana has increasingly been opening “senior-focused” primary care clinics that have been reducing the need for elderly to be admitted to hospitals. And when seniors are released from the hospital, the clinics help reduce the number of hospital admissions.

It’s a strategy for Humana that was coming into focus before the announcement of the proposed Kindred acquisition.

“Interwoven with our provider strategy, we continue to be very focused on the home, as home is often a superior clinical environment to deliver care and reduce high-cost hospital admissions,” Broussard told analysts last month on the company’s third quarter earnings call. “In its current state, care in the home is often disconnected from primary care physicians, challenged with issues on timeliness of care, lacking in robust data exchange, as well as based on a Fee-for-Service-driven business model.”

Article source: https://www.forbes.com/sites/brucejapsen/2017/12/19/humana-wants-to-modernize-home-care-with-stake-in-4b-kindred-deal/

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