National health insurer Humana has entered a joint venture with a private equity firm to develop more primary-care centers for Medicare Advantage patients.
The Louisville, Ky.-based insurer expects the partnership to eventually more than double the footprint of its subsidiary Partners in Primary Care, which currently operates 47 senior-focused primary-care centers in Florida, Kansas, Missouri, North Carolina, South Carolina and Texas.
Under the partnership, the private equity firm Welsh, Carson, Anderson & Stowe will commit $600 million to the venture and have a majority stake in the company, according to a news release. Humana will own a "small minority stake" but have the option to acquire the private equity firm's interest in the future. The two are still evaluating where the new payer-agnostic centers would be located, a Humana spokesman said.
"Partners in Primary Care is well positioned to meet the health needs of the growing senior population with our integrated primary-care platform. Our integrated, whole-person, value-based care model comprehensively and proactively addresses chronic conditions, wellness and social determinants of health," Renee Buckingham, segment president of Humana's care-delivery organization, said in a statement.
According to guidance issued by the company in January, Humana serves about 4.1 million seniors in Medicare Advantage, which is the private alternative to original Medicare. The insurer expects to grow its Advantage membership by as much as 420,000 by the end of 2020.
Humana, like other large insurance companies, has moved to invest in or buy up medical practices to gain better control over healthcare spending and keep plan members away from the costly hospital or emergency department. In addition to Primary Care Partners, Humana operates 104 senior primary-care centers under its Conviva brand, which is not part of the new joint venture.
Humana in 2018 bought a stake in Kindred Healthcare's home health, hospice and community care division, which included 40,000 caregivers at the time, with the same private equity firm and another called TPG Capital. The trio also bought hospice operator Curo Health Services.
According to the news announcement, Humana's Partners in Primary Care will receive a management fee, including performance-based incentives, for the management of the joint venture centers. Under the agreement, Welsh, Carson, Anderson & Stowe can require Partners in Primary Care to purchase its interest in the joint venture in stages over the next five to 10 years.
"This transaction represents another example of how WCAS creatively partners within the healthcare ecosystem to enhance access to innovative healthcare services to improve patient care. 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," David Caluori, a general partner at the private equity firm, said in the announcement.