Skip to main content
Sister Publication Links
  • ESG: THE IMPLEMENTATION IMPERATIVE
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Digital Health
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Transformation
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Unwell in America
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Insurance
September 16, 2022 12:04 PM

Humana to spend $550M on private equity clinics

Nona Tepper
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    humana_i.jpg
    BLOOMBERG

    Humana will spend up to $550 million to acquire the first set of clinics it built with a private equity firm, Chief Financial Officer Susan Diamond said during a meeting with investors Thursday. 

    Beginning in 2025, the health insurance company will use a mix of debt and cash to purchase 20 CenterWell Senior Primary Care clinics erected through a joint venture with Welsh, Carson, Anderson & Stowe, Diamond said. The investment represents the first of many Humana will make to grow its primary care services for older adults, she said. 

    “We plan to expand our primary care platform to build on our leadership position in this space, with the expectation that our earnings from this business will become a meaningful contributor to enterprise earnings as additional cohorts are acquired from the JV and the business continues to mature and scale beyond 2025,” Diamond said. 

    Humana launched its first $600 million joint venture with the private equity firm in February 2020 to build 67 primary care clinics for older adults in 2023. The company announced a second, $1.2 billion joint venture with Welsh, Carson, Anderson & Stowe in May to develop more than 100 new CenterWell clinics. 

    Welsh, Carson, Anderson & Stowe owns majority stakes in these clinics, which serve Medicare beneficiaries. Each joint venture comes with a put-and-call agreement that allows Humana to fully acquire the facilities after five years of operation.

    “Post-2025, as each subsequent cohort is fully acquired, we expect to see a meaningful increase in the contribution from the primary care organization, with the potential to self fund new, de novo clinic expansion beginning in 2026,” Diamond said.  

    Humana owned 222 primary care clinics as of June 30. The company aims to build up to 50 new clinics annually through 2025, with about half coming through acquisitions and the remainder being built with Welsh, Carson, Anderson & Stowe. From 2026 to 2030, Humana plans to spend up to $3.5 billion to expand its primary care footprint, Diamond said. 

    Primary care represents a critical part of the company’s $1 billion value-creation plan, which Humana launched in February after rival Medicare Advantage insurers captured a large share of its members during open enrollment. Humana is the second-largest Medicare Advantage carrier with 5.1 million members, behind UnitedHealthcare's 6.9 million. 

    Care delivery offers Humana a new revenue stream that is not limited under federal medical loss ratio requirements. By referring its Medicare Advantage members to a provider also owned by Humana, the company can essentially pay itself for providing the care. Humana expects its primary care operations to generate up to $200 million in earnings before interest, taxes, depreciation and amortization by 2025, Diamond said. Primary care will grow to contribute $1 billion in EBITDA over the next 10 years, she said. 

    The company has also invested in Cano Health, a primary care startup for which Humana holds the right of first refusal if competitors show interest in acquisition. The insurer has also helped develop primary care clinics for Oak Street Health, Iora Health and has a separate joint venture with ChenMed. 

    Related Article
    Humana grows private equity-backed primary care
    Humana to cut costs, invest $1B in Medicare Advantage
    Medicare Advantage insurers brace for post-pandemic star ratings drop
    Hospitals squeezed, insurers boosted as utilization lags
    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Clawbacks
    Insurance companies ramp up efforts to claw back money from providers
    Feds take aim at prior authorization
    Feds take aim at prior authorization
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Daily Finance Newsletter: Sign up to receive daily news and data that has a direct impact on the business and financing of healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Digital Health
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Unwell in America
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing