Dr. Vishal Agrawal, chief strategy and corporate development officer at Humana
Insurance companies have been increasingly investing in clinician operations, particularly primary care and home health providers who service Medicare enrollees. Dr. Vishal Agrawal, chief strategy and corporate development officer at Humana, joins Modern Healthcare to discuss the reasons for the funding boost and what the future looks like for the trend.
Related: Humana CEO says Medicare Advantage cuts good for insurer
Over the past few years, we’ve seen so much insurer investment in provider assets. What’s behind this increase in funding?
We believe the broader construct behind the “payvider” phenomenon is the realization that the provider’s patient and the payer’s member [are] really the same customer. If [providers and payers] are both looking after the customer’s best interests, we actually want the same thing, and so our intention is to start acting like that.
Integration helps us evolve what sometimes can be an adversarial relationship into a highly collaborative one by designing workflows that simplify the experience for all the stakeholders, as well as better aligning incentives and building tools that reduce waste in the system. Both of those lead to better health outcomes for our patients and members.
As to your specific question of why we are buying and building assets like primary care and home health: Ultimately, [the strategy is] driven by the underlying health risk of [members in] our core lines of business like Medicare Advantage, Medicaid and dual-eligibles. About 70% of our Medicare Advantage book has two or more chronic conditions. Those same members are largely served today by a health system that’s oriented toward acute-care services. In some markets, patients are still using the emergency room for their primary care needs. So we started to build out what we’re calling our value-based care ecosystem, which is effectively a chronic care management platform specifically oriented toward managing chronic care needs both upstream and downstream from our acute-care delivery partners. The components of that ecosystem are primary care, home health, pharmacy, social determinants of health and behavioral health services. When you bring those together, you can have a more holistic view of managing chronic health.
What’s driving other insurance companies to invest in provider assets?
The total addressable market for senior-oriented, value-based primary care is upward of $700 billion. I don’t think we should be surprised many different organizations are looking to capture a share of that. The typical senior-focused primary care doctor influences about $10 million of medical expense. There is a growing recognition that primary care, coupled with a delegated risk model—like what you often see with Medicare Advantage—makes that $10 million of spending per doctor more effective.
[When] you [combine] that high significant market opportunity with the innovation we’re seeing … in how primary care is reimbursed and delivered, then you have the right ingredients.
Humana has been a leader in developing primary care clinics for Medicare patients through its CenterWell arm. Can you describe Humana’s strategy for CenterWell? How, if at all, does it differ from other large, Medicare Advantage insurers’ strategic visions for their clinical arms?
CenterWell, I would say, is distinct in three different ways: our scale, our focus on integration and what we could call our universality. CenterWell’s not simply an aggregation of assets. Rather, it’s a purpose-built value-based care team platform.
A common adage is that all healthcare is local. I believe we have proven the ability to run and adapt our payer-agnostic businesses to flourish in a variety of market archetypes.
Last year, we saw Amazon and CVS Health spar over One Medical; CVS, UnitedHealth and Amazon reportedly engaged in bidding wars over Signify Health; and there were rumors of a bidding war that Humana was involved in over Cano Health. Was Humana ever interested in acquiring Cano Health? And what is driving these public bidding wars?
It comes back to the large [total addressable market] for value-based primary care, and a greater realization that this is a model that works and we need more of it.
I can’t comment on specific assets. But we do have a strong record of tuck-in acquisitions and creative partnerships that help accelerate our growth. Overall, we plan to add 15 to 25 centers each year via [mergers and acquisitions], and that will generate 20% to 25% of our total center contribution by 2025.
We’re generally not looking for larger platform organizations at this stage, since we have our own in-house platform capabilities we’re excited about. But we do actively look across markets in a three-pronged approach to identify acquisition targets.
Sometimes the opportunities come to us through enterprise contractual protections we have in place, and sometimes they’re existing independent physician association providers, to whom we’re providing value-based care enablement services, that are looking to sell their practices. And, of course, we also routinely [review] the local market with provider groups and stay close to [those] that may be looking to merge into a larger organization.
Does large insurers purchasing large providers pose an antitrust concern?
Not that I’m really aware of.
We’re a payer-agnostic organization, just like [the other] provider service organizations of our traditional insurance peer set. Our insurance members have choices, and they can select the provider that best meets their needs.
CenterWell competes for its patients based on the quality of the service experience, as well as the health outcomes it delivers.
That open competition is out there and fairly prevalent in the industry.
What are you particularly excited about in the industry?
Many comment about how the U.S. healthcare system is not a healthcare system, but a sick care system. Well, I’m really hopeful that sentiment changes as we continue to build out CenterWell, and as, frankly, several of the other innovators that are out there are merging.
I’m hopeful that the care from a customer perspective is more personalized; it’s more simple; it’s more coordinated. [I’m hopeful] it’s more omnichannel, so customers can access services however they want. I’m hopeful from a provider perspective that care delivery becomes more team-based; that we enable providers to work at the top of their licenses; that we have technology that supports actual care delivery versus simply billing.
Ultimately, I’m hopeful from a system perspective that all of this leads to reduction in morbidity and mortality of our nation’s chronic disease burden.
There’s a lot to be hopeful for, and we’re certainly excited to continue our journey and be part of the solution.
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