Digital health startup Signify Health will pay $250 million to acquire consultancy Caravan Health, creating one of the largest networks of value-based care providers in the nation.
The deal, which is subject to regulatory approval, will consist of $190 million in cash and $60 million in common stock for Caravan, which focuses on helping accountable care organizations achieve greater savings, often through consolidation. Caravan could also nab an additional $50 million through the merger based on its future performance, although Signify was unable to comment on how it would define success in this area.
The merger adds more than 200 health systems and 100 federally qualified health centers to Signify's current network of more than 3,000 contracted providers. The companies expect the acquisition to close during the first quarter of this year.
"There actually is no one that we know of that has this combined portfolio," said Francois de Brantes, senior vice president of commercial business development at Signify Health. "It really creates a much wider platform to support both payers and providers on their move towards different forms of value based payment."
Five-year-old Signify works with providers to improve a patient's care through bundled payment programs, thereby increasing their reimbursement. Their tech platform identifies preventive and social determinants of health needs for individual patients, reminding doctors to perform the necessary ultrasounds, referrals and more for bundled pregnancy models, for example. The startup also works with commercial, Medicaid and Medicare Advantage payers to structure risk-based or shared savings programs with health systems. Signify also provides home visit consultations, an area it has been called out for allegedly helping Medicare Advantage payers artificially inflate risk-scores. The company said it strongly disagrees with this accusation.