- The new joint venture will deploy up to $1.2 billion of
additional capital to develop approximately 100 new CenterWell
Senior Primary Care clinics between 2023 and 2025 and operate them
to profitability.
- This joint venture expands upon an existing collaboration that
is currently deploying up to $800 million of capital to open 67
clinics by early 2023 and support their ongoing operations.
- Development of additional de novo clinics will reinforce the
Humana Primary Care Organization’s position as the largest
senior-focused primary care provider in the nation.
Humana Inc.’s (NYSE: HUM) CenterWell Senior Primary Care and
Welsh, Carson, Anderson & Stowe (“WCAS”) have established a
second joint venture (“JV”) to further expand access to value-based
primary care clinics for Medicare patients. The new JV will deploy
up to $1.2 billion of committed capital to develop approximately
100 new senior-focused, payer-agnostic primary care clinics between
2023 and 2025 and operate them to profitability. This JV between
Humana’s CenterWell Senior Primary Care and WCAS follows an earlier
JV that is currently deploying up to $800 million of capital to
open 67 clinics by early 2023 and support their ongoing
operations.
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WCAS, a healthcare and technology-focused investment firm, will
have majority ownership of the JV, while Humana will own a minority
stake. All de novo clinics developed through the Humana-WCAS joint
ventures will be managed and operated under Humana’s CenterWell
Senior Primary Care brand.
As the nation’s largest provider of senior-focused primary care,
CenterWell Senior Primary Care is actively scaling its platform
through a combination of de novo expansion and inorganic growth. As
of March 31, 2022, Humana’s Primary Care Organization (“PCO”)
operates a total of 214 senior-focused primary care clinics,
including 37 under the current joint venture with WCAS and 177
other wholly owned centers. Together, these 214 clinics – operating
under the CenterWell Senior Primary Care and Conviva Care Solutions
brands – serve approximately 180,000 patients in Medicare
value-based arrangements, while also supporting 58,000 patients
under Independent Practice Association (IPA) arrangements through
Conviva Care Solutions. By the end of 2022, Humana expects to serve
Medicare patients in approximately 250 CenterWell and Conviva
clinics, and intends to add 30 to 50 additional CenterWell clinics
per year through 2025.
“We are excited to grow our partnership with Humana to improve
access to senior-focused, value-based primary care across the
United States,” said David Caluori, General Partner at WCAS. “We
look forward to continuing our work alongside the CenterWell team
to deploy their care model at scale.”
“Physicians and patients alike are coming to recognize the many
advantages of our unique, senior-focused primary care model,” said
Reneé Buckingham, President of Humana’s Primary Care Organization
which operates both CenterWell Senior Primary Care and Conviva Care
Centers. “Doctors and nurses spending more time with patients,
paying greater attention to both the physical and mental aspects of
health, and following a team-based approach all allow for
personalized, value-based care that helps improve lives. Early
success has led to increased interest in our payer-agnostic model,
and under this new joint venture, we look forward to significantly
expanding our geographic footprint and serving even more patients
in more communities around the country.”
Under the new JV agreement, CenterWell Senior Primary Care will
receive a management fee, including performance-based incentives,
for the management of all joint venture clinics. In addition, the
agreement includes a series of put and call options through which
Humana may acquire WCAS’s interest in the joint venture beginning
in 2028 or five years after the opening of each cohort of clinics,
and through which WCAS may require Humana to purchase its interest
in the joint venture beginning in 2030 or seven years after the
opening of each cohort of clinics.
The transaction is expected to have an immaterial impact to
Humana’s earnings in 2022.
About CenterWell
At CenterWell, part of Humana Inc., we create care experiences
that put patients at the center. The result is healthcare that
provides ease, comprehensiveness and, most of all, a personal
approach. Our primary care, pharmacy, and home health services go
beyond traditional clinical settings and outcomes, working with
patients and their care teams to close gaps and take their whole
health into account.
Because when care is made relevant and accessible, patients can
lead happier and healthier lives.
The first services to adopt the CenterWell name were Humana’s
senior-focused primary care centers. The experienced care teams at
CenterWell Senior Primary Care provide comprehensive support
services to fully understand the needs of their patients and
improve health outcomes.
The Home Health division of Humana-owned Kindred at Home is in
the process of transitioning to the CenterWell brand in 2022 –
becoming CenterWell Home Health. Also in 2022, Humana’s pharmacy
and specialty pharmacy businesses will take on the CenterWell name,
becoming CenterWell Pharmacy and CenterWell Specialty Pharmacy.
In recent years, Humana has significantly expanded its
healthcare services capabilities to better serve its medical
members and to significantly strengthen its payer-agnostic care
offerings. These services help deliver on the promise of better
quality and health outcomes, lower costs and a simpler, more
personalized experience for the people they touch.
The CenterWell logo features a blossom with three petals
symbolizing physical, emotional and social wellness – important
aspects of whole-person health that CenterWell care services
address.
About Humana
Humana Inc. is committed to helping our millions of medical and
specialty members achieve their best health. Our successful history
in care delivery and health plan administration is helping us
create a new kind of integrated care with the power to improve
health and well-being and lower costs. Our efforts are leading to a
better quality of life for people with Medicare, families,
individuals, military service personnel, and communities at
large.
To accomplish that, we support physicians and other health care
professionals as they work to deliver the right care in the right
place for their patients, our members. Our range of clinical
capabilities, resources and tools – such as in-home care,
behavioral health, pharmacy services, data analytics and wellness
solutions – combine to produce a simplified experience with the
goal of making health care easier to navigate and more
effective.
More information regarding Humana is available to investors via
the Investor Relations page of the company’s website at humana.com,
including copies of:
- Annual reports to stockholders
- Securities and Exchange Commission filings
- Most recent investor conference presentations
- Quarterly earnings news releases and conference calls
- Calendar of events
- Corporate Governance information.
About Welsh, Carson, Anderson &
Stowe
WCAS is a leading U.S. private equity firm focused on the
healthcare and technology industries. Since its founding in 1979,
the firm’s strategy has been to partner with outstanding management
teams and build value for its investors through a combination of
operational improvements, growth initiatives, and strategic
acquisitions. The firm has raised and managed funds totaling over
$30 billion of committed capital.
Humana Cautionary
Statement
This news release includes forward-looking statements regarding
Humana within the meaning of the Private Securities Litigation
Reform Act of 1995. When used in investor presentations, press
releases, Securities and Exchange Commission (SEC) filings, and in
oral statements made by or with the approval of one of Humana’s
executive officers, the words or phrases like “expects,”
“believes,” “anticipates,” “intends,” “likely will result,”
“estimates,” “projects” or variations of such words and similar
expressions are intended to identify such forward-looking
statements.
These forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties, and
assumptions, including, among other things, information set forth
in the “Risk Factors” section of the company’s SEC filings, a
summary of which includes but is not limited to the following:
- If Humana does not design and price its products properly and
competitively, if the premiums Humana receives are insufficient to
cover the cost of healthcare services delivered to its members, if
the company is unable to implement clinical initiatives to provide
a better healthcare experience for its members, lower costs and
appropriately document the risk profile of its members, or if its
estimates of benefits expense are inadequate, Humana’s
profitability could be materially adversely affected. Humana
estimates the costs of its benefit expense payments, and designs
and prices its products accordingly, using actuarial methods and
assumptions based upon, among other relevant factors, claim payment
patterns, medical cost inflation, and historical developments such
as claim inventory levels and claim receipt patterns. The company
continually reviews estimates of future payments relating to
benefit expenses for services incurred in the current and prior
periods and makes necessary adjustments to its reserves, including
premium deficiency reserves, where appropriate. These estimates
involve extensive judgment, and have considerable inherent
variability because they are extremely sensitive to changes in
claim payment patterns and medical cost trends. Accordingly,
Humana's reserves may be insufficient.
- If Humana fails to effectively implement its operational and
strategic initiatives, particularly its Medicare initiatives and
state-based contract strategy, the company’s business may be
materially adversely affected, which is of particular importance
given the concentration of the company’s revenues in these
products. In addition, there can be no assurances that the company
will be successful in maintaining or improving its Star ratings in
future years.
- If Humana fails to properly maintain the integrity of its data,
to strategically maintain existing or implement new information
systems, to protect Humana’s proprietary rights to its systems, or
to defend against cyber-security attacks or prevent other privacy
or data security incidents that result in security breaches that
disrupt the company's operations or in the unintentional
dissemination of sensitive personal information or proprietary or
confidential information, the company’s business may be materially
adversely affected.
- Humana is involved in various legal actions, or disputes that
could lead to legal actions (such as, among other things, provider
contract disputes and qui tam litigation brought by individuals on
behalf of the government), governmental and internal
investigations, and routine internal review of business processes
any of which, if resolved unfavorably to the company, could result
in substantial monetary damages or changes in its business
practices. Increased litigation and negative publicity could also
increase the company’s cost of doing business.
- As a government contractor, Humana is exposed to risks that may
materially adversely affect its business or its willingness or
ability to participate in government healthcare programs including,
among other things, loss of material government contracts;
governmental audits and investigations; potential inadequacy of
government determined payment rates; potential restrictions on
profitability; including by comparison of profitability of the
company’s Medicare Advantage business to non-Medicare Advantage
business; or other changes in the governmental programs in which
Humana participates. Changes to the risk-adjustment model utilized
by CMS to adjust premiums paid to Medicare Advantage, or MA, plans
according to the health status of covered members, including
proposed changes to the methodology used by CMS for risk adjustment
data validation audits that fail to address adequately the
statutory requirement of actuarial equivalence, if implemented,
could have a material adverse effect on the company's operating
results, financial position and cash flows.
- Humana's business activities are subject to substantial
government regulation. New laws or regulations, or legislative,
judicial, or regulatory changes in existing laws or regulations or
their manner of application could increase the company's cost of
doing business and have a material adverse effect on Humana’s
results of operations (including restricting revenue, enrollment
and premium growth in certain products and market segments,
restricting the company’s ability to expand into new markets,
increasing the company’s medical and operating costs by, among
other things, requiring a minimum benefit ratio on insured
products, lowering the company’s Medicare payment rates and
increasing the company’s expenses associated with a non-deductible
health insurance industry fee and other assessments); the company’s
financial position (including the company’s ability to maintain the
value of its goodwill); and the company’s cash flows.
- Humana’s failure to manage acquisitions, divestitures and other
significant transactions successfully may have a material adverse
effect on the company’s results of operations, financial position,
and cash flows.
- If Humana fails to develop and maintain satisfactory
relationships with the providers of care to its members, the
company’s business may be adversely affected.
- Humana faces significant competition in attracting and
retaining talented employees. Further, managing succession for, and
retention of, key executives is critical to the Company’s success,
and its failure to do so could adversely affect the Company’s
businesses, operating results and/or future performance.
- Humana’s pharmacy business is highly competitive and subjects
it to regulations and supply chain risks in addition to those the
company faces with its core health benefits businesses.
- Changes in the prescription drug industry pricing benchmarks
may adversely affect Humana’s financial performance.
- Humana’s ability to obtain funds from certain of its licensed
subsidiaries is restricted by state insurance regulations.
- Downgrades in Humana’s debt ratings, should they occur, may
adversely affect its business, results of operations, and financial
condition.
- The securities and credit markets may experience volatility and
disruption, which may adversely affect Humana’s business.
- The spread of, and response to, the novel coronavirus, or
COVID-19, underscores certain risks Humana faces, including those
discussed above, and the ongoing, heightened uncertainty created by
the pandemic precludes any prediction as to the ultimate adverse
impact to Humana of COVID-19. As the COVID-19 pandemic continues,
the premiums the company charges may prove to be insufficient to
cover the cost of health care services delivered to its members,
each of which could be impacted by many factors, including the
impacts that Humana has experienced, and may continue to
experience, to its revenues due to limitations on its ability to
implement clinical initiatives to manage health care costs and
chronic conditions of its members, and appropriately document their
risk profiles, as a result of the company’s members being unable or
unwilling to see their providers due to actions taken to mitigate
the spread of COVID-19; increased costs that may result from higher
utilization rates of medical facilities and services and other
increases in associated hospital and pharmaceutical costs; and
shifts in the company’s premium and medical claims cost trends to
reflect the demographic impact of higher mortality during the
COVID-19 pandemic. In addition, Humana is offering, and has been
mandated by legislative and regulatory action (including the
Families First Act and CARES Act) to provide, certain expanded
benefit coverage to its members, such as waiving, or reimbursing,
certain costs for COVID-19 testing, vaccinations and treatment.
These measures taken by Humana, or governmental action, to respond
to the ongoing impact of COVID-19 (including further expansion or
modification of the services delivered to its members, the adoption
or modification of regulatory requirements associated with those
services and the costs and challenges associated with ensuring
timely compliance with such requirements), and the potential for
widespread testing, treatments and the distribution and
administration of COVID-19 vaccines, could adversely impact the
company’s profitability. The spread and impact of COVID-19 and
additional variants, or actions taken to mitigate this spread,
could have material and adverse effects on Humana’s ability to
operate effectively, including as a result of the complete or
partial closure of facilities or labor shortages. Disruptions in
public and private infrastructure, including communications,
availability of in-person sales and marketing channels, financial
services and supply chains, could materially and adversely disrupt
the company’s normal business operations. A significant subset of
the company's and the company's third party providers' employee
population are in a remote work environment in an effort to
mitigate the spread of COVID-19, which may exacerbate certain risks
to Humana’s business, including an increased demand for information
technology resources, increased risk of phishing and other
cybersecurity attacks, and increased risk of unauthorized
dissemination of sensitive personal, proprietary, or confidential
information. The continued COVID-19 pandemic has severely impacted
global economic activity, including the businesses of some of
Humana’s commercial customers, and caused significant volatility
and negative pressure in the financial markets. In addition to
disrupting Humana’s operations, these developments may adversely
affect the timing of commercial customer premium collections and
corresponding claim payments, the value of the company’s investment
portfolio, or future liquidity needs. The ongoing, heightened
uncertainty created by the pandemic precludes any prediction as to
the ultimate adverse impact to Humana of COVID-19. Humana is
continuing to monitor the spread of COVID-19, changes to the
company’s benefit coverages, and the ongoing costs and business
impacts of dealing with COVID-19, including the potential costs and
impacts associated with lifting or reimposing restrictions on
movement and economic activity, the timing and degree in resumption
of demand for deferred healthcare services, the pace of
administration of COVID-19 vaccines and the effectiveness of those
vaccines, and related risks. The magnitude and duration of the
pandemic remain uncertain, and its impact on Humana’s business,
results of operations, financial position, and cash flows could be
material.
In making forward-looking statements, Humana is not undertaking
to address or update them in future filings or communications
regarding its business or results. In light of these risks,
uncertainties, and assumptions, the forward-looking events
discussed herein may or may not occur. There also may be other
risks that the company is unable to predict at this time. Any of
these risks and uncertainties may cause actual results to differ
materially from the results discussed in the forward-looking
statements.
Humana advises investors to read the following documents as
filed by the company with the SEC for further discussion both of
the risks it faces and its historical performance:
- Form 10-K for the year ended December 31, 2021; and
- Form 8-Ks filed during 2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220516005339/en/
Investors: Lisa Stoner - Humana Investor Relations; (502)
580-2652; lstamper@humana.com
Media: Mark Taylor - Humana Corporate Communications;
(317) 753-0345; MTaylor108@humana.com
WCAS: Greg Lau, General Partner; (212) 893-9586
glau@wcas.com
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