It’s been a while since we’ve talked about Humana. But this one is big.
According to a September 2022 article in Fierce Healthcare, Humana is pumping $500 million into primary care clinics, hoping to get even more vertically integrated in Medicare Advantage.
We’ll back up a bit. Back in 2020, Humana and private equity firm Welsh, Carson, Anderson & Stowe (WCAS) partnered up, investing $800 million toward opening senior-focused primary care centers, called CenterWell Senior Primary Care clinics.
Now, Humana is buying them out — and planning to spend between $450 million and $550 million to purchase 20 of the senior primary care clinics. Apparently, the two entities agreed on an approach to their partnership: either allow Humana to buy out WACS’s stake in the venture (which they are) or allow WCAS to force Humana to do so in stages for the next five to 10 years, according to the article.
Humana expects to have 250 clinics by the end of this year.
But wait, there’s more — Humana and WCAS are also planning to spend $1.2 billion to develop an additional 100 senior primary care clinics next year. (Are you adding up the $ like we are?)
So, why is a health insurance company suddenly so interested in collecting clinics like pieces on a Monopoly game board? What’s in it for them?
Oh yeah, silly us. The cold hard cash. No play money here.
We’ll break it down. Humana is a major player in Medicare Advantage, a space where the federal government pays private insurers to manage care for seniors. A space that has been very profitable. In fact, Humana generates some of its largest profits by serving the riskiest and poorest patients: seniors and Medicare enrollees, “proving that vertical integration works,” claims Entrepreneur Magazine.
But wait — if the federal government pays private insurers a fixed payment to provide care to Medicare Advantage members, why the spending spree, Humana?
Well, if some vertical integration is good, then more must be better, right? Apparently.
And for context, Humana has upwards of 8 million Medicare Advantage members. That, combined with its plan of adding 30 to 50 clinics to its 250+ portfolio each year through 2025, it’s clearly going to be the major player in providing and paying for senior care.
Exactly how comfortable is anyone with a single organization playing judge, jury, and executioner on seniors’ medical care?
We wouldn’t be.
And how certain are we that decisions will be made in the best interest of patients rather than shareholders, who have certainly been sitting pretty with Humana’s recent business ventures?
The simple answer is, we don’t.
