Health Plan Weekly

Humana Inc. will spend between $450 million and $550 million in debt and cash to gain full control of a group of primary care clinics that it launched with private equity firm Welsh, Carson, Anderson and Stowe (WCAS), and company executives said during the firm’s recent investor day that Humana plans to double down on its existing primary care M&A strategy. Health care finance experts tell AIS Health, a division of MMIT, that insurers’ spending spree on providers is only likely to accelerate, but that Humana is in pole position to benefit from deep investments in Medicare Advantage-focused primary care. 

Health insurers have spent billions to acquire outpatient providers since the onset of the COVID-19 pandemic. Finance experts tell AIS Health that the spending spree has two sources of capital. Carriers are spending huge cash reserves taken in during the deepest parts of the pandemic, which saw utilization plummet as premium revenues increased. In addition, Wall Street is bullish on managed care: Lenders are lining up to offer generous terms to acquisition-hungry insurers, which have enjoyed strong stock performance since the start of the pandemic era. 

The Purchaser Business Group on Health (PBGH) for the first time has created a public purchaser advisory committee. The decision, part of the purchaser group’s newly announced five-year plan, is meant to align the needs of its public members and integrate them with private purchasers.  

PBGH is a nonprofit coalition representing nearly 40 public and private purchasers that collectively spend $350 billion annually on health care services. While the group’s members include major corporations such as Apple, Inc., Microsoft Corp. and the Walt Disney Co., PBGH is different from other purchasing organizations in that it also represents public purchasers, according to Elizabeth Mitchell, PBGH’s chief president and chief executive officer.  

A primary care reform model in Michigan failed to deliver intended cost savings and quality improvements among two private payers, casting doubt on whether current value-based model designs in the primary care space have the muscle to exert real benefits. 

A study published in the September issue of Health Affairs analyzed the spending and quality results of two large insurers in Michigan that offered a payment reform model designed after the federal Comprehensive Primary Care Plus (CPC+) program. The results were muted: Among the private payers involved, the CPC+ model failed to reduce total spending; the results indicate that, when accounting for care management fees, spending actually rose under the CPC+ program. On the quality side, performance remained unchanged between CPC+ and non-CPC+ participants.