Despite Focus on Home Health, Humana Remains Flexible in Personal Care, Hospice

Humana Inc. (NYSE: HUM) has been vocal about its plan to develop its health care services capabilities in three phases.

The first phase is building the capabilities; the second phase includes enhancements to align its capabilities with value-based principles, and the third is integrating these capabilities in select local markets.

With the divestiture of its majority interest in Kindred at Home’s hospice and personal care assets to private equity firm Clayton Dubilier & Rice (CDR), Humana continues to make progress in moving through these phases, according to President and CEO Bruce Broussard.

“We explored a broad range of alternatives for the hospice and personal care businesses, and believe this transaction best allows us to accomplish our previously stated intent,” he said Wednesday during a first quarter earnings call.

Last week, Humana announced that it had agreed to sell 60% of its hospice and personal care assets from Kindred at Home to CDR for a $2.8 billion price tag. The company will maintain a strategic minority interest through its remaining stake.

On its end, CDR is a New York- and London-based firm with a varied portfolio of assets, including everything from consumer retail to technology. The organization also has an established presence in health care, but is a newcomer to hospice and post-acute care in general.

Still, Broussard expressed confidence in CDR’s ability to successfully steer the Kindred at Home ship — specifically calling out its value-based care acumen.

“With CDR’s established physician relationships, value-based care expertise and record of supporting providers to deliver high-quality care for patients, we are certain these divisions are well-positioned for success under the joint ownership of Humana and CDR,” Broussard said.

Humana’s dealings with Kindred at Home originally began back in 2018, when the company acquired a 40% minority interest.

“[We acquired] that 40% minority interest with the belief that a key component of the next generation of integrated care delivery model was the ability to provide care to consumers in their home — meeting them where they want to be in a preferred lower-cost setting,” Broussard said. “Also recognizing that the traditional volume-based fee-for-service model limits innovation in home health.”

In 2021, Humana completed the full acquisition of Kindred at Home. The deal was worth $8.1 billion in terms of enterprise value.

“[The acquisition reflected] our continued commitment to investing in home-based clinical solutions that improve patient outcomes, increased satisfaction for patients and providers and value for health plan partners,” Broussard said.

Ultimately, the company’s dealings with Kindred at Home has firmly established Humana as one of the largest players in the home-based care space.

“We are pleased that when viewing this transaction in conjunction with our purchase of the broader Kindred at Home platform, we have been able to achieve our objective of substantially increasing our footprint in home care by acquiring one of the leading home health platforms in the country, and at an attractive valuation for our shareholders,” Broussard said.  

Though Kindred at Home was top of mind for Humana’s leaders, they also provided updates about the company’s other home-based care efforts.

Last year, Humana’s home-based care capabilities were further accelerated with the acquisition of onehome, a home-focused, post-acute care company. The Florida-based company is both a convener and a provider, and operates under a full-risk model.

Broussard noted that onehome’s management service organization capabilities and experience providing home health infusion and durable medical equipment (DME) services establishes the platform for Humana’s value-based home health model.

Currently, Humana is set to begin the launch of its value-based model in North Carolina and Virginia in June. The company has plans to expand to additional markets in early 2023.

Humana expects 15% of its Medicare Advantage (MA) members to be supported by the company’s value-based home health model by the end of the year. Within five years, the company expects this to jump up to 50% of its MA members.

Along with shifting to value, as well as integrating DME and infusion, onehome will help members navigate the broader care ecosystem, Humana believes.

“For example, if a member lacks a primary care provider onehome could connect the member with a high value local option, including Humana’s primary care organization,” Broussard said. “In addition, if a member would benefit from home delivery of chronic medications, onehome can help the member set up home delivery through our Humana pharmacy. We believe these efforts can lead to both improved member experience and better health outcomes.”

Humana also provided an update on the expansion of its senior care-focused primary care platform. The company is scaling its platform through a combination of de novo expansion and organic growth.

As one of the largest value-based primary care providers in the nation, the company has 214 centers to date. It plans to have 250 centers by the end of 2022.

During the Q1 call, Humana CFO Susan Diamond also offered an update on the company’s pledge to drive $1 billion of additional value for the enterprise through “cost savings, productivity initiatives and value acceleration from previous investments.”

“We are tracking various initiatives across discrete stages of development, starting with ideation, followed by sizing, design and execution, and finally – realization of savings,” she said. “We gain confidence as each initiative moves through the stages, and we’re pleased that initiatives valued at approximately $575 million are now in the design-and-execute phase. We continue to believe that the majority of initiatives will be implemented in the back half of 2022.”

Humana also revealed episodic and total admissions for its home health business. Episodic admissions are up 3.5% year over year, while total admissions are up 4.9% year over year.

Diamond noted that this was mostly consistent with expectations.

Overall, Humana reported revenues of $930 million for the first quarter of 2022, up 12.3% year-over-year from $828 million during the same period the previous year.

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