Blog | Strategic Partnerships, Mergers, and Acquisitions

Humana partners with private equity firm to expand its primary care capabilities

Blog | Strategic Partnerships, Mergers, and Acquisitions

Humana partners with private equity firm to expand its primary care capabilities

  • Healthcare Dive reported Feb. 3 that Humana is launching a joint venture to expand primary care centers for seniors that will be managed by its subsidiary Partners in Primary Care (PPC).
  • The new venture is likely to double Partners in Primary Care’s  47 locations, according to Healthcare Dive.
  • HFMA’s Chad Mulvany says Humana’s existing primary care physician (PCP) centers are in Texas, Florida and North Carolina, and combined, the states are home to approximately 20% of the Medicare Advantage (MA) population today, with the likelihood the percentage will grow.

Healthcare Dive reported Feb. 3:  that “[Humana] is launching a joint venture to expand primary care centers for seniors that will be managed by its subsidiary Partners in Primary Care. The payer and private equity firm Welsh, Carson, Anderson & Stowe are making an initial commitment of about $600 million. Humana will have a small minority stake while WCAS will have majority ownership. The agreement includes put and call options through which either party may buy the other's interest over the next 10 years. The new venture is likely to double the number of centers Partners in Primary Care operates. It currently runs 47 locations throughout Kansas, Missouri, North Carolina, South Carolina, Texas and Florida. Patients will not need to be Humana members to go to the centers, which are intended to focus on value-based care models, wellness initiatives and social determinants of health.”


Humana, already viewed by many providers to be one of the more progressive health plans in terms of partnering with in value-based arrangements joins a growing field of payers who are expanding their primary care capabilities. And the same private equity firm that was involved in the Kindred transaction – Welsh, Carson – is in on the deal this time as well. It’s also not a coincidence that Humana’s existing primary care physician (PCP) centers are Texas, Florida and North Carolina, and as combined, the states are home to approximately 20% of the Medicare Advantage (MA)  population today and that percentage will likely grow as more baby boomers age into Medicare and retire to warmer climates. I would expect to see the new centers located in a mix of states where Humana already has a significant membership base and areas it is targeting for growth. For a company heavily invested in MA, there are at least two reasons to invest in primary care capabilities:

Stars Ratings and risk coding: Owning primary care practices and encouraging members to use an employed PCP will help maintain and improve both risk coding and Medicare Advantage Stars Ratings. While Humana has traditionally done this with great success through value-based contracts with PCPs, actually employing the physicians will give it greater control over both the quality of care delivered (as determined by the MA quality and patient experience of care measures that roll up to the Stars Rating). My guess is the PCPs will be salaried with a significant bonus opportunity tied to panel size, the percentage of the Medicare patient panel that comes in for an annual wellness visit and how the panel will perform on quality measures. That will also allow the PCPs to annually document any conditions that feed into the Hierarchical Condition Category (HCC) risk adjustment score. The dollars for Humana are not insignificant. In 2016, it only received $1.5 billion – losing out on an additional $244 million as it had fewer plans eligible for bonuses.  

Managing medical loss ratio: Beyond the revenue side of the equation, employing PCPs will likely help Humana manage medical expenses and trend for its MA members. Beyond standardizing care pathways for its members with common chronic conditions to reduce ambulatory-sensitive utilization, one can imagine that Humana will use its claims data to identify more efficient providers within its networks for referrals when members need specialist care. That may also include eliminating referrals to provider-based settings of care unless they can reliably demonstrate superior outcomes compared to freestanding settings for both diagnostics and procedures. The strategy in markets where there is overlap between the PPC assets and Kindred providers will likely also reduce ED visits and inpatient admissions for low-acuity medical conditions as the rationale behind the acquisition was to allow Humana to provide more care “in the home.” Educating high-risk patients with chronic disease to call their PCP’s office first before they go to the ED coupled with after-hours access will allow Humana’s physicians to evaluate frail elders to determine if their exacerbation is a candidate for home hospitalization or if they should be admitted to the hospital. 

About the Author

Chad Mulvany, FHFMA,

is director, healthcare finance policy, strategy and development, HFMA’s Washington, D.C., office.


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