Insurance giant Humana Inc. (NYSE: HUM) has penned a definitive agreement to acquire the remaining 60% stake in Kindred at Home for $8.1 billion. Humana, which currently holds 40% ownership of the business, is purchasing the additional stake from the private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe.
The $8.1 billion price tag includes Humana’s existing equity value of $2.4 billion from its existing 40% ownership. The transaction is expected to close in the third quarter of this year.
“We continue to invest in assets that allow Humana to better manage the holistic needs of our members and patients by expanding care in the home, including primary care, telehealth, and emergency room care, while also addressing social determinants of health,” said Bruce D. Broussard, Humana’s president and CEO. “We’ve learned a great deal about the home health space and recognize the significant value we can deliver to members and patients by integrating this asset into our holistic approach to care.”
Humana and the two private equity firms completed the acquisition of Kindred Healthcare in 2018. The transaction separated Kindred’s facility-based businesses from its hospice, home health and community-based care services. Those segments were reorganized as Kindred at Home.
Across all three of its service lines, Kindred at Home cares for 550,000 patients in their residences each year. The company employs nearly 43,000 clinical staff in locations throughout 40 states. Kindred’s footprint overlaps with about 65% of Humana’s individual Medicare Advantage membership.
Among the nine insurance companies that are participating in the first year of the value-based insurance design demonstration, or Medicare Advantage carve-in, Humana operates the most plans that will offer hospice. They have begun to offer hospice through their MA plans in five markets: Atlanta, Cleveland, Denver, the Louisville, Ky., metro area (including southern Indiana), and the Richmond-Tidewater region of Virginia.
Humana and Kindred at Home have spent the last year laying the groundwork for this ownership transition, including close monitoring of the home-based care provider’s ability to reduce costs from high-acuity and facility-based care. The companies also collaborated on building a technology platform capable of sharing and analyzing information between health plans and the provider.
According to Humana, this acquisition will allow Kindred at Home to more quickly integrate and scale new models for value-based payments and care delivery.
“Fully integrating Kindred at Home will enable us to more closely align incentives to focus on improving patient outcomes and on reducing the total cost of care,” Broussard said. “This is critical to deploying at scale a value-based, advanced home health model that makes it easier for patients and providers to benefit from our full continuum of home-based capabilities.”
Through the transaction, Humana will control Kindred at Home’s hospice and community care operations as well as their home health business. However, the parent company may be more heavily focused on home health for the time being. Humana will continue to explore its involvement in hospice through the Medicare Advantage carve-in.
Humana indicated that it would consider options such as a public listing for Kindred at Home or other potential transactions, but the timing of such a decision remains unknown. David Causby, the current CEO of Kindred at Home, will remain at the helm.
Kindred at Home’s home health operations will be integrated into Humana’s Home Solutions business under the segment’s CenterWell brand. CenterWell is a payer-agnostic entity, meaning the organization cares for patients even if they are not members of a Humana plan.
“Our work with Kindred at Home allowed us to learn more about the advanced clinical models needed, proved that we can execute on the needed innovation, demonstrated that we can drive penetration and gave us confidence we can support a higher acuity patient by leveraging the other home-based assets and capabilities we’ve assembled,” said Susan Diamond, Humana’s Segment President for Home Business.