Humana, Inc. (NYSE: HUM) has completed its purchase of Kindred at Home in an $8.1 billion transaction. The company obtained a 40% stake in Kindred in 2018. Through this transaction Humana gains the remaining 60% from private equity firms Welsh, Carson, Anderson & Stowe (WCAS) and TPG Capital.

The price tag includes Humana’s equity value of $2.4 billion from its existing 40% ownership of the business plus an additional $5.7 million. Humana has signaled its intentions to retain the home health component of the Kindred at Home business and spin off and sell the hospice segment. The company will continue to partner with hospices through its preferred provider networks. 

“We are pleased to complete the acquisition of Kindred at Home and fully integrate their home health services and clinical expertise into Humana’s value-based home health business,” said Bruce Broussard, Humana’s president and CEO. “The addition of Kindred at Home will help us significantly expand our home health offering, with a focus on accelerating clinical innovation, improving patient outcomes, increasing satisfaction for patients and providers, reducing the total cost of care and providing greater value for health plan partners.”

Kindred is the largest provider of home health services by market share in the United States — and the second-largest hospice provider, according to LexisNexis. Selling off the hospice segment would allow Humana to capitalize on record high valuations in the hospice M&A market while allowing them to focus on their core home health business. The company also expects to see substantial cost savings through reduced hospitalizations and skilled nursing admissions as more care moves into the home.

Humana will integrate Kindred’s home health operations into its Home Solutions business under the company’s recently unveiled CenterWell brand. CenterWell is payer-agnostic, meaning that patients do not have to be Humana beneficiaries to receive care. The integration is expected to complete in 2022.

With Kindred’s scale, Humana stands to gain significantly from divesting its hospice segment, likely seeking a substantial price for the asset. Across all three of its service lines, Kindred at Home cares for 550,000 patients in their residences each year, employing nearly 43,000 clinical staff in locations throughout 40 states.

“We expect that we will be able to capitalize on a robust market for hospice assets by divesting a majority stake in that portion of the business at what we anticipate will be an attractive valuation,” Humana CFO Brian Kane said during a Q1 earnings call. “Immediately following the closing of the transaction, significant deleveraging [is] expected post divestiture of the majority stake in hospice and community care.”

Kane stepped down as CFO in June, with Susan Diamond, segment president for Humana’s Home Business, stepping into the role. She will also continue to lead the home health operations.

U.S. Senators on the Finance Committee recently announced that they would investigate the relationship between Kindred and Home and its former private equity backers. Ron Wyden (D-Ore.) and Sens. Elizabeth Warren (D-Mass.) and Sherrod Brown (D-Ohio) have asked the company for information about the role that TPG Capital and WCAS may have played in Kindred’s operations.

The lawmakers expressed concern about the rising involvement of private equity in the hospice space as well as the larger health care sector. To date, none of the companies have been implicated in any wrongdoing. Brown’s office indicated that the senator “and his colleagues are requesting additional information in order to better understand this national trend.”