Centene unites with investors in commitment to value-based care

In a deal that reflects one of the next phases of value-based care, Rubicon Founders; Valtruis, a WCAS company; Oak HC/FT; and HLM Venture Partners jointly take a majority stake in US Medical Management.

Another unique partnership involving a large incumbent in healthcare and a group of investors underscores one of the next frontiers of value-based care: taking existing providers or entities and using tools to transition at least some of its population to a value-based construct.

Rubicon Founders; Valtruis, a Welsh, Carson, Anderson & Stowe company; Oak HC/FT; and HLM Venture Partners joined hands to acquire a majority stake in US Medical Management from Centene. Centene will retain a minority investment, according to an announcement.

Financial terms were not disclosed, but USMM generates around $200 million of revenue, said one source familiar with the company.

USMM, whose family of companies is dedicated to providing high-quality, co-ordinated healthcare in the home, encompasses the largest physician house calls business in the country (which is largely fee-for-service), as well as participating in the Medicare Shared Savings Program. Its accountable care organization, launched in 2015, is the only ACO focused solely on the frail, disabled or home-limited populations, the announcement said.

The partnership is notable for more than one reason, Adam Boehler, founder of Rubicon Founders, said: “No. 1, you have a group of investors that know this convergence of fee-for-service into value cold. No. 2, not only are we going to convert this business to value, but as part of this we are going to expand it out into all of Centene and WellCare.”

WCAS general partner David Caluori added: “This is a perfect example of the next phase [of value-based care] — buying assets and moving them to full risk-taking organizations.”

Value-based care – an underlying healthcare theme fueling significant levels of investment – is an alternative to the traditional fee-for-service model of reimbursement. It is a payment model that rewards doctors for some measure of quality (for instance, fewer hospitalizations) versus the volume and types of procedures performed.

In August, WCAS committed $300 million to support the launch of Valtruis, a new value-based care platform led by veteran operators and investors Anna Haghgooie, Tracy Bahl and Karey Witty.

Just a few months earlier, Boehler, the former Center for Medicare and Medicaid Innovation director, unveiled the launch of Rubicon, announcing a partnership with both Oak HC/FT and WCAS. Both entities have similar missions of supporting and building transformational value-based care companies.

Boehler has a long history in value-based care and a longstanding relationship with Centene chief executive Michael Neidorff that dates back to his days at Landmark Health, where Boehler was chief executive from 2012 to 2018.

Landmark is among the earlier generation of value-based care models that has proven successful, with an in-home care platform formed around the idea of applying this model of reimbursement to the sickest, most complicated and expensive patient population. (UnitedHealth’s Optum unit bought Landmark from Francisco Partners and General Atlantic earlier this year.)

For Centene, the investment underscores “their interest in partnering with PE firms that have a strong domain in healthcare,” Boehler said. “It’s a pretty big commitment around the importance of value-based care.”

Centene and UnitedHealth are not alone in deploying meaningful sums of capital to support healthcare’s slow but inevitable evolution towards value-based care.

For example, Humana in 2020 partnered with WCAS to run a network of senior care value-based centers under the CenterWell brand. Elsewhere, Walgreens in mid-October made an additional $5.2 billion investment in Oak HC/FT-backed VillageMD, whose technology helps affiliated primary care doctors adopt a value-based model of reimbursement.