Humana and WCAS forms second Medicare JV

Humana’s CenterWell Senior Primary Care and Welsh, Carson, Anderson & Stowe have agreed to form a second joint venture that will expand access to primary care clinics for Medicare patients. The new JV will invest up to $1.2 billion to develop about 100 new senior-focused, primary care clinics between 2023 and 2025.

PRESS RELEASE

LOUISVILLE, Ky. & NEW YORK–(BUSINESS WIRE)–Humana Inc.’s (NYSE: HUM) CenterWell Senior Primary Care and Welsh, Carson, Anderson & Stowe (“WCAS”) have established a second joint venture (“JV”) to further expand access to value-based primary care clinics for Medicare patients. The new JV will deploy up to $1.2 billion of committed capital to develop approximately 100 new senior-focused, payer-agnostic primary care clinics between 2023 and 2025 and operate them to profitability. This JV between Humana’s CenterWell Senior Primary Care and WCAS follows an earlier JV that is currently deploying up to $800 million of capital to open 67 clinics by early 2023 and support their ongoing operations.
WCAS, a healthcare and technology-focused investment firm, will have majority ownership of the JV, while Humana will own a minority stake. All de novo clinics developed through the Humana-WCAS joint ventures will be managed and operated under Humana’s CenterWell Senior Primary Care brand.

As the nation’s largest provider of senior-focused primary care, CenterWell Senior Primary Care is actively scaling its platform through a combination of de novo expansion and inorganic growth. As of March 31, 2022, Humana’s Primary Care Organization (“PCO”) operates a total of 214 senior-focused primary care clinics, including 37 under the current joint venture with WCAS and 177 other wholly owned centers. Together, these 214 clinics – operating under the CenterWell Senior Primary Care and Conviva Care Solutions brands – serve approximately 180,000 patients in Medicare value-based arrangements, while also supporting 58,000 patients under Independent Practice Association (IPA) arrangements through Conviva Care Solutions. By the end of 2022, Humana expects to serve Medicare patients in approximately 250 CenterWell and Conviva clinics, and intends to add 30 to 50 additional CenterWell clinics per year through 2025.

“We are excited to grow our partnership with Humana to improve access to senior-focused, value-based primary care across the United States,” said David Caluori, General Partner at WCAS. “We look forward to continuing our work alongside the CenterWell team to deploy their care model at scale.”

“Physicians and patients alike are coming to recognize the many advantages of our unique, senior-focused primary care model,” said Reneé Buckingham, President of Humana’s Primary Care Organization which operates both CenterWell Senior Primary Care and Conviva Care Centers. “Doctors and nurses spending more time with patients, paying greater attention to both the physical and mental aspects of health, and following a team-based approach all allow for personalized, value-based care that helps improve lives. Early success has led to increased interest in our payer-agnostic model, and under this new joint venture, we look forward to significantly expanding our geographic footprint and serving even more patients in more communities around the country.”

Under the new JV agreement, CenterWell Senior Primary Care will receive a management fee, including performance-based incentives, for the management of all joint venture clinics. In addition, the agreement includes a series of put and call options through which Humana may acquire WCAS’s interest in the joint venture beginning in 2028 or five years after the opening of each cohort of clinics, and through which WCAS may require Humana to purchase its interest in the joint venture beginning in 2030 or seven years after the opening of each cohort of clinics.

The transaction is expected to have an immaterial impact to Humana’s earnings in 2022.

About CenterWell
At CenterWell, part of Humana Inc., we create care experiences that put patients at the center. The result is healthcare that provides ease, comprehensiveness and, most of all, a personal approach. Our primary care, pharmacy, and home health services go beyond traditional clinical settings and outcomes, working with patients and their care teams to close gaps and take their whole health into account.