Investor group buys majority stake in Centene’s USMM, MiddleGround doubles down on auto-industry deals, PE firms make hybrid return to office

Value-based care flurry continues: Investor group buys majority of Centene's USMM.

Good morning, readers!

Not to claim this as “value-based care week” on the heels of my admittedly long (but hopefully enlightening) read, but more than one investor featured in my recent coverage just unveiled yet another unique partnership underscoring one of the next frontiers around this theme.

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

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

USMM, whose family of companies are dedicated to providing high-quality, coordinated healthcare in the home, encompasses the largest physician house calls business in the country (which is largely fee-for-service) as well as participates 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, told me: “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.”

Added WCAS General Partner David Caluori: “This is a perfect example of the next phase [of value-based care] — buying assets and moving them to full risk-taking organizations.”
WCAS in August committed $300 million to support the launch of Valtruis, just months after Boehler, the former Center for Medicare and Medicaid Innovation (CMMI) director, unveiled the launch of Rubicon, announcing at the time a partnership with both Oak HC/FT and WCAS.

Boehler added that he has a long-standing relationship with Centene CEO Michael Neidorff that dates back to his days running Landmark Health. (UnitedHealth’s Optum unit bought Landmark from Francisco and GA earlier this year.)

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

Read PE Hub’s brief on the partnership, and ICYMI, check out my deep dive on value-based care.

Mobile: Aaron Weitzman has an interesting read for PE Hub on a unique strategy deployed by MiddleGround Capital. Marking its third investment to date out of its mobility fund, the firm recently acquired Plasman Holdings — a maker of exterior plastic and composite assemblies for vehicles — for roughly $415 million, sources told PE Hub.

MiddleGround founder and managing partner John Stewart, who’s gone from installing bumpers at a Toyota factory in Kentucky to managing billions of dollars for a private equity fund, has taken his personal experience and applied it to his investment lens.

The overall auto industry is “flat to slightly declining” over the long-term, but Stewart found that by investing in one of four trends driving change in the sector, there is money to be made. Those four trends? The electrification of power-trained vehicles, vehicle light-weighting, autonomous vehicles and connected vehicles.

The mobility fund has deployed roughly $75 million to date and its gross internal rate of return, as of the second quarter, sat north of 600 percent, he said.

Read Aaron’s full report on PE Hub.

Life in hybrid: As the latest and more contagious strain of the covid-19 pandemic, the Delta variant, continues to spread, Iris Dorbian has put together a great read on the varying approaches private equity firms are taking when it comes to return to office policy and safety protocols.

Some firms, like BlackRock and Jefferies, pushed back their return to office plans. Others made some adjustments, such as Goldman Sachs requiring all employees to be fully vaccinated before returning to the office.

When contacted by Buyouts, several private equity firms declined comment, with some citing the confidentiality of human resources issues as a reason. Yet not all were as tight-lipped, although responses were measured, if not downright cautious.

On Carlyle’s vaccination policy at its portfolio companies, a firm insider offered a somewhat cagey response; however, the inference was clear: Like Blackstone, Carlyle (and the source was quick to qualify that the firm was “the first in the US to mandate the vaccine back in May”) does not have a vaccination mandate for workers at portfolio companies.

“We believe the private sector should play an important role in the vaccine rollout,” explained the Carlyle source, adding that the firm does not “control everything our companies do but the tone from the top is what we believe is the right thing for the private sector to do our part.”

Read Iris’s full report for more on this topic.

That’s it for me! Have a great week ahead, and as always, write to me at with any tips, gossip or feedback.