Second joint venture with private equity firm will expand CenterWell brand.
Humana will join with a private equity firm to invest $1.2 billion in about 100 new CenterWell Senior Primary Care clinics from 2023 to 2025, the company announced this week.
It will be the second joint venture for Humana and Welsh, Carson, Anderson & Stowe (WCAS), a New York-based investment firm that focuses on health care and technology, to operate primary care clinics for Medicare patients. The companies have an earlier joint venture agreement for $800 million to open 67 clinics by early 2023 and support ongoing operations, according to a news release from Humana and WCAS.
“We are excited to grow our partnership with Humana to improve access to senior-focused, value-based primary care across the United States,” David Caluori, general partner at WCAS, said in a press release. “We look forward to continuing our work alongside the CenterWell team to deploy their care model at scale.”
WCAS will have majority ownership of the new clinics, with Humana owning a minority stake and managing and operating the payer-agnostic clinics under Humana’s CenterWell Senior Primary Care brand. Louisville, Kentucky-based Humana has claimed it is the nation’s largest provider of senior-focused primary care, operating 214 clinics with the CenterWell Senior Primary Care and Conviva Care Solutions brands.
“Physicians and patients alike are coming to recognize the many advantages of our unique, senior-focused primary care model,” Reneé Buckingham, president of Humana’s Primary Care Organization, said in the press release. “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.”
CenterWell Senior Primary Care has clinics in Nevada, Missouri, Texas, Louisiana, Florida, Georgia, South Carolina, and North Carolina, while Conviva Care Solutions operates in Texas and Florida. The existing clinics serve about 180,000 patients in Medicare value-based arrangements, along with 58,000 patients under independent practice association arrangements through Conviva Care Solutions, according to Humana. By the end of 2022, the company expects to have about 250 clinics, adding 30 to 50 additional clinics a year through 2025.
Under the new JV agreement, CenterWell Senior Primary Care will receive a management fee, including performance-based incentives, to operate the joint venture clinics. The companies announced the agreement includes 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 deal is not expected to affect Humana’s earnings in 2022, according to the company. On April 27, Humana reported adjusted first-quarter earnings of $1.34 billion.
WCAS was founded in 1979 and has raised and managed more than $30 billion. The firm has more than 190 current or former portfolio companies in the health care and technology industries, according to its website.