What Major Primary Care Deals Mean for In-Home Care Operators

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There are multiple big-time, primary care deals on the horizon.

And the names tied to those deals are behemoths in size and influence. They are also tied heavily to the home-based care space.

This week, stocks were jumpy for Cano Health Inc. (NYSE: CANO) and 1Life Healthcare Inc. (Nasdaq: ONEM), the parent company of One Medical.


Reportedly, Cano Health could be the next acquisition target for Humana Inc. (NYSE: HUM), which has been building out its risk-based capabilities through primary care purchases, the expansion of its CenterWell clinics and, of course, the Kindred at Home takeover, over the past few years. Cano Health’s stock had jumped by nearly 30% over the past five days as of Thursday morning.

Dealreporter called a Cano Health deal a more “readily accessible option” for Humana given right of first refusal stipulations. Cano Health is a senior primary care company with 137 medical centers in six states. Humana has rapidly been building out its senior primary care footprint via a joint venture with the private equity firm Welsh, Carson, Anderson & Stowe (WCAS).

As of March 31, 2022, Humana operated 214 senior-focused primary care clinics, serving 180,000 patients in Medicare value-based arrangements. In May, it unveiled plans to open a hundred more in coming months.


Also this week, CVS Health (NYSE: CVS) was rumored to be considering an acquisition of 1Life’s One Medical. One Medical is a membership-based primary care service with in-person and online care capabilities. Similar to Cano Health, 1Life’s stock is up more than 36% over a five-day period.

Talks with CVS Health reportedly have stalled for now, yet interest in One Medical has remained strong.

1Life raised $282 million in an initial public offering in January 2020. It had about 736,000 members and operated 182 medical offices in 25 markets at the end of 2021, according to a report from Bloomberg, citing the company’s annual report.

The home-based care connection

Over the years, health care experts have regularly told me that two types of care were underutilized in the U.S.: primary care and home-based care.

A combination of the two has become very popular among health care providers, particularly with companies such as Humana and CVS Health, as well as others, including Walgreens Boots Alliance (Nasdaq: WBA).

While CVS Health is already investing in a new form of primary care, one that offers community-based, in-person and virtual visits to seniors, it still has yet to commit to it as strongly as Walgreens or Humana. The purchase of One Medical would give CVS a valuable platform from which to add – and a unique longitudinal primary care model perfectly designed for a value-based care world.

That’s especially true given that CVS Health already has Aetna under its umbrella.

While an acquisition seems more than just on the table for CVS Health, either way, it’s clear where leadership’s thinking lies in terms of this home-based care and primary care connection.

“If you look at $1 of health care spend in our country now, 3 cents is for home health, 5 cents is for primary care. Our hope and belief is that should be increased significantly,” Dr. Kyu Rhee, Aetna’s CMO, told me in June. “We believe that 8 cents should go up, because it has an impact on 50 to 70 cents, right? If you invest in home health and primary care, you’re going to reduce overall health care spend and hospitalizations spend. We have to be clear that we are not investing sufficiently in home health and primary care.”

Walgreens, meanwhile, has invested over $5 billion into the home-focused primary care provider VillageMD. The latter just acquired Grace at Home – another home-based primary care provider – as it expands across the country.

Humana and WCAS have pumped $1.2 billion into their joint venture, which is bringing senior-focused, value-based primary care clinics to individuals. Humana’s CenterWell Senior Primary Care arm, specifically, is the partner in that relationship.

Cano Health’s total membership at the end of the fourth quarter of 2021 was 227,000, up 114% on a year-over-year basis, according to the company. It went public in June 2021.

“Our calling is to fundamentally improve how health care is delivered so that patients can live longer and fuller lives,” Dr. Marlow Hernandez, co-founder, chairman and CEO of Cano Health, said at the time. “We believe our strategy of building, buying and managing primary care centers, with a focus on the senior population, strongly positions Cano Health for future growth.”

Opportunities for risk

Humana’s integration of Kindred at Home – now CenterWell Home Health – in tandem with its senior primary care footprint expansion, is likely the best example of primary care’s relationship with home-based care.

In fact, within the next five years, Humana wants 50% of its Medicare Advantage population under its value-based home health model, CEO Bruce Broussard has said.

“As seniors increasingly choose Medicare Advantage, there is a meaningful opportunity for home health organizations to engage differently with patients, and [MA] payers to more holistically address patient needs and improve health outcomes,” Broussard said on an earnings call last November. “And to reduce the total cost of care for health plans and share appropriately in this value creation.”

Independent senior primary care startups such as CareConnectMD – which just raised $25 million – and Teladoc Health (NYSE: TDOC) have also expanded their primary care models into the home.

The reason that’s important for home-based care providers is simple.

Though almost every provider wants to get into more risk- and value-based contracts, not many have.

Health plans still don’t always totally grasp the value of both home care and home health. There is no vehicle to engage in risk with the federal government either, as home-based care providers have not had any direct luck in the ACO REACH model or previous direct-contracting models.

So, to date, primary care groups are among the best ways for providers to enter into risk-based contracts. And it seems more of these opportunities are coming down the pike.

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