How A Cigna-Humana Combination Could Alter Home-Based Care In The US

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Over the last week, a potential Cigna Group (NYSE: CI) and Humana Inc. (NYSE: HUM) combination has gone from a rumor to a real possibility.

After I reported on the topic for Home Health Care News on Tuesday, Reuters and The Wall Street Journal confirmed that the two companies were in talks, on Wednesday and Thursday, respectively.

A hat tip is in order for Scott Fidel, the managing director at the investment banking company Stephens, who was the first – or at least one of the first – to mention this possibility back on Nov. 7.


Even at face value, Cigna potentially joining forces with Humana is such a large health care story that it is worth exploring for any health care audience.

But Humana and Cigna combining will also create a home-based care powerhouse akin to UnitedHealth Group’s (NYSE: UNH).

Additionally, if a combined Cigna and Humana have CenterWell Home Health, and UnitedHealth Group has LHC Group – and potentially Amedisys Inc. (Nasdaq: AMED) – it’s reasonable to wonder whether other larger payer organizations will view home health care as table stakes in the future.


In this week’s exclusive, members-only HHCN+ Update, I further break down what a Cigna-Humana deal would mean for home-based care in the U.S., and the effect it could have on other dealmaking moving forward.

Managed care moves

Cigna pulls in about $190 billion in revenue per year, while Humana pulls in just over $100 billion. Cigna insures about 18 million insured lives, while Humana insures just about 17 million.

Any deal of that size is likely to face some scrutiny. That’s why, when it was reported that Cigna was considering selling its MA business, there was speculation that that was a preemptive move to erase some of the overlap between the two companies. Humana’s MA business is significant, while Cigna’s is relatively meager in comparison.

“We believe that a CI/HUM merger has significant L-T strategic merit and believe it could survive a legal challenge by the DOJ (which is surely to come) with appropriate MA and PBM remedies,” Fidel wrote in an analyst note Thursday. “However, investors are worried that the deal structure could effectively look more like an MOE given converging market caps along with a likely extended, noisy, and stressful merger review process. Indeed, on the WSJ report, CI shares traded down another ~8%, while HUM traded -5.5%.”

Pharmacy benefit management, as Fidel mentioned, is another area where there is significant overlap that would need to be dealt with.

But there’s also overlap between the provider sides of each house in home-based care, albeit not so much that it would cause an issue with the DOJ.

Humana has CenterWell, which includes CenterWell Home Health, one of the largest home health providers in the country. It also provides home-based primary care through CenterWell Senior Primary Care, a service line it’s in the process of expanding.

Cigna, on the other hand, has Evernorth Health Services. Evernorth provides behavioral health, pharmacy benefit management solutions, medical drug management services, clinical trial solutions, fertility health services, digital health, and, of course, home-based care.

On the home-based care front specifically, Evernorth provides “in-home primary care for polychronic patients and post-acute care through care coordination and provider network management.”

Together, Cigna and Humana would be the first entity that could boast home-based care capabilities that rival UnitedHealth Group’s.

UnitedHealth Group leaders spent hours on their home-based care plans at the company’s investor day Wednesday.

Other clues

The rumor that Cigna may be getting rid of MA was the first sign. But since discussions between the two companies have been confirmed, it appears there could have been other warning signs hiding in plain sight.

Most importantly, Humana announced a succession plan for CEO Bruce Broussard in October. Jim Rechtin will join Humana as president and COO in January, and then will succeed Broussard as CEO in the latter half of 2024.

Rechtin comes from Envision Healthcare, a hospital-based physician group where he served as president and CEO. The company filed for bankruptcy in May, which made the appointment of Rechtin a bit of a head scratcher, even if he had nothing to do with Envision’s downfall.

But the Cigna-Humana deal talk brings more clarity. After all, Humana highlighted Rechtin’s dealmaking experience in its October press release.

“Prior to OptumCare, Rechtin was with DaVita Medical Group, which he joined in 2014 and played the dual roles of Senior Vice President of Corporate Strategy and President of DaVita Medical Group’s California market,” Humana wrote. “Further, he is a 14-year veteran of Bain & Company, highlighting his depth of experience in health care mergers and the overall health care sector.”

Of note, Rechtin also spent time at UnitedHealth Group’s Optum before joining Envision.

Ripple effects

Part of what Broussard ushered into Humana was an era of investment in home-based care services. The culmination of those efforts ended up in CenterWell Home Health.

UnitedHealth Group has LHC Group, and, again, could have Amedisys by the end of the first quarter of 2024. That would give it two of the largest home health companies in the country and about 10% of the overall home health market.

It’s possible that other insurers could stay out of the home health market, even if their two largest competitors are heavily embedded in it.

It’s also possible that a game of follow the leader materializes.

CVS Health (NYSE: CVS) – which owns Aetna, for instance – has already dabbled in home-based care assets with its $8 billion purchase of Signify Health. But it has also teased more core home health acquisitions in the past.

“I think, over time, we’ll look at what other assets [we need],” CVS Health CEO Karen Lynch CEO said in May. “As you think longer-term, around the corner, there might be additional opportunities in the home.”

On the other end, it’s a tough time to be a home health provider – both due to fee-for-service rate cuts and MA penetration.

Joining a deep-pocketed partner could be enticing for some of the larger home health providers out there.

“Our ultimate aspiration was to move away from the fee-for-service model and drive better outcomes through value-based care,” LHC Group President and CEO Josh Proffitt said Wednesday at UnitedHealth Group’s investor day. “But we knew we didn’t have the capabilities to do it on our own. Now that we’re part of Optum, we can. Today, we see tremendous opportunity to not only scale within Optum’s value-based strategy, but also connect into the broader capabilities of Optum’s comprehensive home care offerings.”

Enhabit Inc. (NYSE: EHAB) is the last publicly traded, at-scale home health provider that’s available. The good news for interested payers, however, is that it is for sale.

A payer looking to compete in the home with the other larger payers may see Enhabit as a perfect fit.

If they do, the largest home health companies will all effectively be owned by managed care plans.

What that may mean, for the industry at large, is a topic for another day.

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