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The health insurance giant's subsidiary Partners in Primary Care entered a joint venture (JV) with private equity firm Welsh, Carson, Anderson & Stowe to develop more primary care centers for its Medicare Advantage (MA) patients, according to Modern Healthcare.
For context, MA is offered by private insurers to consumers 65 and up as an alternative to the government's Medicare program. Under the tie-up, the private equity firm will invest $600 million and hold a majority stake in the JV, while Humana will own a "small minority stake" with the option to acquire the private equity firm's interest in the future.
Humana expects to significantly grow its MA membership by the end of 2020 - so it makes sense that it's inking a deal that'll more than double the footprint of Partners in Primary Care's senior-focused care centers.Per guidance issued by Humana in January, the health insurance giant serves approximately 4.1 million seniors in MA and expects to grow its MA membership by up to 420,000 members by the end of 2020.
And the insurer expects its new JV to more than double the footprint of Partners in Primary Care, which currently operates 47 senior-focused primary care centers across Florida, Kansas, Missouri, North Carolina, South Carolina, and Texas. Doubling down on senior-focused care delivery makes sense for a payer that's operating - and seeking to grow its presence - in the MA space, which caters to a population that's sicker than younger cohorts, as it's positioning itself to better cater to their health needs and boost outcomes.
Humana's latest move underscores a larger trend of health insurers building out their MA businesses - which could signal trouble for smaller insurers operating in the entrenched MA space. The MA market is dominated by three large, established players - UnitedHealthcare, Humana, and BlueCross BlueShield - which could make capturing increased market share a difficult proposition for smaller insurers that may not have the footprint or access to resources of larger incumbents.
However, we've seen smaller insurers make aggressive plays in the MA space as of late: For example, Minneapolis-based MA insurtech Bright Health recently acquired fellow insurance firm Brand New Day to beef up its MA business, and health insurance startup Oscar Health launched MA plans in New York City and Houston. And health insurers could be all the wiser for leveraging MA-focused growth strategies: As enrollment in plans balloons, the MA market stands to present a $360 billion opportunity by 2023.
But while health insurance giants like Humana making aggressive plays in the MA space, we're interested to see if smaller insurers will have the means to keep pace and offer comprehensive services like Humana's - or if these smaller insurers will end up as targets for acquisition themselves.
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