Humana is the second-largest Medicare Advantage payer in the nation after UnitedHealthcare, covering more than four million Medicare Advantage members (DRG July 2019 data). Recently, the insurer has been working to leverage and expand its pharmacy benefit management and care delivery through external investments. Following in the footsteps of competitors like UnitedHealth, Humana is looking to own medical practices or PBMs to have better control over total healthcare spending.

Humana to acquire Enclara

On Dec. 16, 2019, Humana signed a definitive agreement to acquire Enclara Healthcare, the largest for-profit hospice and pharmacy benefit provider, from Consonance Capital Partners and Enclara Management. Enclara Healthcare is a principle solution provider primarily focused on improved care delivery for patients with chronic and complex-care conditions. The deal is expected to bolster Humana’s portfolio by expanding its hospice care reach.  The acquisition is expected to close in the first half of 2020.

This deal is a strategic fit and a logical extension of Humana’s pharmacy arm, Humana Pharmacy Solutions, given the carrier’s increasing interest in chronic illness care, social determinants of health, and senior care delivery systems. With Medicare Advantage being the most lucrative business in healthcare, the addition of Enclara’s pharmacy services will help Humana grow more rapidly in the senior space where it has staked its future.

The payer is already a major provider of home care and hospice services with its acquisition of CURO Services, a large hospice chain, and its recent $4.1 billion investment in Kindred Healthcare. The moves showcase the carrier’s growing interest into palliative care and social determinants. With Enclara being one of the largest hospice care providers, and with the MA enrollment on the rise, it is a strategic choice to enhance Humana’s product suite.

Key takeaways from Humana-Enclara Deal:

  • This vertical merger would expand Humana’s care continuum, covering all the pharmacy management services including hospice care.
  • Humana’s Medicare and palliative population will now have access to mail-order services, in-home pharmacy technological services such as mobile medication management, and improved electronic medical record connectivity.
  • Through this deal, Humana will get access to more than 97,000 Enclara patients, with as many as 450 care providers working to offer a suite of services through personalized and customer-fit models.

Humana’s new venture into primary-care centers:

On Feb. 3, 2020, Humana announced a joint venture with private equity firm Welsh, Carson, Anderson, and Stowe for $600 million. This deal will be handled by Humana subsidiary Partners in Primary Care.

  • Although holding a minor stake in the venture, Humana is putting money into primacy care for all patients in need of access to value-based care models, wellness initiatives, and social determinants of health assistance, like transportation, access to care, etc. More MA plans are being offered with these benefits, with CMS announcing the number of MA plans with value-based offerings have tripled in 2020.
  • This new agreement is predicted to double the number of centers that Partners in Primary Care operates, which is more than 47 locations throughout Missouri, Kansas, both North and South Carolina, Texas, and Florida.
  • Operating around the competing strategy with the UnitedHealthcare-Walgreens contract to open 14 Medicare service centers, the Humana-WCAS venture also fits the increasing trend of private equity companies entering the healthcare space.
  • Partners in Primary Care will receive performance-based incentives that also include a management fee for operating the centers.

Conclusion:

Humana’s Enclara and WCAS deals will also accelerate timely care delivery and cost-effective pharmacy solutions through primary-care centers. Humana already has footholds in most verticals of healthcare except for a retail pharmacy chain. UnitedHealthcare is teaming up with Walgreens, and as a strong competitor, this could indicate a future Humana move.

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