Earlier this month, Humana Inc. (NYSE: HUM) and Welsh, Carson, Anderson & Stowe (WCAS) teamed up on a new joint venture aimed at expanding access to value-based primary care for Medicare patients.

Under the JV agreement, Humana and WCAS will commit upwards of $600 million to build 50 new Partners in Primary Care (PiPC) centers over the next three years. Currently, PiPC operates 47 care centers in Kansas, Missouri, North Carolina, South Carolina, Texas and Florida.

Broadly, Humana’s value-based primary care efforts fit into its organizational-wide mission of providing care where and when its members want to receive it. Other examples of that mission include the moves to acquire stakes in Kindred at Home and Curo Health Services in 2018.

While many older adults have access to home health and home care services within their communities, some still struggle to find senior-focused primary care, Renee’ Buckingham, segment president of Humana’s care delivery organization, told Home Health Care News. That gap has only grown as the baby boom generation has continued to age and as living with multiple chronic conditions has become more common. 

“Communities are in need of senior-focused primary care, and we believe that providing local access to full-service primary care, pharmacy, nutrition, behavioral health, wellness support, social work and other services will help seniors spend less time in the hospital and other institutional settings,” Buckingham said.

Moving forward, WCAS will have majority ownership of the new JV entity, with Humana owning a “small minority stake.” Founded in 1979, private equity giant WCAS has raised and managed funds totaling more than $27 billion of committed capital, mostly targeting the health care and technology sectors.

While Partners in Primary Care has a strong emphasis on older adults enrolled in Medicare Advantage (MA) plans, it maintains a payer-agnostic strategy.

“WCAS is making this investment since we believe there is significant unmet need for value-based, senior-focused, integrated primary care in the U.S.,” WCAS General Partner David Caluori told HHCN in an email. “PiPC represents an opportunity to build primary care centers targeted for the Medicare Advantage market. We are excited to work with Partners in Primary Care to select attractive markets, build and rapidly scale primary care centers in underserved populations and lower the cost of the delivery of healthcare across the country.”

Future plans

Partners in Primary Care will receive a management fee and performance-based incentives for running all JV centers, according to Humana and WCAS.

Their JV deal also includes put-and-call options that give PiPC the option to acquire WCAS’s interest in the JV over time. On its end, WCAS can also require Partners in Primary Care to purchase its interest in the JV in stages over the next five to 10 years.

Last week during a Q4 earnings call, Humana leadership described the WCAS JV as a creative way to rapidly scale its senior-focused primary care centers, which normally take a while to mature and start seeing solid returns.

Buckingham likewise touted WCAS and its ability to grow health care companies.

“WCAS is a leader in the health care investment space and has been building successful health care companies for over 40 years,” she said. “We believe their expertise in health care and operating experience growing and scaling health care services companies will be invaluable as we continue to create avenues to accelerate the expansion of senior focused primary care into more communities.”

So far, Humana has not publicly released any data on the PiPC model’s clinical or financial results.

Most of Humana’s followers are probably familiar with PiPC due to its senior care clinic partnership with Walgreens. The new JV with WCAS will have “no effect whatsoever” on those existing plans, according to Buckingham. 

“Partners in Primary Care will continue to operate the four co-located centers in Kansas City and the new center in Anderson, South Carolina,” she said.

WCAS investments

The market size, measured by revenue, of the primary care industry is estimated at $266.1 billion in 2020, according to research firm IBISWorld. The market has grown 1.8% per year on average between 2015 and 2020.

For WCAS, the PiPC JV adds to the PE giant’s growing list of aging-related health care ventures, which already include Kindred at Home and InnovAge. Kindred at Home was ranked as the largest home health operator in the U.S. last year, while InnovAge operates the largest Propogram of All-Inclusive Care for the Eldrely (PACE) network.

Partners in Primary Care “fits in well” with those other investments, Caluori said.

“The U.S. health care market continues to experience significant shifts toward value-based and home-based care,” he said. “From a value-based care perspective, WCAS believes that the PiPC model is very attractive given the strong projected growth in the MA market and PiPC’s risk-bearing primary care model. From a home-based care perspective, WCAS welcomes the opportunity to be part of potential solutions that enhance the wellness of seniors and enable them to receive high quality healthcare while remaining in their homes.”