The news: Humana teamed up with private equity firm Welsh, Carson, Anderson & Stowe (WCAS) to launch a second JV. The new JV will shell out up to $1.2 billion to open 100 value-based primary care clinics by 2025.

• This expands on Humana-WCAS’s existing JV that invested around $800 million to open 67 clinics by early 2023.
• WCAS will have a majority ownership, and Humana will hold a minority stake.
• The end goal is for the new clinics to reach profitability by 2025.

How we got here: Humana is placing a premium on Medicare Advantage (MA) markets.

• Humana reported $930 million in profit and 28% year-over-year growth in MA enrollment in Q1 2022. It plans to add 150,000 to 200,000 new members this year.
• It also acquired the largest home health provider in the US, Kindred at Home, for $5.7 billion in April 2021. This cushioned its revenue streams and grew the MA members enrolled in its program.

The bigger picture: Payers targeting the fast-growing Medicare Advantage (MA) market.

• In 2021, 42% (26 million) of all Medicare members were enrolled in an MA plan. That’s more than double the number of MA members from 2011, according to the Kaiser Family Foundation.
• Not to mention, more options can be available to MA members at lower premiums: 96% of MA beneficiaries have access to at least one $0 premium plan. And MA beneficiaries report a 98% satisfaction rate, according to the Better Medicare Alliance’s 2021 State of Medicare Advantage report.

Why Humana’s JV could succeed: As Humana captures more MA members, it can boost value to both its members and internal business by offering in-person primary care clinics.

• 31% of MA members missed at least one annual physical exam in the past five years, per McKinsey’s June 2021 Medicare Shopping survey.
• Annual physical exams are key checkpoints of care where patients can get screened for health risks and providers can catch chronic diseases early before they become worse.
• Older adults face higher risks for chronic conditions, making annual exams and physical health appointments important. These require the need for physical versus virtual locations.