Humana spends big to buy the largest home health provider in the US

Humana is fully acquiring Kindred at Home for $5.7 billion. The legacy insurer already owned a 40% equity stake in the home health provider worth $2.4 billion. For context, Kindred at Home has locations across 40 states, serves 550,000 patients, employs 43,000 caregivers, and has a 65% overlap with Humana’s Medicare Advantage (MA) marketplaces.

The acquisition comes on the heels of Humana’s Q1 2021 earnings, where it reported skyrocketing profits and MA enrollment—a signs that it’s leading the way in serving the complex healthcare needs of the growing senior population.

• Humana reported $828 million in profit and 12% year-over-year growth in MA enrollment in Q1. That represents an increase of nearly half a million beneficiaries compared with Q1 2020.
• This is significant considering MA markets are growing in tandem with home healthcare markets. In 2020, 39% of all Medicare members were enrolled in MA plans—and that’s expected to balloon as more MA plans are available in 2021 than in any year prior, according to the KFF. At the same time, the home healthcare market is growing fast: It’s projected to surpass $293.6 billion globally, and over three-quarters of US adults see a future with more healthcare delivery at home.
• Both markets are being driven by the undercurrent of a burgeoning population of seniors in the US—who are also increasingly warming up to digital health tech. Telemedicine use among adults 65+ increased 300% during the pandemic, more than any other age group. On top of that, older adults are expected to make up over 20% of the US population by 2030, which means innovative home healthcare solutions will be an even greater priority for payers.

Humana's expansion into the home healthcare and digital care coordination spaces underscore the blurring lines between payers and providers.

• Humana’s Kindred at Home acquisition is the latest in its string of home health investments. In the past year alone, Humana partnered with Salesforce to launch a cloud-based care coordination platform, tapped Dispatch Health to provide hospital-level care at home for its MA members, piloted its own digital chronic care management platform, and teamed up with at-home primary care startup Heal.
• Humana could create a connected ecosystem of its horizontally integrated home healthcare services. Melding its home health tech investments with its provider facilities could help the payer improve members’ health outcomes and satisfaction—both of which can generate cost-savings for payers.
• And it’s not the only insurer focused on horizontal integration—other top insurers have been dipping into the provider space to gain even more influence over the evolving healthcare landscape. UnitedHealth acquired the largest physician network in Massachusetts, Atrius Health, last month, and Cigna bought telehealth provider MDLive in February.