The CEO of major health insurer Humana laid out why he's betting big on primary care

By Shelby Livingston

Long before Humana became the dominant health insurer it is today, its business revolved around operating hospitals.

Now, decades later, Humana is getting back to its roots of providing medical care.

This time, the company is hyper-focused on transforming primary care for older people.

The national health insurer is investing heavily in building clinics in underserved areas across the country. It's also partnering with primary-care startups like Oak Street Health, ChenMed, and Iora Health to reach more seniors. And last year, Humana pumped $100 million into telehealth startup Heal to bring primary care into patients' homes.

Humana's quest, CEO Bruce Broussard told Insider, is to weave together health insurance with the delivery of healthcare. Integrating the two could lead to lower costs and better health outcomes, he said.

The insurer is focusing on primary care because that's one type of clinical care that has shown to reduce costs in the long run. Various studies have demonstrated that investing more money into primary care is associated with fewer costly hospitalizations and emergency department visits.

"We're big believers in primary care," Broussard told Insider in an interview in January. "We see great results, high satisfaction scores, high quality scores, and in addition, from a cost point of view, some really great outcomes there."

Over the next decade, as Humana continues to invest in primary-care clinics, along with home-based and virtual care, the company may start to look different, Broussard said. Soon, it could employ as many clinicians as it does other types of employees, he said.

"Over the longer run, a decade, you'll see a very substantial healthcare service business within Humana," Broussard said. "I think you'll see a considerably larger platform and a changing organization."

Humana got serious about primary care after its Aetna break-up

Humana began buying primary-care clinics about a decade ago, but it became "intentional" about its clinic strategy when it called off its planned merger with rival insurer Aetna in 2017 after a federal judge blocked the deal, Broussard said.

After the break-up, Humana did some soul-searching. It looked to big, integrated health systems like Kaiser Permanente in California and University of Pittsburgh Medical Center and Geisinger in Pennsylvania and concluded that delivering healthcare is most successful when integrated with insurance under one organization.

Primary care was one clinical area Humana decided to focus on. In 2018, Humana moved the various primary-care groups it had acquired under one brand called Conviva. Those clinics were largely concentrated in South Florida.

For a time, Broussard said Humana doubted that a clinic strategy would work outside of Florida, where the strategy had proven successful because people from Cuba and other Hispanic backgrounds who have a large presence in Florida were already used to getting care in clinics, he said.

Humana wanted to see where else a primary-care clinic strategy would work, but there weren't a lot of senior-focused clinics out there. So it began investing in other primary-care startups like Oak Street, ChenMed and Iora. According to Oak Street's latest earnings report, Humana comprised nearly half of the startup's revenue for the first nine months of 2020.

"We wanted to fund a number of different companies, both to see who was going to be successful or not and also to get capacity in the marketplace," Broussard said.

Humana then started building its own clinics under the brand Partners in Primary Care "both for defensive and offensive reasons," Broussard said. It struck a deal last year with private equity company Welsh Carson to build out 50 more clinics over three years.

Oak Street Elgin
An Oak Street Health location in Elgin, Illinois during its grand opening.
Lydia Ramsey/Business Insider

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Humana owns 171 primary-care clinics and partners with about 150 more

Humana's primary-care clinics cater to seniors enrolled in Medicare Advantage, which is a private alternative to the traditional government-run Medicare program that provides health coverage to older people. Humana serves about 4.6 million people in Medicare Advantage plans.

The clinics are paid in a nontraditional way. Insurers give them set monthly fees to care for each patient, so the clinics make money by keeping patients healthy and out of the expensive hospital or emergency room. Doctors see fewer patients than normal so they can give each patient more attention.

Broussard said the company would continue to open clinics in areas that are starved for primary care, both by building its own centers and partnering with startups.

It's also buying up clinics. On March 2, Humana said its Conviva business acquired 12 senior-focused primary-care centers in South Florida. The acquisition gave Humana another 200 Conviva employees, including more than 40 doctors, physician assistants and advanced practice registered nurses.

In total, Humana owns 171 clinics through its Conviva, Partners in Primary Care, and Family Physicians Group subsidiaries as of March 2, a Humana spokesman said.

At the end of 2020, Humana's clinics served 255,400 seniors enrolled in multiple health plans, according to its fourth-quarter 2020 earnings release. Those clinics employed or contracted with 662 primary-care doctors, the release showed.

Humana also boasts joint ventures or partnerships with 152 additional clinics operated by other companies. It aims to open about 50 to 60 more clinics with partners in 2021, a Humana spokeswoman confirmed.

In late January, Partners in Primary Care announced it plans to open up to 20 more centers this year, after opening 15 in 2020. The new centers will be located in Atlanta, Houston, Louisiana and Nevada.

Partners in Primary Care, which serves 57,000 patients, aims to operate nearly 80 centers total this year and about 100 centers by 2023.

About 8%, or 300,000, of Humana's Advantage members, get care in owned and partnership clinics, and company executives have expressed plans to grow that figure.

Beyond primary care, Humana is also pushing deeper into delivering care in patients' homes.

It bought a 40% stake in Kindred Healthcare's home health business in 2018 for about $800 million, and in April struck a deal to acquire the rest for about $5.7 billion. In addition to its investment in Heal, Humana last year put money into DispatchHealth, which provides urgent medical care in the home.

Broussard said the insurer is testing a model in Atlanta that integrates the services of Kindred, DispatchHealth and Heal so that seniors can see a nurse or doctor, or even "visit" the emergency room, all without leaving the couch.

Humana's transformation is emblematic of an industry-wide shift toward integrated healthcare companies

Humana's focus on delivering healthcare is part of a broader movement among health insurers to become more that just intermediaries who pay medical bills.

This industry-wide shift has been happening for some time, but it seems to be speeding up as insurers look for ways to control runaway healthcare costs.

The poster child for this trend is UnitedHealth Group, the healthcare behemoth that houses insurance company UnitedHealthcare and Optum, a company that manages pharmacy benefits and provides care, under one roof. Optum generates about 45% of UnitedHealth's total earnings from operations.

Optum includes 1,600 medical clinics and employs or partners with more than 56,000 doctors. It aims to add at least another 4,000 more doctors by the end of this year.

Broussard told Insider that Optum is a more diverse business than Humana's healthcare services division aims to be. Humana is focusing more narrowly on integrating clinical services to deliver holistic care to seniors.

Still, Broussard wants to grow the care-delivery side of Humana over the next decade. The insurer's healthcare services segment collected $28.4 billion in revenue and $944 million in earnings in 2020, driven in large part by its pharmacy benefit management business. Humana's total revenue that year was $77.2 billion and its net income was $3.4 billion.

He noted that when Humana acquires the rest of Kindred Healthcare's home health business, Humana will employ as many clinicians as it does other workers.

Kindred's home health operation employs about 43,000 clinicians.

The COVID-19 pandemic is accelerating the changes underway at Humana

Broussard said the coronavirus crisis has bolstered the case for offering care through multiple channels, whether in person in a patient's home or virtually.

"There are many things that are done in the hospital that can be done in someone's home," he said. "I think the ability to serve the population in a broader way I think it was coming, but it just wasn't coming fast enough, and the pandemic pushed that."

The pandemic also highlighted the benefits of moving away from the traditional way of paying for care based on the volume of services provided, toward a model that pays doctors set amounts to keep patients healthy.

Doctors in such value-based arrangements continued to receive payments when patients stopped coming to the clinic for fear of contracting the coronavirus. Other healthcare providers saw their revenues plummet. Value-based clinics were also able to pivot quicker to telehealth and were more proactive about reaching out to patients, Broussard said.

As a result, Humana is pushing faster and faster into providing care in different settings. It's also investing heavily in its technology, and launched a new internal Medicare company called Author, which will provide digitally-enabled health plans for seniors.

"I just feel that we're at this cusp here," Broussard said. "We still have a lot of development and organic build to do, but the energy level and the effort and the focus and the prioritization is much different."

This article was originally published on January 26. It was updated on February 3 with new information about Humana's 2020 financial results and its owned and affiliated primary-care centers, and on March 2 and April 27 with information about Humana acquisitions.