UnitedHealth Group CEO: Home care resonates with payers

Through acquisitions and contracting with providers, more payers are going all-in for home care.

The drive to reduce costs, often through risk-based models, is driving an increasing number of insurance companies and other payers to make (sometimes) huge investments in space. Among them is UnitedHealth Care (NYSE: UNH).

Andrew Whitty, CEO of UnitedHealth Care, said the investment highlights the growing importance of the home in the health care system.

“I would really think of how we’ve built in-home capabilities as a significant expansion of what we can do in the clinical space… It’s a very important part of the environment,” Whitty said during an earnings call. “This resonates very strongly not only with UnitedHealthcare, but with other payers as well. And there is no doubt that this side of the agenda has attracted the attention of other payers.”

A subsidiary of insurer Optum Health last year agreed to acquire healthcare and hospice provider LHC Group (NASDAQ: LHCG) for $5.5 billion, with the deal expected to close in the first quarter of this year.

The two companies are reportedly trying to go through the usual deal procedures. Both the newly confirmed “substantial match” and no sales are expected, according to a Dealreporter posting last week.

A key factor is the potential cost savings associated with risk-based payment systems such as Medicare Advantage, in which UnitedHealth Care is one of the largest players.

“For value-driven patients, our in-home services have reduced hospital visits by 15% compared to service fees, delivering comparable health outcomes and reaching an NPS of approximately 80,” said the president and chief operating officer. UnitedHealth Group Dirk McMahon.

In total, Optum expects to accept 750,000 new value-driven patients in 2023, the company says.

The subsidiary’s profit grew 16% year-over-year to $47.9 billion. Revenue for 2022 increased by 27% compared to the same period last year and amounted to $182.8 billion.

UnitedHealth Group’s fourth-quarter consolidated revenue was $82.8 billion in the fourth quarter, up 12% from $73.7 billion in the fourth quarter of 2021. Full year revenue increased by $324.2 billion, up 13% from last year.

“You will see us developing the home care platform more and more comprehensively, as well as integrating home care into our clinic-based care model,” said Optum CEO Dr. Wyatt Decker in the earnings report. “It really creates two vehicles for us to grow.”

As Whitty noted, other payers are also seeing opportunities in the home. This includes Humana Inc. (NYSE: HUM), which acquired a 100% stake in Kindred at Home in 2021 for $5.7 billion.

But as more payers join the national conversation about home care, the word “hospice” is often missing. More often, the focus is on home health and home care, often in combination with Medicare Advantage.

Last summer, Humana sold a 60% stake in the Kindred at Home hospice segment to private equity firm Clayton, Dubilier & Rice for $2.8 billion. Humana retained the remaining 40%.

Time will tell how hospices fit into the equation when it comes to payer investment. In the long term, this may depend in part on the results of the hospice component of the value-based insurance model (VBID).

The four-year program, often referred to as the Medicare Advantage Hospice Program, launched on January 1, 2021, with 53 health plans participating. There are 119 plans participating in the program this year, according to the US Department of Health and Human Services (HHS). Geographically, the program will be available in 806 districts in 24 states, up from 461 in 2022.

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