UnitedHealth Group (NYSE: UNH) is moving toward value-based care at a faster pace than even it originally imagined. And that’s partly because of the success of its home- and community-based care capabilities, according to CEO Andrew Witty.
Already, that home- and community-based care ecosystem includes capabilities such as Optum’s HouseCalls program and in-home assessments, plus Landmark Health, naviHealth and in-home testing initiatives – something UnitedHealth Group hopes to do more of in the not-so-distant future.
“Our approach focuses on providing quality care in the setting that makes most sense for the patients we serve,” Witty said during a Thursday conference call discussing first quarter financial results.
By the end of 2022, that ecosystem will likely include the operations of LHC Group Inc. (Nasdaq: LHCG) as well. UnitedHealth Group’s $5.4 billion purchase of the Lafayette, Louisiana-based home health company is expected to close in the second half of the year.
“Our pending combination with LHC Group will reinforce our ability to deliver care and support in the home as well as in other ambulatory locations,” Witty continued.
Advancing its value-based care strategy is a top priority for UnitedHealth Group, the parent company of diversified health services platform Optum and UnitedHealthcare, the nation’s largest health insurer.
Following a strong start to the year, UnitedHealth Group is now projecting Optum Health to add about 600,000 patients under value-based care arrangements, compared to its initial estimate of around 500,000.
Having a wide variety of home- and community-based care capabilities allows UnitedHealth Group to shift care into the most appropriate – and often lowest-cost – setting. It likewise adds appeal from a patient and member perspective, as most Americans, when possible, prefer to receive treatment in the comfort of their own homes.
Witty specifically pointed to how UnitedHealth Group’s “extraordinary” capabilities have positioned the company to serve the Dual Eligible Special Needs Plan (D-SNP) population in a way that “historically would not have been possible.”
Overall, UnitedHealthcare in the first quarter served about 1.5 million more people than a year ago across its health benefits offerings, with growth driven by strong enrollment in Medicare Advantage (MA), D-SNPs and the broader Medicaid market.
“We’re really moving at speed to bring together our home and community capabilities,” Witty said. “And if you look at what’s really driving alongside our value-based strategy for the clinics, [it’s] the rapid growth of our home and community offering, which has brought together naviHealth, Landmark. It will, over time, align with LHC, when it joins into the organization, built on our original ‘Optum At-Home’ product.”
UnitedHealth Group’s Q1 2022 revenues totaled $80.1 billion, up 14.2% compared to $70.2 billion in last year’s first quarter. UnitedHealthcare revenues were up 13.6% to $62.6 billion, while Optum revenues were up 18.9% to $43.4 billion.
‘We’re incredibly proud’
When Humana Inc. (NYSE: HUM) bought out private equity partners TPG Capital and Welsh, Carson, Anderson & Stowe (WCAS) for full ownership of Kindred at Home in April 2021, its leadership team immediately said the plan was to separate the home health and hospice operations.
The hospice divestiture process began in early 2022, with Humana reportedly working with Goldman Sachs and targeting potential PE buyers.
“As our experience has demonstrated, we can deliver desired experiences and outcomes for patients transitioning from restorative care to hospice through partnership models,” Humana CEO Bruce Broussard said in November, speaking about the decision to offload Kindred’s end-of-life care operations.
In light of that plan, many are now wondering if UnitedHealth Group will do the same with LHC Group.
LHC Group’s network includes hundreds of home health, hospice and home- and community-based services locations across 37 states and the District of Columbia. As of March, its hospice arm included 170 locations, with roughly 15% of home health locations co-located with hospice.
Witty declined to comment on divestiture possibilities, citing the fact the LHC Group deal isn’t yet finalized. He did, however, say that he “very much” likes “all of the aspects” that he’s seen of LHC Group.
“We’re incredibly proud of coming to an agreement with the LHC board to bring together the two organizations,” said Witty, noting that he spent time with LHC Group’s leadership team and founders on Monday.
LHC Group was co-founded by Keith and Ginger Myers in 1994.
“An unbelievable, positive culture inside the organization has been built up by Keith and Ginger since they first founded it,” Witty added. “Really a company with a true heart, and [it] really puts patients first and their families first. Extraordinary impact in all of their lines of operations and how they can have a significant impact on the lives of people who very often are excluded from care.”
Optum CEO Dr. Wyatt Decker echoed those sentiments.
“They’ve developed multiple capabilities, which actually really nicely complement our growing home and community platform,” Decker said Thursday. “The quality of care that they provide is remarkable.”
A pipeline of opportunities
LHC Group isn’t the only pending or recently finalized addition for UnitedHealth Group.
Optum and Change Healthcare (Nasdaq: CHNG), a large health care technology firm, are attempting to merge, despite pushback from regulators. Additionally, Optum recently acquired mental health provider Refresh Mental Health last month.
The Refresh acquisition is also reflective of UnitedHealth Group’s value-based care ambitions, as well as its desire to better pair behavioral health management alongside medical management.
With expected full-year cash flows of about $24 billion, UnitedHealth Group has runway for further dealmaking.
“I’d say, overall, our pipeline of opportunities … is probably as diverse as it has ever been – and probably deeper than it’s ever been,” Witty said. “I think from a potential capital-deployment capability, I think we feel pretty optimistic about that.”