Humana CEO Bruce Broussard said this week that his company wants to buy a stake in Kindred Healthcare in part to increase its capabilities to manage patients’ chronic diseases in their homes, which would improve their lives — and the insurer’s bottom line.
“Most of our members have severe chronic conditions and the more we can engage with them, keep them out of the hospital systems, the institutions, staying at home and preventing the disease from progressing, the more impact that we have on both them … from a health point of view, cost point of view and societal point of view,” Broussard said.
Chronic disease costs are a primary driver of rising health care costs in America, Broussard told investors at the 36th Annual J.P. Morgan Healthcare Conference Tuesday.
By 2025, national health care expenditures will exceed $5.5 billion, more than double the amount from 2010. And 164 million people are projected to have at least one chronic disease by 2025, up 16 percent from 2010. Three-quarters of people 64 and older already have at least one chronic disease.
Humana is paid a fixed fee, based on the patient’s condition, Broussard said, which means Humana bears the risk of managing the patient’s health. The planned acquisition of Kindred exemplifies how Humana is mending a fragmented system to improve care.
The companies announced the proposed $4.1 billion deal in mid-December. Under the proposal, Kindred would be split into two businesses: Kindred at Home would focus on home health, hospice and community care and would be owned 40 percent Humana and 60 percent by TPG Capital and Welsh, Carson, Anderson & Stowe.
The acquisition also would advance Humana’s at-home model, which it started in 2007 and now covers 800,000 customers, he said.
The rapidly advancing abilities of high-tech devices and telehealth paired with Humana’s data analysis capabilities continue to make home-based care more feasible and effective, Broussard said: Homes equipped with scales will tell the insurer when a congestive heart failure patient gains weight and may be in danger of suffering a heart attack. The frequency and severity of foot ulcers in diabetic patients can provide information about amputation risk.
Care for customers with a low severity of diabetes cost the company about $900 per month, Broussard said, whereas care for patients with severe cases costs more than $4,000 a month.
Preventing the severe complications helps patients live longer, more fulfilling lives and improves Humana’s bottom line, Broussard said.
Correction: The story was updated to indicate that Humana initially plans top buy only part of Kindred.