The CEOs of Humana and Kindred Healthcare said the Louisville companies’ merger would allow them to transform how older Americans, especially those with chronic conditions, get care in their home and would boost Louisville’s status as a national leader in aging and health.
Kindred announced Tuesday morning that its board had agreed to be acquired in a $4.1 billion all-cash deal by Humana and two private equity partners.
Kindred CEO Benjamin Breier said Tuesday morning in a media call that the transaction would bolster the city’s prominence as an “urban leader of senior living.”
Kindred provides health care services in nearly 2,500 locations in 45 states. Under the terms of the deal, the company would be split in two, with Humana initially taking partial — and eventually full — ownership of Kindred at Home, which would focus on home health, hospice and community care.
The deal brings together two Louisville companies that are focused on trying to figure out how to provide better health care, Breier said.
“This is a really exciting day,” he said.
Humana CEO Bruce Broussard said the companies’ combined capabilities would allow them to better coordinate how health care is delivered in the home.
Kindred has long provided care for people who are recovering from an illness or injury and want to do so at home after their stay in a hospital or rehabilitation center.
Humana, meanwhile, has paired health professionals with patients who have significant and often multiple health conditions to give them personalized guidance to reduce their risk for serious — and more costly — medical procedures.
Broussard said Tuesday that companies tended to not work together very well, which caused “friction points” for patients and caregivers. The combination of Humana and Kindred would allow the companies to work together to optimize the work flow and use of data to provide patients with a more efficient and simpler experience as they’re recovering after acute treatments.
The Humana CEO also said that by going private and escaping shareholder pressures, Kindred would be in a better position to innovate as the industry shifts from a fee-for-service model to a value-based model.
In the traditional fee-for-service model, health care providers get paid depending on the number and cost of services they provide. That means providers have not had an incentive to steer patients toward the option with the greatest value, a professor has told Insider.
In a model in which hospitals get paid per patient or based on patient outcome — regardless of the type or cost of the care that is provided — hospitals have more of an incentive to keep patients out of the facility long-term, she said, because their profit margin takes a hit every time that patient returns to the facility.
Broussard also said that the Humana-Kindred combination would allow the companies to take greater advantage of technological advances, including telehealth and remote monitoring, which would allow medical professionals to intervene sooner and prevent or delay more serious health problems.
“These changes … are really exciting for the home,” Broussard said.
Both CEOs said that they expect the deal to have little impact on employment and their facility needs in Louisville, in part because their home-focused businesses are based outside of Kentucky.