Humana Inc. will spend between $450 million and $550 million in debt and cash to gain full control of a group of primary care clinics that it launched with private equity firm Welsh, Carson, Anderson and Stowe (WCAS), and company executives said during the firm’s recent investor day that Humana plans to double down on its existing primary care M&A strategy. Health care finance experts tell AIS Health, a division of MMIT, that insurers’ spending spree on providers is only likely to accelerate, but that Humana is in pole position to benefit from deep investments in Medicare Advantage-focused primary care.
Health insurers have spent billions to acquire outpatient providers since the onset of the COVID-19 pandemic. Finance experts tell AIS Health that the spending spree has two sources of capital. Carriers are spending huge cash reserves taken in during the deepest parts of the pandemic, which saw utilization plummet as premium revenues increased. In addition, Wall Street is bullish on managed care: Lenders are lining up to offer generous terms to acquisition-hungry insurers, which have enjoyed strong stock performance since the start of the pandemic era.