"Improving Kidney Disease Care Coordination and the Role of Private Equity in Healthcare"

Ben H.

Ben H.

Oct 10, 20234 min read

0

"Improving Kidney Disease Care Coordination and the Role of Private Equity in Healthcare"

Introduction:

In a recent collaboration, Humana Inc. and Strive Health have joined forces to provide kidney disease care coordination services for eligible Humana Medicare Advantage and Commercial members in Kentucky and Indiana. This partnership aims to address the challenges faced by healthcare providers in delivering quality care and navigating complex reimbursement systems. Additionally, the role of private equity (PE) in healthcare is becoming increasingly prominent, with specialty clinics being targeted for buyouts. This article will explore the connection between these two topics and discuss potential implications for the healthcare industry.

The Challenges of Delivering Care in a Complex Regulatory Environment:

Healthcare providers face numerous obstacles in delivering care, ranging from individual patient dynamics to complex regulatory frameworks. The intricate nature of the healthcare system makes it increasingly difficult to provide efficient and effective care. Moreover, healthcare reimbursement is a major concern, with CMS payments often falling short of doctors' expectations. Commercial plans further exacerbate the issue by cutting payments by up to 40% for out-of-network practices. These challenges have led many physicians to consider PE buyouts as a means to alleviate these burdens.

The Appeal of Private Equity Buyouts for Physicians:

Private equity firms offer physicians an attractive alternative to the demanding and financially straining nature of running a medical practice. By acquiring physician practices, PE firms relieve doctors of administrative headaches and provide them with a substantial payout. This arrangement allows physicians to focus on patient care while benefiting from the financial security provided by the buyout. However, PE firms face limitations due to Corporate Practice of Medicine laws, preventing them from directly employing physicians.

The Role of Management Service Organizations (MSOs) in Private Equity Acquisitions:

To work within the constraints imposed by Corporate Practice of Medicine laws, PE firms often establish management service organizations (MSOs) that enter into master service agreements (MSAs) with the acquired physician practices. MSOs handle various administrative tasks while ensuring that physicians retain autonomy in clinical decision-making. This structure enables PE firms to streamline operations, achieve economies of scale, and leverage their contracts more effectively. By consolidating practices within the same specialty onto a single platform, PE firms can maximize EBITDA and increase the potential for a higher sale multiple in the future.

Improving Kidney Disease Care Coordination:

The collaboration between Humana and Strive Health in providing kidney disease care coordination services highlights the growing importance of specialized care models. By focusing on a specific area of healthcare, such as kidney disease, providers can dedicate resources and expertise to deliver more targeted and effective care. Coordinated care for kidney disease patients can lead to improved health outcomes, reduced hospitalizations, and better management of chronic conditions. This collaboration aims to enhance the quality of care provided to Humana members in Kentucky and Indiana, ultimately improving their overall well-being.

Implications for the Healthcare Industry:

The partnership between Humana and Strive Health showcases the potential for collaboration between health insurance companies and specialized care providers to address specific healthcare needs. By combining forces, these entities can leverage their respective strengths and resources to improve patient outcomes and reduce the burden on healthcare providers. Additionally, the increasing involvement of private equity in healthcare underscores the need for innovative solutions to navigate complex reimbursement systems and regulatory environments.

Actionable Advice:

  • 1. Foster partnerships: Healthcare providers and insurers can explore collaborations to enhance care coordination and address specific healthcare needs. By leveraging each other's expertise, these partnerships can improve patient outcomes and streamline processes.
  • 2. Embrace specialization: Specialized care models, such as the focus on kidney disease in the collaboration between Humana and Strive Health, can lead to improved outcomes and better management of chronic conditions. Healthcare providers should consider adopting similar approaches to enhance the quality of care they deliver.
  • 3. Advocate for reimbursement reform: Physicians and healthcare organizations should advocate for fair reimbursement rates from CMS and commercial plans to ensure the financial sustainability of medical practices. By working together, stakeholders can drive positive changes in reimbursement systems and support the delivery of high-quality care.

Conclusion:

The collaboration between Humana and Strive Health highlights the importance of care coordination for kidney disease patients and the potential benefits of specialized care models. Simultaneously, the involvement of private equity in healthcare presents both opportunities and challenges for providers seeking financial stability and operational efficiency. By fostering partnerships, embracing specialization, and advocating for reimbursement reform, the healthcare industry can navigate these complexities and drive improvements in care delivery.

Resource:

  1. "Humana and Strive Health Announce Kidney Disease Care Coordination Services Collaboration In Kentucky and Indiana", https://press.humana.com/news/news-details/2020/Humana-and-Strive-Health-Announce-Kidney-Disease-Care-Coordination-Services-Collaboration-In-Kentucky-and-Indiana/default.aspx (Glasp)
  2. "The Healthcare Breakdown No. 022 - Breaking down financial engineering and what it means in healthcare", https://prestonalexander.substack.com/p/the-healthcare-breakdown-no-022-breaking (Glasp)

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