Strange Tony,
Humana owns 40% of our hospice alongside two financial rapscallions. CEO Bruce Broussard spoke of Humana's interest in caring for patients with terminal illness in the recent
earnings call.
Over the last year, we've continued to make significant advances in our
enterprise strategy, particularly in the past few months as demonstrated
by our recent investments in both Kindred at Home and Curo Health
Services. With a continued focus on helping seniors achieves their best
health, we are striving to reshape healthcare by expanding access to
high-quality, value-based care in both primary care and home health.
Humana's CFO said the company used approximately $1.1 billion in parent cash to buy the 40% stake in Kindred at Home and Curo. Parent cash could've bought 100% of Kindred at Home and had two divisions to spin off, LTAC hospitals and RebabCare. Humana would've had $280 million leftover to invest in Curo. Instead Humana did a squirrely deal with Welsh, Carson, Anderson and Stowe (WCAS) and TPG Capital, the employer of a Kindred board member.
In the call Humana's CFO added "we expect
reasonable adjusted EBITDA growth in our healthcare services
segment, as the
Kindred results are annualized and our other businesses
in the segment, particularly our own clinics, improve."
Broussard stated in his prepared remarks.
Turning to home, we recently announced the completion of the
acquisition of a 40% interest in each of Kindred at Home and Curo Health
Services, collectively the largest home health and hospice operator in
the nation. As we previously indicated, we are striving to do something
that has never been done before in home health -- transform the payment
model into one that is value-based, encouraging a transition for
maximizing volume to focusing on managing health and chronic conditions,
such as COPD, congestive heart failure, and diabetes to prevent or slow
disease progression. This movement to value-based care and aware from a
predominantly therapy-based methodology, is aligned with the recent CMS
proposal for changes to the home health payment methodology, which was
anticipated when we entered into the transaction.
Broussard partnered with leveraged buyout firm WCAS, which employs ex-Medicare Chief Tom Scully. WCAS is also Broussard's former employer and sponsor of his
first fortune.
In
that regard, we appreciate the model proposed by CMS and welcome change
that aligns home health with pay-per-value and improved clinical
outcomes, reducing preventable events. While the ultimate transformation
will take many years, upon closing of the transaction, we immediately
launched test-and-learn pilots aimed at both operational and clinical
improvements in four markets: Richmond, Virginia; Charlotte, North
Carolina; Virginia Beach, Virginia; and Dallas, Texas. These pilots
incorporate a pay-per-value mechanism in addition to the traditional
fee-for-service payment based on four quality measures: hospital
admissions, hospital readmissions within 30 days, emergency room visits
without hospitalization, and timely initiation of home care specifically
within 48 hours of referral or an M.D. order.
In
addition, in order to create differentiated home health model, we had
the opportunity to weave the richness of Humana at Home telephonic and
in-home engagements, as well as Humana pharmacy resources, into the
skilled nursing provided by Kindred at Home clinicians. Over the next
year, we plan to leverage Humana predictive modeling to identify
additional clinical interventions, integrate Humana pharmacy resources
to conduct comprehensive medication reviews, and extend our care
management best practices from Humana at Home into the Kindred at Home
homecare environment.
We will also reduce friction in
the authorization process to ensure Kindred professionals are in the
home within 48 hours of a referral or supplement the ordering physician
through telehealth with a virtual M.D. to expedite the delivery of care.
We expect the changes we are making in the home health space will not
only benefit our Medicare Advantage members, but also our Medicaid
members over time.
The continued development of our
in-home capabilities, together with our demonstrated clinical
capabilities in Medicare Advantage uniquely position us to serve the Medicaid population,
giving us confidence that we'll be successful in growing our Medicare
platform through procurements. Under our recent statewide award in
Florida, we expect to serve an additional 141,000 members, an increase
of 44% from our existing Medicaid membership.
The
Florida contract was awarded based upon the ability of plans to achieve
the Medicaid agency's goals. These goals included creating enhanced
provider and member experience, the ability to reduce preventable
inpatient and outpatient events, high-quality scores, innovative and
effective methods to deliver integrated care, and integration with the
community and support of Medicaid beneficiaries.
We've
been successful in achieving strong results across these areas by
leveraging the capabilities that have positioned us as a top Medicare
Advantage plan, including our capabilities in chronic condition
management, integrated care delivery, value-based provider
relationships, and community programs designed to address social
determinants of health, such as food and security, and social isolation.
While we are confident in our capabilities and expect to be successful
in the procurement process, consistent with our previous remarks, we
will continue to assess length of time to scale and potential barriers
to entry at the state level, while considering potential M&A
opportunities in the Medicaid space.
In that regard, we appreciate the model proposed by CMS and welcome
change that aligns home health with pay-per-value and improved clinical
outcomes, reducing preventable events.
Broussard's excitement over home health is clear in his remarks. What about hospice?
David Windley -- Jefferies -- Analyst
Good morning. Thanks for taking my question. Going back to Kindred and Curo, and understood those are investments not full acquisitions. Integration is maybe not the right word, but how do you think about optimizing or harmonizing your workflow between those entities and your internal home health initiatives to drive more cost savings for the member base? I'm thinking about what could manifest as a trend-bender as we think into 2019 and what has to happen to make that a reality?
Bruce D. Broussard -- President and Chief Executive Officer
At
the time of close and pre-close, we had a lot of planning of what would
be our top priorities in engaging with Kindred. I'll wrap around a few
things. First is we're going to test and learn in a number of markets
and be able to really focus more on just not about bringing our home
health business over to Kindred, but more importantly, bringing the
ability to prevent preventable events from happening. We have a number
of things going on that are focused more on nursing-oriented patients
that have chronic conditions that can be managed in the home.
First,
we're just rerouting more effort nursing area as opposed to the therapy
area. That's the first thing. As you mentioned, the trend-bender out of
this is reduced admissions, readmission, our rates going down, ER
visits going down. That's our measurement of success there, by focusing
on these chronic conditions.
Part
of that test will also be how we bring telehealth into the home. The
telehealth platform will not only allow us to be more convenient in
bringing care into the home, but the second thing is it also will help
us with our star scores and other preventative measurements that that we
can get into the home quicker, both in being able to do it more
convenient as a result of not having to get people transported there
and, in addition, working through the appointment schedule. So, we see
two combinations here in our test-and-learn. One is around how do we
reduce the preventable events from happening and then secondarily, how
do we continue to increase our performance on our quality measurements.
David Windley -- Jefferies -- Analyst
Thank you.
The following interchange showed CEO Bruce Broussard soft pedaling Humana's vision of being the largest hospice operator in the U.S. Humana paid a huge premium for Curo relative to Kindred deal pricing.
Frank Morgan -- RBC Capital Markets -- Analyst
My second question, obviously with the Curo acquisition, you must like the hospice business. So, my question is, with hospice being carved out of the MA benefit today, what's your short term and your longer term view there and also just any thoughts in the context of the future for value-based purposing for hospice? Thanks.
Bruce D. Broussard -- President and Chief Executive Officer
Hospice
for us is really, we look at that as a service we are participating in
and providing to the healthcare community, and we leave it ultimately up
to the caregiver, the family, and the physician to decide where is the
proper place for an individual.
But once that decide that it moves from a
restorative to pain management kind of treatment, then we are there to
serve them and integrate that into offerings we have.
In regard to is it in or outside of Medicare Advantage, we really look at it more is it the right thing to do for the family member and then ultimately be able to help them with the transition of quality of life.
We do believe, over time, that hospice and palliative care will continue to be more and more important parts of the care model as we see the need for it. We see people living longer and at the same time, treatment options at end of life become more intense or there are fewer of them and people make this choice that is probably one of the less used area of healthcare today that probably have a large, positive impact on people's life as they think about where they are in their stage of life.
For us, we are more a recipient of it. We are believer it's the right thing to do and we are a believer that we will provide that service to our members if they choose to.\
The payment model is less of an issue for us and insignificant in our decision making.
Frank Morgan -- RBC Capital Markets -- Analyst
Thank you.
Broussard provided mixed messages to hospices in his call. It's an important service for families and the payment model isn't important. However, as people have less treatment options hospice has a role to play. What if insurance denials result in more insureds having few to no treatment options? In that case hospice would be a cost saving measure for Humana.
If payment were insignificant why would Humana's CFO talk about Kindred's contribution to reasonable EBDITA growth for the second half of 2018? He went past EBDITA as a measure saying the company would only report adjusted EBDITA for Kindred at Home/Curo. Adjusted EBDITA is a financial rapscallion
measure.
Cost control measures have already begun at our hospice. WCAS, TPG and Humana have set clear financial performance expectations. The only window into these is Humana's
SEC filings. Financial rapscallions don't disclose.
Anonymous (from KAHtivacare Hospice managed by Curo Executives)
