How does Signify Health make money?

The company generates most of its revenue from fees for providing in-home health evaluations

Back in the day, doctor house calls were a significant part of the healthcare experience; in the 1930s, 40% of appointments occurred in the patient's home. Somewhere along the way, they fell out of favor, making up just 1% of visits by the 1980s, but now they seem to be making a comeback.

This has coincided with the rise of the social determinants of health, or all the factors that make up a person's health that are not just about the visit to their doctor, including their food availability, access to transportation, and their mental state. No longer is care simply thought of as what happens within the four walls of a doctor's office.

Signify Health is one company at the forefront of this trend, providing in-home health evaluations (IHEs) for Medicare Advantage members. That allows its network of over 10,000 clinicians to better understand all of the elements of a patient’s life.

The company also uses analytics to change the way healthcare is paid for, with it's value-based care model; value-based care is when caregivers are paid on the basis of quality versus per service.

"Value-based payment programs are rapidly transforming how governments, employers, and health plans pay for and manage healthcare services. The objective of these initiatives is to improve patient outcomes while lowering the overall cost of healthcare services," the company wrote in its S-1 filing with the SEC. 

"We believe that our differentiated data assets, proprietary analytics capabilities, comprehensive cloud-based software platforms, and healthcare provider networks enable success in the two dominant forms of value-based payments: population-based payment programs and episode-based payment programs."

Signify's customers include health plans, governments, employers, health systems and physician groups, and the company breaks its revenue down into two buckets: Home & Community Services (HCS) and Episodes of Care Services (ECS).

Home & Community Services

In its HCS segment, the company focuses on reaching and engaging populations at home.

Revenue is primarily generated through IHEs, which are performed either within the patient’s home, virtually, or at a healthcare provider facility, primarily to Medicare Advantage health plans. The company is typically paid a flat fee for each completed IHE, regardless of the member’s location or the outcome. 

Additionally, this segment also includes fees the company is paid for by the health plan for providing diagnostic screening, and other ancillary services, related to social determinants of health through its Signify Community solution. 

HCS revenue for the first nine months of 2021 was $496.9 million, or 84% of the company's $592 million total revenue. That was a 65% increase from the same period in 2020; the company attributed this to an increase in IHE volume and a decrease in virtual IHEs, as "virtual IHEs have a lower cost per evaluation than in-person IHEs."

Episodes of Care Services

Through its ECS segment, Signify manages episode-based payment programs in partnership with healthcare providers, primarily under the Medicare Bundled Payment for Care Improvement Advanced (BPCI-A program) with CMS.

An episode-based payment program, also known as bundled payments, is an alternative payment model in which the total cost for a patient’s of care related is predetermined, rather than made up of fees for separate services and providers.

Additionally, in this segment Signify says it gets revenue from providing "certain complex care management services."

ECS revenue for the nine months of 2021 was $95.1 million, or 16% of total revenue. That represented a decrease of 17% year-to-year, "reflecting lower program size and savings rates due to the impact of COVID-19."

Signify Health went public in February 2021, raising $564 million and valuing the company at $7.12 billion. It is now trading at $12.64, a 47% decrease from its $24 IPO price.