Signify Health acquires Caravan Health to advance value-based care

Steven Loeb · February 10, 2022 · Short URL:

The $250 million deal will allow Signify to expand into accountable care organizations

The idea behind value-based care, which involves paying clinicians on the basis of quality rather than for performing a service, is to improve patient outcomes while lowering the overall cost of healthcare services. While the concept is still only taking off, there's already proof that it works

One of the leaders of the movement toward value-based care is Signify Health, a healthcare platform that uses analytics to help bring healthcare into the patient's home. On Thursday, the company announced that it acquired population health management company Caravan Health.

The $250 million acquisition price includes $190 million in cash and $60 million in Signify Health common stock. On top of that, the company may pay up to another $50 million in contingent additional payments based on the future performance of Caravan Health.

When the deal is complete, two Lynn Barr, Caravan Health's founder and chairwoman, will become Chief Innovation Officer of Signify Health, while CEO Tim Gronniger will become Executive Vice President of Accountable Care at Signify Health, while also remaining CEO of Caravan Health, which continue to operate under Signify. 

In addition, Caravan Health’s approximately 160 employees will come to work at Signify Health, bringing its total workforce to 2,160. 

Founded in 2013, Caravan Health works with health systems of various sizes, including rural community hospitals, urban health systems, individual physician practices, and independent medical groups to help them move to a value-based care model.

The company's solution includes collaborative accountable care organizations (ACOs) larger than 100,000 lives; these are groups of doctors, hospitals, and other health care providers, who join combine resources to provide coordinated care to Medicare patients. These ACOs use Caravan's technology platform, Caravan Coach, to engage patients, improve preventive care, and optimize bonus and incentive programs.

Signify Health's solution uses analytics to promote a value-based care model. Its efforts also include increasing access and utilization of in-home health evaluations (IHEs) for Medicare Advantage members, in order to provide a more comprehensive assessment than the annual wellness visit.

By acquiring Caravan, Signify is adding more than 200 health systems, and 100 Federally Qualified Health Centers, with more than 10,000 primary care providers who collectively manage over 500,000 patients. 

Francois de Brantes, SVP of commercial business development at Signify Health, spoke to VatorNews about Caravan, why the two companies are a good fit, and what Signify hopes to achieve through this acquisition. 

VatorNews: Walk me through what Caravan Health does and what their solution is. I want to understand what the company does. 

Francois de Brantes: Caravan Health was founded to develop better solutions for community health systems, who often get left behind in value-based care initiatives. This is because they do not have the resources, technology, capital and scale necessary to take on risk. Caravan Health collaborates with health systems to collectively manage and spread risk, thereby opening value-based care to more providers. Caravan Health also provides technology and analytics and assumes meaningful risk alongside these providers to align incentives. Through this comprehensive service offering, the company guides hospitals and physicians caring for underserved populations to achieve meaningful results in value-based care arrangements. 

Caravan Health’s more than 200 provider partners manage over 500,000 patients, representing approximately $5 billion in medical spend, and Caravan Health has consistently achieved positive shared savings.

In early February, Caravan announced the expansion of its footprint in the Medicare Shared Savings Program (MSSP), adding 25 health systems and four ACOs into its Collaborative ACO model that has saved Medicare $510 million. 

VN: Why is Caravan a good fit for Signify Health? How do the two companies align with each other? 

FDB: The acquisition of Caravan Health makes sense for both companies as they look to expand their footprint and help more providers transition away from the fee-for-service model of healthcare payment to value-centric payment models. Both companies are dedicated to advancing value-based care, improving the way our healthcare system works more broadly, and aligning incentives across the care continuum. Caravan and Signify Health also believe that value-based payment will contribute to Medicare trust fund solvency and support the sustainability of Medicaid to care for underserved populations. 

Caravan’s suite of tools and solutions for ACO enablement and success are a great compliment to Signify’s suite of tools and solutions for episodes of care/bundled payment program enablement and success. In fact, Signify’s tools fit into Caravan’s by providing ACO participants with insights at the condition and procedure level that can positively impact total cost of care. 

In a similar way, Signify’s expertise in managing post-acute care, addressing social determinants of health, and performing in-home evaluations will help Caravan’s ACO participants extend their reach to their patients’ homes and address clinical and social issues that would otherwise be difficult to address.

Overall, the addition of Caravan Health will expand Signify Health’s addressable market by creating new opportunities for providers currently in bundled arrangements to enroll in MSSP and Commercial ACOs. The more patients providers have in value-based care arrangements, the more attractive these programs become and the faster they are able to drive meaningful change.

VN: What gaps does Caravan fill for Signify? What can the company do now that it couldn't before this acquisition? 

FDB: The combined company will allow Signify to offer its provider partners the full spectrum of advanced payment models from advanced primary care payment to specialty care bundles to total cost of care contracts. Episodes of care are synergistic with total cost of care models. When integrated, these models allow providers in total cost of care programs to effectively manage specialist care, helping to improve overall savings and clinical outcomes. The acquisition supports Signify Health’s diversification strategy to offer a comprehensive, end-to-end solution for value-based care enablement.

Together, we will be better positioned to enable provider organizations to manage larger populations covered by value-based arrangements, and to drive more coordinated clinical and social care across the healthcare continuum.

Caravan’s focus on rural providers and community hospitals complements Signify’s provider networks in urban and suburban areas, allowing the combined company to address the needs of medically underserved populations, provide better access to care, and extend resources to address clinical social and behavioral care needs. 

VM: Will Signify be using any of Caravan's technology? If so, how will that be incorporated into your solution going forward?

FDB: Signify Health will benefit from Caravan Health’s award-winning population health analytics software, Caravan Coach, in supporting Signify’s BPCI-A clients who are looking to expand their participation in value-based payment programs and address total costs of care. Signify also intends to use Caravan’s platform to manage total costs of care contracts for self-insured employers and other payers.

VN: What is the end goal of this acquisition? What will success look like? 

FBD: The companies have a deep commitment to changing the way our healthcare system works -- for the better. The ultimate goal is to help more providers across the nation succeed in value-based care, resulting in improved overall patient outcomes and greater affordability of healthcare for all Americans. 

Beyond broadscale healthcare payment transformation, the companies are also hyper focused on addressing whole person care from primary care to specialty care needs, along with addressing social determinants of health that impact a large portion of the population’s health and wellbeing. Through this acquisition, we will be able to address persistent challenges in reaching and supporting underserved patients by extending providers' ability to engage with them in the home and virtually. 

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