Signify Health bolsters home health business with $250 million acquisition

Dallas-based Signify Health Inc. is bolstering its home health business with a $250 million acquisition of an accountable care organization builder.

The cash-and-stock deal for Caravan Health unites two companies focused on value-based payment models for everything from advanced primary care to specialty care bundles to total cost of care contracts. The transaction also includes up to $50 million in additional payments based on future financial performance.

The deal creates a large national network of physicians, nurse practitioners and licensed social care workers that will reach more than 2 million homes this year, Signify’s CEO Kyle Armbrester told Fierce Healthcare.

“What we’re building out is going to be something that actually finally enables a health system to take on value-based care,” Armbrester told the publication.

Caravan’s technology assists community hospitals, physician practices and clinics in setting up accountable care and other commercial risk arrangements. Signify Health’s expertise is bundled payments for Medicare and Medicaid programs and specialty care through a mobile network of 10,000 physicians and nurse practitioners. Together, the companies said they’ll manage $10 billion in total medical spending.

Kansas City-based Caravan adds more than 300 health systems and federally qualified health centers with more than 10,000 primary care providers to Signify’s network. Caravan’s providers collectively manage over 500,000 patients, most of whom struggle to access care, according to the companies.

The business combination also supports the Centers for Medicare & Medicaid Services’ goal of improving “health equity and [having] everyone in Medicare fee-for-service aligned to an accountable relationship by 2030,” Armbrester said in a statement.

Caravan founder and chairwoman Lynn Barr will join Signify Health as chief innovation officer when the deal closes, which is expected by the end of March.

Caravan CEO Tim Gronniger will become Signify Health’s executive vice president for accountable care. Caravan said its accountable care organizations have saved Medicare $510 million since 2014.

Signify Health went public a year ago, raising just under $610 million.

Founded in 2017, Signify splits its headquarters between Norwalk, Conn., where a number of its executives are based, and Dallas, where roughly half of its 2,100 employees work and live.

Its customers are health plans, governments, employers, health systems and physician groups, including Humana, Optum, Aetna, Oak Street, Ascension and Oscar. It also serves 47 Medicare Advantage health plans.