Signify Health to Acquire Caravan Health, Further Value-Based Care

Value-based care platform Signify Health has signed an agreement to acquire Caravan Health and aims to increase participation in value-based payment models and improve patient outcomes.

The merger will create one of the largest national provider networks engaged in risk-based payment models.

The transaction will consist of $250 million — $190 million in cash and $60 million in Signify Health common stock. The agreement also includes the possibility of additional payments up to $50 million based on Caravan Health’s future performance.

Signify Health leverages technology, analytics, and provider networks to offer members a value-based payment program. Similarly, Caravan Health helps further value-based care by providing technology services to support providers and practices in accountable care organizations.

The merger aims to create an end-to-end suite of value-based care resources by combining Caravan’s ability to promote prevention and wellness and manage chronic disease with Signify’s ability to identify and manage specialty care needs.

Together the companies will support a wide range of advanced alternative payment models that allow providers to improve patient outcomes and lower care costs by assuming various levels of risk. The combination of value-based payment models will cover a handful of risk-based and shared savings models, including advanced primary care payment, specialty care bundles, and total cost of care contracts.

“This is an exciting opportunity to leverage the combined technology, tools, and expertise of Caravan and Signify to all move forward toward better patient care while helping providers achieve financial sustainability,” Lynn Barr, founder and chairwoman of Caravan Health, said in the press release. “We share with Signify Health a deep commitment to doing everything possible to help those we serve live their best life and look forward to accelerating our collective mission to create a healthcare system that works better for all of us.”

The newly merged company will support around $10 billion in spending, according to the organizations.

The acquisition will help grow Signify’s current network of more than 3,000 practices and facilities in value-based care contracts. In addition, the platform will gain Caravan’s network of more than 200 health systems and 100 federally qualified health centers. The network includes more than 10,000 primary care providers serving over 500,000 underserved patients who struggle to access care.

Signify may help increase access to care for this population by allowing providers to leverage the company’s virtual network of 10,000 physicians and nurse practitioners and more than 600 care coordinators.

Additionally, Signify’s mobile network combined with Caravan’s software may help expand access to care for underserved patients.

The acquisition also aims to boost provider participation in value-based care programs. Signify serves an array of health plans, including Medicare Advantage plans, Medicaid programs, and commercial managed care organizations, all of which will gain access to broader risk-sharing payment models.

“A strategic focus for Signify Health has been driving more participation and success in value-based payment arrangements in alignment with our commercial payer clients,” Kyle Armbrester, chief executive officer of Signify Health, stated in the press release. “This focus also supports critical imperatives from the Centers for Medicare and Medicaid Services to improve health equity and have everyone in Medicare fee-for-service aligned to an accountable relationship by 2030.”

The companies expect to finalize the transaction in the first quarter of 2022, subject to customary closing conditions.