Dallas’ Signify Health, a national value-based healthcare platform, announced February 10 that it has acquired Caravan Health, thereby developing one of the largest national networks of providers who employ risk-based payment models.
Signify Health leverages advanced analytics and technology with national networks of health care providers, while Caravan Health assists accountability care organizations (ACOs) with population-based health management and value-based payment programs.
Value-based care (also called a risk-based payment model), is an alternative payment model wherein providers are reimbursed “based on the value of care delivered rather than volume.” Said reimbursement “requires providers to assume more risk” because they “are paid a fee per patient and are then responsible for treating the patient within this budget,” therefore “hold[ing] providers accountable for better, more efficient care,” per Definitive Healthcare.
The collaboration between these two health care companies will support various providers in assuming different levels of risk and working with other providers to improve patient outcomes and reduce costs across the continuum of care.
Signify Health’s decision to acquire Caravan Health has been agreed to for an initial purchase price of approximately $250 million in a combination of cash and Signify Health common stock. Also included in the transaction are up to $50 million in additional contingent payments based on Caravan’s future performance.
Caravan Health will provide to the collaboration its imperative technology, insights, and services to community hospitals, medical practices, and clinics looking to succeed in accountable care and alternative business risk arrangements. Signify Health will contribute its expertise in technology, analytics, and management of health care encounters and bundled payments.
Their combined resources will support a wide range of advanced payment models. Combined, the companies will support approximately $10 billion in total medical spending.
Lynn Barr, Caravan’s founder and president, will join Signify Health as chief innovation officer upon completion of the deal, which is expected by the end of March. “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,” Barr commented.
Tim Gronniger, who is the current CEO of Caravan and will become Signify Health’s EVP of accountable care, added, “We are thrilled to welcome Caravan Health’s team as we build the infrastructure and payment models that are needed to achieve patient-centric, holistic care and better outcomes for everyone, especially the underserved.”
Learn more about Signify Health here.
Learn more about Caravan Health here.
