Signify Health scoops up Caravan Health for $250M to form largest network of at-risk providers

Signify Health, a value-based care platform, has acquired accountable care organization builder Caravan Health for $250 million. 

Integrated together, the companies aim to help providers manage larger populations with value-based arrangements and better coordinate care. The acquisition creates a large national network of providers including 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 said.

“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,” said Lynn Barr, founder and chairwoman of Caravan Health, in a statement. Barr will become chief innovation officer of Signify Health.

Tim Gronniger, CEO of Caravan Health, will become executive vice president, accountable care at Signify Health and CEO of Caravan Health, a Signify Company. 

The combined companies contract with more than 3,200 health systems and physician group practices and 10,000 primary care physicians to cover more than 500,000 lives with approximately $10 billion total medical spend under management, according to the companies.

Signify is paying $250 million for Caravan using a combination of $190 million in cash and $60 million in Signify stock and will also make additional payments of up to $50 million based on Caravan's future performance. The deal is expected to close in the first quarter of 2022.

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The acquisition comes just a day shy of Signify Health's public market debut a year ago. The health tech company raised $564 million in its initial public offering.

Signify Health launched in December 2017 as the result of a merger between CenseoHealth and Advance Health. The company provides a value-based care platform that uses advanced analytics and other technology to shift health services toward the home. 

Caravan brings together accountable care organizations (ACOs) and says it's guided more than 300 independent health systems and 26,000 clinicians to achieve meaningful results through value-based care. The deal follows Caravan's recent expansion in the Medicare Shared Savings Program, which added 25 health systems and four ACOs into its Collaborative ACO model that has saved Medicare more $476M and earned more than $235M in total shared savings, according to the company.

Caravan offers population health management expertise, while Signify brings specialty care and care transition knowledge to the table. As of the end of 2020, Signify had contracts with 26 of the top 50 Medicare Advantage plans, according to the company. 

Signify’s goal to expand its at-home service offerings, episodic care programs and networks is not new, Armbrester said.

These growth strategies were laid out in its prospectus filing (PDF) when the company went public last year. The payers Signify work with have been asking it to expand risk contracts to providers, Armbrester said, since the government shifted Medicare risk to payers.

The company plans to leverage these relationships to increase provider participation in commercial value-based care programs.

"This focus also supports critical imperatives from the Centers for Medicare & Medicaid Services to improve health equity and have everyone in Medicare fee-for-service aligned to an accountable relationship by 2030,” Armbrester said.