Humana Up on ACO Deal with Iora Health for MA Members - Analyst Blog

Shares of Humana Inc. ( HUM ) rose nearly 1% over the last two trading sessions to close at $133.18 after the company partnered with Iora Health to launch an Accountable Care Agreement.

The program intends to benefit Humana's Medicare Advantage (MA) members in Arizona and Washington. The members stand to gain from the opening of Iora Health's four primary care practices in the states, two in Phoenix and two in Seattle. These primary care practices will be formed under the Iora Primary Care brand.

Humana's Accountable Care initiative is similar to an Accountable Care Organization (ACO). An ACO is a collaboration of healthcare providers who voluntarily form alliances to provide coordinated high quality care to patients. An ACO is accountable for the quality, cost and overall care offered to members. Focus on the needs of patients and the linking of payments to outcomes enables the model to improve the health of individuals and communities and limit the rise in healthcare costs.

In accordance with the objectives of an ACO, the aforementioned deal should benefit both Humana and Iora Health. Iora's veteran team of doctors, nurses, health coaches, medication management, behavioral health and social services resources will help in enhancing the patient care experience for Humana members. For this, the partnership will resort to population management tools like predictive analytics and chronic care, disease management and wellness programs. Moreover, as Humana's members will be offered care under the Iora Primary Care brand, the deal will enhance the goodwill of Iora and give it access to more number of patients. Additionally, apart from providing value-based incentives, the deal will lead to steady revenue generation for Iora Health.

The Arizona and Seattle primary care practices will open in Sep 2014 while the Washington primary care will open in Oct 2014. However, Humana MA members will be able to access the services in the regions from Oct 1, 2014 and Nov 1, 2014, respectively.

Humana currently consists of 33,000 primary care physicians and has Accountable Care associations with 900 organizations. It strives to improve patient care through its Accountable Care Continuum and thus engages in value-based partnerships with various healthcare organizations. We believe the aforementioned deal will help Humana strengthen its operations in Arizona and Washington, thereby paving the way for higher revenues.

Other insurers actively engaged in forming ACOs include UnitedHealth Group Incorporated ( UNH ), Aetna Inc. ( AET ) and Cigna Corp. ( CI ).

Humana currently carries a Zacks Rank #3 (Hold).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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