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Value-Based Care

Maia Anderson

Healthcare Brew delivers the latest news and trends in healthcare.

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Ever wonder what entices an executive to jump ship and join a new health system? For Amy Perry, Banner Health’s insurance arm caught her eye.

Perry joined the Arizona-based nonprofit health system as president and COO in November 2021 and took the reins as president and CEO in July 2024. Before joining Banner, she was SVP of integrated care delivery and CEO of New Jersey-based Atlantic Health’s hospital division for four years.

Banner is Arizona’s largest health system and consists of 33 hospitals that handle roughly 6.4 million clinic visits per year and have more than 55,000 employees. The system brought in $15.6 billion in revenue in 2024.

Perry told Healthcare Brew the fact that Banner has its own health plan with about 1.2 million members was a big part of the reason she took the job, as she sees provider-sponsored health plans, or PSHPs, as a “really important approach to healthcare.”

PSHPs are health insurance companies that are owned, either partially or fully, by a health system, hospital, or other provider group. The largest example is the Kaiser Foundation Health Plan, which has more than 12.6 million members and is run by Kaiser Permanente, a California-based health system.

As of 2022, 197 health systems in the US (or 31%) have PSHPs, according to healthcare analytics firm Trilliant Health.

PSHPs help health systems move away from a 

Healthcare’s reliance on sick people to generate revenue is a primary reason costs keep rising, according to Perry.

“When we are able, as health systems, to get premium revenue, we can actually save money when people stay well. It’s almost a completely shifted paradigm,” she said.

About 74% of Banner’s revenue came from the fee-for-service side of the health system and about one-quarter (or about $4 billion) came from premiums in 2024, Perry said.

“I’m just a fervent believer that we’ve got to find a way to migrate, as health systems, toward more of this at-risk, premium-based care,” she said.

However, it’s not easy to be both insurer and provider, according to Katherine Hempstead, a senior policy officer at healthcare research organization Robert Wood Johnson Foundation.

That’s because providers are typically incentivized to do more higher-cost procedures while payers try to keep costs down.

“When you’re trying to do both jobs, it can create a conflict,” Hempstead said.

Some large hospitals, including Northwell Health, the largest health system in New York, have 

 to create PSHPs. Northwell blamed high risk adjustment payments for why it shuttered its PSHP, CareConnect Insurance Company, in 2017, Fierce Healthcare reported. 

Perry acknowledged how hard it is to run both a health system and an insurer, saying “it’s very difficult to live in both worlds.”

However, despite the challenges, there are also upsides, she added, such as premium revenue that allows the health system to invest in chronic disease management and other things “you wouldn’t even consider on the fee-for-service side because there’s simply not enough funding.”

But premium revenue hasn’t shielded Banner from broader industry headwinds like Medicaid funding cuts and 

President Trump’s One Big Beautiful Bill Act, which was signed into law on July 4, is set to 

 by about $1 trillion over the next 10 years. Perry said Banner is bracing for a reality in which some services may have to be cut.

“We have a significant commitment to Medicaid patients and the service lines, but at the same time, there’s only so much we can do if we are scaled back,” Perry said. “Access will be affected, not only in clinics but in emergency rooms.”

To prepare for the cuts, which will take effect 

 over the coming years, Banner is “battening down the hatches like most health systems and trying to reduce our expenses as much as possible,” she said.

Tariffs on products like aluminum and steel already cost Banner roughly $23 million as of September, according to Banner’s SVP of Finance Adrienne Moore, and the health system expects that figure to be less than $35 million by the end of 2025.

In addition to navigating Medicaid cuts and tariffs, one of Perry’s top goals as CEO involves a $1 billion investment in technology the health system plans to pay over the course of five years, she said.

As part of that initiative, Banner created its own ChatGPT-like program called BannerWise via a 

 with AI company Anthropic to analyze data from things like physician notes and pathology results, Modern Healthcare reported earlier this month. Perry told Healthcare Brew this will help providers use the health system’s data “in a more strategic and analytical way.”

Beyond investing in technology, Perry said she’s very focused on connecting with the communities the health system serves in the near term.

“If we’re able to do that and we do it successfully over the next five years, I’m going to be one happy CEO,” Perry said. 

A woman, Amy Perry, Banner Health CEO, cutout and contained in an abstract shape while breaking the frame.

Banner Health CEO Amy Perry on running a health system with an insurance business

From health insurance to Medicaid cuts, Perry dishes on her first year leading Banner Health.  

Banner Health CEO on running a health system with an insurance business

In a significant strategy pivot, Walgreens is considering selling its VillageMD primary care subsidiary just three years after 

 for $5.2 billion, according to an August 7 SEC filing.

VillageMD clinics provide primary care services, with many locations attached to Walgreens pharmacies. The retail pharmacy chain’s goal when it first bought VillageMD was to 

, which managing partner Michael Abrams at healthcare consulting firm Numerof & Associates previously told Healthcare Brew is a lucrative expansion opportunity for pharmacies.

In the SEC filing, Walgreens executives said they’re “evaluating a variety of options” for VillageMD, which “could include a sale of all or part of the VillageMD businesses, possible restructuring options, and other strategic opportunities.”

Walgreens announced in March that it would close 160 VillageMD clinics following a $6 billion net loss reported in Q2 2024 earnings. Walgreens CEO Tim Wentworth then said in late June that although the company would reduce its stake in VillageMD, it would continue to “believe in [its] future” and “remain an investor and partner,” as 

VillageMD played a large part in Walgreens’s goal of becoming a “consumer-centric healthcare company” rather than just a chain of pharmacies, a plan former CEO Rosalind Brewer announced in 2021.

As part of that plan, Walgreens spent more than $13 billion to build out its US Healthcare unit, which includes VillageMD, specialty pharmacy company Shields Health Solutions, and post-acute care company CareCentrix.

Michael Cherny, a senior managing director of healthcare technology and distribution at investment bank Leerink Partners, told Healthcare Brew last year that Brewer’s strategy was “a drastic difference” from how the company had previously operated. 

Now, under current CEO Wentworth, who took the reins in 

, Walgreens appears to be “putting all that strategy in reverse,” according to John Ransom, managing director of healthcare research at investment bank Raymond James.

“[With] the stock at $10 a share, it’s not surprising to conclude that those moves didn’t work out,” Ransom said of Brewer’s strategy to move deeper into healthcare.

In June, following Walgreens’s most recent earnings, shares fell over 20% and were down 54% compared with the start of the year, the 

 a $13.1 billion operating loss for the first nine months of FY2024 and lowered its 2024 profit forecast from $3.20–$3.35 per share to $2.80–$2.95 per share.

What is surprising, however, is the decision to sell VillageMD right now, at a time when the asset isn’t performing well, Ransom added. “The timing of that just doesn’t seem to make any sense right now.”

 It’s unclear what Wentworth’s strategy is exactly, as company execs haven’t publicly disclosed many details about the shift. But, according to Ransom, it appears the CEO’s hoping to refocus on the retail pharmacy part of Walgreens’s business.

“Informed by our strategic review, we are focused on improving our core business: retail pharmacy, which is central to the future of healthcare,” Wentworth said in the company’s Q3 2024 earnings release.

Walgreens considers selling VillageMD as it shifts away from primary care

The company spent more than $5 billion to buy the primary care provider just three years ago. 

Will Peischel

Strive Health, a value-based kidney care provider, is set to provide services to insurer Medical Mutual’s 1.2 million members under a new partnership announced Tuesday.

Strive estimates that more than 10,000 patients with chronic kidney disease (CKD) and end-stage kidney disease (ESKD) of Medical Mutual’s 1.2 million members may benefit from its services, regardless of whether the coverage is provided through individual, Medicare Advantage, or commercial group health plans. The partnership between the Denver-based provider and the Ohio insurer began last summer. Strive declined to share how many members have since enrolled in the effort.

“What we do is what you would want done for your mom or your dad—or your grandfather or grandmother,” Strive co-founder and CEO Christopher Riopelle told Healthcare Brew. “In our country today, we fail patients who are in late-stage kidney disease. There is very little intervention and engagement of these patients prior to their kidneys actually failing.”

CKD corrodes the kidney’s ability to filter waste from blood and produce urine. If left untreated, it can evolve into ESKD, which could require dialysis to filter the kidneys or an organ transplant, 

 estimated that 35.5 million people in the US have CKD.

The kidney disease provider operates under a value-based model—in which patient outcomes rather than number of procedures drive profits—and relies on in-house computer models to help diagnose kidney disease early. The model has led to a 42% reduction in hospitalizations, according to Strive’s press release, which compared 2021 data from the US Renal Data System Annual Data Report to the company’s patient data.

Strive’s proprietary tech, called CareMultiplier, uses a cluster of 40 computer models to analyze patient data—such as past lab results or vulnerability scores—to identify kidney disease earlier, Farhad Modarai, Strive’s chief clinical officer of population health, told Healthcare Brew. The provider then offers care to eligible members through telehealth or in-person treatment.

“We want to work as upstream as possible,” he said. “Then we can kind of get some insight into what’s driving the underlying chronic kidney disease and how we slow it down, and hopefully prevent the progression.”

Riopelle declined to comment on whether Medical Mutual pays for Strive’s services, but said that Strive’s total healthcare spend, which spans 34 states, is about $3.8 billion. He also said the company aims to treat patients in all 50 states by the end of the year.

The partnership with Medical Mutual isn’t Strive’s first step into Ohio. The kidney care provider already offers direct care through Bon Secours Mercy Health, one of the largest healthcare systems in the country, but Riopelle estimates that the approximately 10,000 new patients from Medical Mutual’s membership would increase the total number of patients under Strive’s care in Ohio by 70%.

To meet the increasing demand, he said that Strive, which employs 800 workers, has increased its Ohio team to 50 members, including 40 in clinical roles.

“We have deep roots in Ohio,” Riopelle said. “And we wanted to go deeper.”

Kidney care provider Strive Health partners with Ohio insurer Medical Mutual

Hold on to your kidneys, folks. 

Shannon Young

On Fridays, we schedule our rounds with Healthcare Brew readers. Want to be featured in an upcoming edition? 

This week’s Making Rounds spotlights Nima Ahmadi, co-founder and CEO of the Wound Company, a Minneapolis-based virtual platform that works with health plans and providers to connect patients to wound and ostomy care.

Ahmadi highlighted the importance of treating chronic wounds, a condition that he noted generally receives little attention outside of healthcare circles despite the fact that it affects millions of people in the US—including 10.5 million Medicare beneficiaries according to a 2023 

—and costs the health system an estimated $50+ billion each year.

This interview has been lightly edited for length and clarity.

Tell me about your work and why you decided to focus on wound care.

Within wound care, the whole space is completely broken. Wound care companies benefit from patients being wounded, having multiple wounds, staying wounded—and that’s just not the right financial incentive system. Patients are seen when their wounds have advanced quite a bit, and a lot of stuff is done to them. Then they’re let loose, and they don’t get follow-up; things go awry—there’s a huge spike of intervention.

What we’ve pioneered is to assign somebody who’s truly an expert in wound care—nurse practitioners, nurses—to every patient with a wound. We are going to follow them continuously and remain engaged so we can intercept these wounds earlier, we can heal them faster, we can drive prevention of these wounds, and we can use technology and analytics to help us segment those populations and know where to throttle up—what kind of individualized care plans these individual patients should be in and quantify our results continuously to drive a closed feedback loop.

We do all of this without participating in those kinds of perverse incentive models and actually shifting the payment system in wound care to 

What’s the best change you’ve made or seen at a place you’ve worked?

With the Wound Company, we’ve already helped hundreds and hundreds of patients. We have saved people’s legs—even as a young startup—from amputation. Despite nutritional status, smoking, and diabetes. We’ve shown that this model of getting engaged early and staying engaged can actually be helpful and heal faster or maintain wounds without further complications. That’s been extremely rewarding to see.

What healthcare trend are you most optimistic about and why?

The shift to value-based care and actually creating incentive structures that promote keeping people healthy, like what we’re doing with our payment model for wound care. The conversation and what we’re trying to push toward. There seems to be more energy around that, especially for our most vulnerable senior populations.

The Wound Company’s Nima Ahmadi wants to bring a value-based approach to wound care

Wound care affects millions of people in the US and costs health systems billions.

Health insurers Cigna and Humana are exploring a merger, and a deal may come as soon as the end of 2023, people familiar with the matter told the 

If an agreement is reached, the combined insurance company would rival giants UnitedHealth Group and CVS Health in size, the latter of which owns the insurer Aetna, the WSJ reported on Wednesday afternoon.

Both Cigna and Humana are already major players in the health insurance market. Cigna’s market value was around $83 billion and Humana’s stood at about $62 billion as of November 29, according to the WSJ. In 2022, Cigna reported $180.5 billion in revenue and Humana reported nearly $93 billion.

According to the WSJ, the two companies each have something the other wants: Humana has a strong Medicare business and Cigna has a large pharmacy benefits business.

Humana could also help Cigna advance its 

 strategy, and Humana’s home health business could help grow Cigna’s Evernorth unit, the WSJ reported.

The two companies have already taken steps to avoid antitrust concerns. Cigna has looked into selling its Medicare Advantage business, 

 reported earlier this month. And per the WSJ, Humana divested its commercial business in February.

This isn’t the first time Cigna and Humana have explored combining. The two companies looked into a merger deal in 2015, but Humana decided to target Aetna instead, the WSJ reported, though antitrust regulators blocked the move, and CVS later bought Aetna in 2018.

If the Cigna and Humana merger is successful this time, it would be the largest in 2023 across all industries, according to the WSJ.

A person holds a smartphone with Humana written on it

Cigna and Humana reportedly looking to merge 

The combined companies could rival insurer giants UnitedHealth Group and CVS Health. 

In recent years, private equity (PE) firms have acquired companies across the healthcare industry, from 

. But they’re not stopping there: PE firms are also acquiring companies that make medical supplies.

PE firms have increasingly bought up medical equipment companies over the last decade, which has led to cost-cutting strategies that, at times, can compromise patient care, according to a 

 from nonprofits the Private Equity Stakeholder Project (PESP) and the National Disability Rights Network.

“Due to the private equity industry’s extreme focus on profit, patients are forced to endure potentially life-threatening delays, costs, and legal hurdles to access the equipment needed to manage their health,” PESP said in a statement.

The report, released this month, focuses on durable medical equipment (DME) manufacturers, which make medical supplies like wheelchairs, blood sugar meters, respiratory equipment, and other supplies patients use to manage chronic conditions and disabilities. The DME industry was worth $60 billion in 2022, according to PESP.

“As private equity firms continue to buy medical equipment manufacturers and suppliers, they have sought to cut costs to maximize outsized returns,” Eileen O’Grady, research and campaign director at PESP, said in a statement. “We have found these typical PE business practices result in quick profits for the firms, often at the expense of patients.”

Some of those cost-cutting initiatives include layoffs, which can result in patients having to wait “weeks or even months” to get “critical repairs” done on their medical equipment, O’Grady wrote in the report.

Cost-cutting initiatives at the two largest wheelchair suppliers in the US—Numotion, owned by PE firm AEA Investors, and National Seating & Mobility, owned by PE firm Cinven—have been linked to lagging repair times for patient DME, according to the report.

And demand for DME is only increasing thanks to the 

In the report, O’Grady made several policy suggestions to limit potential patient harm, including legislation that mandates timely equipment repairs, eliminates prior authorization requirements for repairs, and limits industry consolidation.

“Delays to repairs are more than just an inconvenience to an individual who relies on a mobility device—they are exclusionary and life altering,” Marlene Sallo, executive director of the National Disability Rights Network, said in a statement. “We must act on the policy reforms called for in this report to ensure that corporate profits do not outweigh the needs of people with disabilities.”

Trade group the Medical Device Manufacturers Association, which represents medical equipment manufacturers, didn’t respond to Healthcare Brew’s request for comment.

Doctor holding a clipboard with surrounding medical elements

Private equity firms are buying up medical equipment suppliers, and it’s leading to patient harm, report says

An increasing number of private equity firms have bought medical equipment suppliers in the last decade.

Investment in companies that focus on quality over volume increased more than 400% between 2019 and 2021, according to a 2022 

Some recent deals include private equity firm Kinderhook Industries 

 in value-based primary care physician group Physician Partners in February 2022, and Humana, a health insurance company, creating a 

 with private equity firm Welsh, Carson, Anderson & Stowe in May 2022 to expand the insurer’s VBC clinics for Medicare patients.

So, why do private equity firms want to invest in VBC?

, it’s because there’s now more consensus among policymakers, payers, and providers that the US healthcare industry is making a broad shift toward VBC, and investors want to get in on the ground floor.

“Investors are eager to be on the right side of a secular change in an industry that represents nearly 20% of GDP,” Rebecca Springer, lead healthcare analyst at PitchBook, wrote in the April 2023 analysis.

The shift to VBC requires substantial up-front costs, Brent Nicholson, co-founder and chief partner officer at healthcare services company Carrum Health, previously 

Private equity dollars could help fill the gaps.

“VBC is difficult and requires technological, operational, and clinical acumen to successfully implement,” Springer wrote. “The transition toward value has already required, and will continue to require, significant capital investment not only into provider groups that are pursuing [alternative payment models], but into technology and tech-enabled services solutions that facilitate VBC for both providers and payers.”

The VBC market is expanding rapidly, leaving more room for investment. McKinsey analysts Zahy Abou-Atme, Rob Alterman, Gunjan Khanna, and Edward Levine projected in the 2022 analysis that if the VBC market continues to evolve at its current pace, it could someday have a $1 trillion valuation.

“Our research suggests that the number of patients treated by physicians within the value-based care landscape could roughly double in the next five years, growing approximately 15% per annum,” the analysts wrote. “Increased physician appetite for value-based models lies at the heart of this acceleration.”

Are you eyeing investment in a VBC company? Drop Maia a line at 

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