Evolent buys New Century Health to beef up specialty care

Les Masterson

Sept. 13, 2018

Dive Brief:

• Washington, D.C-based Evolent Health plans to acquire New Century Health for up to $217 million, which the company said will help manage high-cost specialty care for providers and payers.
• Founded in 2011, Evolent sells population health services for Medicare, Medicaid, commercial and self-funded adult and pediatric populations in more than 30 healthcare markets. The company also operates a commercial health plan in New Mexico for small and large companies.
• New Century Health is a specialty care management company that focuses primarily on cancer and cardiac care. It manages about 462,000 Medicare Advantage lives under performance-based arrangements and also sells administrative services only to several organizations.

Dive Insight:

The graying of America coupled with rising chronic care and end-of-life costs are causing companies to look for ways to expand their footprint while controlling costs. Population health is also a potential growth area for payers and other sectors. Providers and payers are interested in social determinants of health especially as they figure out ways to identify and help at-risk members and patients.

With its purchase of New Century, Evolent is looking to expand its control over costs and move into Medicare Advantage, a high-growth area. MA brings potential new members daily as baby boomers age into Medicare. 

Analysts at Leerink said in a note on the transaction that while top-line growth at Evolent is "excellent, it is still a fairly young company" facing incremental risk ties to its acquisition of Valence two years ago and potential repeal of parts of the Affordable Care Act with Republicans in charge of Congress.

In announcing the deal, Evolent trumpeted New Century's ability to bring together clinical, pharmacy management and physician engagement to help patients with cancer and cardiac care needs. New Century serves 12 long-term operating partners in multiple states, including at-risk provider organizations and payers.

Evolent Health President Seth Blackley said in a statement that the acquisition will "expand access to the payer market directly and allow us to facilitate collaboration between payers and providers." Evolent CEO Frank Williams said the deal will allow the company to differentiate itself from competitors.

The combined company will sell services and technology across Medicare Advantage, Medicaid and commercial populations. When the deal closes, the organizations will serve a total of more than 3.5 million lives across more than 40 long-term operating partners.

Williams recently told Healthcare Dive that health systems and physician groups must engage patients and families and work with community agencies to improve care.

"If we find a complex patient, we could find out one of the main reasons is they don't have transportation to pick up medication. Then it becomes very easy for systems to say 'OK, we want to sign them up for a complex care program. We're going to involve a pharmacist in their system. We're going to drop medication off at their house and going to pick them up to come visit our practice' because the economic models align," he said.

The potential Evolent deal continues the M&A trend. The potential CVS Health-Aetna and Cigna-Express Scripts deals have received most of the headlines lately, but smaller deals made the second quarter the 15th consecutive one with more than 200 healthcare M&A deals, according to a PricewaterhouseCoopers report.

https://www.healthcaredive.com/news/evolent-buys-new-century-health-to-beef-up-specialty-care/532201/