Cano Health, Inc. operates a primary care-centric, technology-powered healthcare delivery and population health management platform.
The company is one of the largest independent primary care physician groups in the U.S. The company utilizes its technology-powered, value-based care delivery platform to provide care for its members.
The company predominantly enters into capitated contracts with the nation’s largest health plans to provide holistic, comprehensive healthcare. In 2022, a significa...
Cano Health, Inc. operates a primary care-centric, technology-powered healthcare delivery and population health management platform.
The company is one of the largest independent primary care physician groups in the U.S. The company utilizes its technology-powered, value-based care delivery platform to provide care for its members.
The company predominantly enters into capitated contracts with the nation’s largest health plans to provide holistic, comprehensive healthcare. In 2022, a significant portion of the company’s revenues were from recurring capitated arrangements. The company predominantly recognizes recurring per member per month capitated revenue, which, in the case of health plans, is a pre-negotiated percentage of the premium that the health plan receives from the Centers for Medicare & Medicaid (CMS). The company also provides practice management and administrative support services to independent physicians and group practices that it does not own through its managed services organization relationships, which it refers to as its affiliate providers. The company’s contracted recurring revenue model offers it highly predictable revenue and rewards it for providing high-quality care, rather than driving a high volume of services. CanoPanorama, the company’s proprietary population health management technology-powered platform, is a critical enabler of its efforts to deliver superior clinical care.
The company provides access to care to primarily underserved and dual-eligible (i.e., eligible for both Medicare and Medicaid) populations, many of whom live in economically disadvantaged and minority communities, thereby contributing to the revitalization of these communities.
As of December 31, 2022, the company operated medical centers in Florida, Texas, Nevada, New Mexico, Illinois, and California.
The company delivers value-based primary care through an integrated model.
Patients: At the company’s owned medical centers, its members are offered services in modern, clean, contemporary facilities, with same or next day appointments, integrated virtual care, wellness services, ancillary services (such as physiotherapy), home services, transportation, telemedicine and a 24/7 urgency line, all without additional cost to them. This broad-based care model is critical to the company’s success in delivering care to members of low-income communities, including large minority and immigrant populations, with complex care needs, many of whom previously had very limited or no access to quality healthcare.
Payors: Payors want three things, such as high-quality care, membership growth and effective medical cost management. The quality of the company’s care is reflected in high quality ratings, increasing the premiums paid by CMS to health plans. The company’s quality primary care providers have driven its membership growth. Finally, the company is at risk for its members' medical costs, which helps plans achieve predictable margins.
Providers: The company’s employed physicians receive the tools and multi-disciplinary support they need to focus on medicine, their patients and their families rather than administrative matters, such as pre-authorizations, referrals, billing and coding. The company’s physicians receive ongoing training through regular clinical meetings to review the latest findings in primary care medicine. In addition, the company’s physicians are eligible to receive a bonus based upon optimal patient results, including the reduction in patient emergency room visits and hospital admission, among other metrics.
The company enters into employment agreements with its employed providers to deliver services to patients. The company also contracts with independent physicians and group practices that it does not own through its managed services organization. The company enters into Primary Care Physician Provider Agreements with affiliated physicians pursuant to which it provides administrative services, including payor and specialty provider contract negotiation, credentialing, coding, and managed care analytics.
The Cano Health Care Delivery Platform
The key attributes of the Cano Health care delivery platform are:
Clinical Excellence: The company focuses on ensuring low mortality rates, as well as a fewer hospital stays and emergency room visits for its members, as measured through hospital admissions per thousand members and emergency room visits per thousand members, respectively. The company compares these metrics against Medicare benchmarks as a way to assess performance. The company also focuses on the HEDIS quality score for its members, a tool used by health plans to measure performance on important dimensions of care and service.
Patient Focus: The company focuses on the Medicare-eligible population, particularly through the Medicare Advantage program. This population generally has complex needs which, if properly managed, represent the greatest potential for improved health outcomes. In addition to quality medical services and care management programs, the company provides members with social services to keep them active and engaged with others. Dental services and pharmacy delivery are available in many locations.
CanoPanorama: To turn the company’s principles into results that benefit its members, providers and the healthcare system as a whole, the company utilizes a population health management platform known as CanoPanorama. CanoPanorama integrates all member data into one consolidated and centralized repository, in order to assist providers in accessing fragmented information across the health system and get a complete picture regarding their patient. The platform also provides analytics, reports and protocols that inform key care management activities by its employees and physicians. Through CanoPanorama, the company develops and implements processes that utilize dynamic risk stratification and drive proactive member engagement to ensure members receive the right care and physicians receive the right support.
Relationships with Leading Health Plans: The company has established strong relationships with numerous health plans and are an essential component of their provider network. The company is capable of delivering membership growth, clinical quality and medical cost management based on its care coordination strategy, differentiated quality metrics and strong relationships with members. The company has established itself as a top-quality provider across multiple Medicare and Medicaid payors, including Humana, UnitedHealthcare, Elevance Health, CVS Health and others.
In particular, the company is an important partner for Humana, a market leader among Medicare Advantage plans. In Florida, Humana’s largest Medicare Advantage market, the company served more than 64,000 Humana Medicare Advantage members, as of December 31, 2022. Pursuant to certain agreements with Humana, the company operates medical centers in Texas, Nevada, and Florida for which Humana is the exclusive health plan for Medicare Advantage products.
Growth Strategy
The key elements of the company’s growth strategy focus on organic growth in markets; expansion into new markets; accretive acquisitions; and multiple value-based care opportunities.
Seasonality
The company’s operational and financial results, including capitated revenue per member per month (PMPM) medical costs and organic membership growth, experience some variability depending upon the time of year in which they are measured. This variability is most notable in the following areas:
Capitated Revenue Per Member
The company typically experiences the largest portion of its at-risk patient growth during the first quarter when plan enrollment selections made during the prior annual enrollment period from October 15th through December 7th of the prior year take effect.
Medical Costs
The company experiences higher utilization levels during the first quarter of the year (year ended December 2022) due to influenza and other seasonal illnesses, as well as a result of adding new members with higher acuity.
Organic Member Growth
The company experiences organic member growth throughout the year as existing Medicare Advantage plan members chooses its providers and during special enrollment periods when certain eligible individuals can enroll in Medicare Advantage plans during the year. The company experiences some seasonality with respect to organic enrollment, which is generally higher during the first and fourth quarters, driven by Medicare Advantage plan advertising and marketing campaigns and plan enrollment selections made during the annual open enrollment period. The company also grows through serving new and existing traditional Medicare, Affordable Care Act (the ACA), Medicaid, and commercial patients.
Governmental Regulations
The company’s operations are subject to various state law requirements for licensure of ancillary services, such as lab services and operation of radiological equipment, as well as the federal Clinical Laboratory Improvement Amendments of 1988, Drug Enforcement Administration standards for administering and prescribing controlled substances and distributing drug samples, reporting financial relationships with drug, biologicals and medical device companies, and numerous other federal, state and local laws governing the day-to-day provision of medical services by its centers.
History
Cano Health, Inc. was founded in 2009.
The Analyst Price Target shows the analysts’ low, high, and average target at a glance.
