Anthem is betting on a different strategy than some of its competitors as it looks to transition to value-based care.

The payer is partnering with many value-based clinical platforms like Privia and CareMax to bring physicians into alternative payment models aiming to reimburse for the quality of care delivered, as opposed to pure volume. That's a different tack on value-based primary care than its peers like UnitedHealth and Humana, which have mostly acquired and built their own clinical networks.

But Anthem is betting its capital-light strategy is more sustainable and flexible as the payer looks to push deeper into capitation to really bend the cost curve.

More health insurers are expanding into value-based care delivery, especially in primary care, as steadily rising healthcare costs illustrate that they can only do so much to try to control costs through measures like prior authorization. Instead, payers are focusing more on changing physician behavior and are buying and partnering with medical groups, roping them into the financial benefits of preventing worse patient outcomes.

Anthem has moved to partner with doctors in its markets, allowing it to reap the benefits from those models without having to spend significant chunks of money on acquiring practices or impacting its consolidated margins, analysts say.

Through this strategy, the Indianapolis-based insurer avoids putting all its eggs in one basket, while evading the pitfalls of the physician practice management industry, such as operational costs and culture clash.

Anthem has licensing rights to sell Blue Cross plans in 14 states and in their commercial business have a significant chunk of market share in those geographies. That gives them a meaningful cost advantage relative to other plans, SVB Leerink analyst Whit Mayo told Healthcare Dive. That cost advantage translates to their provider network, and it's one Anthem has kept as they've approached their value-based strategy by opting to go down the path of partnership over ownership.

"That provides them with a lot of unique optionality as it relates to the type of strategy they want to deploy in a market, the type of provider that they partner with in a market and allows them to be very flexible, given each market is different," Mayo said. "Owning one medical group over here may make sense in one market, but owning a similar medical group in another market may not make sense given competitive dynamics and other market factors."

The ability to support multiple care models at once allows Anthem to scale coverage faster. It should also allow it to reinvest in other key areas, like growing its membership or expanding its services around its complex and chronic population.

Anthem, which is the second-largest health insurer by revenue and covers some 45 million members through its plans, has advanced that care provider strategy significantly over the past year.

The payer has been ramping up its investments in risk-bearing primary care providers and aggregator companies, which combine many clinics into one network, and has been increasing value-based arrangements across its network, CEO Gail Boudreaux told investors on a late January earnings call.

Management expects those value-based investments will result in faster membership growth, higher star ratings and better health outcomes, while ensuring it's not overly reliant on one care model as value-based care in the U.S. matures.

"Investing in providers and aggregators secures joint governance to maintain alignment of shared interest with our partners, giving Anthem value from sharing risk and elevating the customer and provider experience," Boudreaux said.

In May, Anthem invested $92 million in Privia Health, a company that provides physicians with technology to help them manage patient populations and enter value-based contracts with insurers.

It's an "alignment strategy that has a flair of synthetic ownership," Mayo explained. "We don't own you. But we want you to be successful, and we want to help you grow, and we want to introduce you to other medical groups that may want to affiliate."

Similarly, Anthem made an investment concurrant with value-based primary care provider Vera Whole Health's acquisition of health data and navigation company Castlight. Anthem is a long-time Castlight customer.

The deal, which is valued at $370 million, will bring a value-based care model to the employer market by integrating Castlight's technology with Vera's clinical network.

The hope is that investing in such tech-enabled value-based players allows Anthem to stand up partnership models aligned with its care providers, without assuming the financial and operational burdens of ownership.

They also benefit Anthem's diversified business group, a unit combining multiple companies like palliative care provider Aspire Healthcare and health plan CareMore Health that's focused on delivering integrated care models.

According to Boudreaux, such investments create opportunities for the diversified business group to service Anthem's providers with enablement programs and other services, many of which target complex and chronic patient needs.

"We see an opportunity to wrap around different provider enablement programs," Boudreaux said. "Some of the acquisitions we've done recently are good examples of where we can do pull-through, and we can participate in the profit pool in a broader way, so very consistent with that. They're very capital-efficient for us. And again, our focus is very much on complex and chronic, and we see significant opportunities."

Anthem has also been striking some notable partnerships with primary care chains. For the health insurer, the investments allow it to further build out its clinical network, potentially attracting more members. Meanwhile, physicians may be attracted to the arrangements because there's financial upside to entering a contract that includes bonuses for hitting certain targets

Though Anthem has taken ownership of care delivery centers in the past — including snapping up health plan and clinical network CareMore in 2011 and more recently home care company MyNexus in April — it generally shies away from full acquisitions, unless it makes sense in a local market.

"Our model primarily has been a partnership model," Boudreaux said.

Most recently in August, Anthem struck a contract with primary care chain CareMax, a tech-enabled care platform providing value-based care and chronic disease management. Under the terms of the partnership inked in August, the two will open 50 medical centers across the U.S. concentrated in areas where Anthem is zeroing in its value-based care efforts, including Indiana, Texas, Kentucky, Wisconsin, Georgia, Connecticut and Virginia.

Anthem is in the early days of many of these value-based clinical relationships, beginning them over the last 12 to 18 months, Boudreaux told investors. The payer predominantly started them in its privately run Medicare Advantage plans, but has been doing more value-based work in the commercial and Medicaid spaces.

"We see that expanding much more broadly to all markets and the skill sets there," Boudreaux said.

This partner-not-build strategy differs significantly from some of its biggest competitors.

Healthcare behemoth UnitedHealth, the parent company of UnitedHealthcare, the biggest private payer in the U.S., was the first health insurer to actually go buy medical groups, Mayo said. That creates growth, while hedging against market volatility by diversifying revenue streams — but relies on significant upfront investments, and has a long ROI.

UnitedHealth now owns an entire value-based provider network through its health services subsidiary, Optum.

Its physician network, OptumHealth, has grown steadily, with more than 60,000 employed or aligned physicians at the end of 2021. It acquired a number of medical groups last year, now operating more than 2,000 locations, and is a source of consistent revenue growth for UnitedHealth.

A key element of UnitedHealth's future growth strategy is accelerating the transition of patients to Optum-led value-based care models, CEO Andrew Witty said in early January.

UnitedHealth has talked about achieving 8% to 10% margin overall across its capitated membership.

But it's unclear whether the return on investment from buying practices is all that good, Mayo said. Buying practices is a capital-intensive strategy that only really makes sense for a company with the deepest of pockets.

Louisville-based Humana has also pursued full ownership of clinics, but has partnered with private equity giant Welsh, Carson, Anderson & Stowe to share that financial load. The payer, which is heavily reliant on its MA senior population for revenue, is acquiring clinics that serve that older population, while building some of its own.

Currently, Humana operates roughly 200 primary care centers operating under a value-based model, and plans to expand that senior-focused network to more than 240 sites by the end of 2022. Those clinics are under Humana's CenterWell Senior Primary Care brand, part of a business Humana created two years ago as part of its joint venture with WCAS. At the time, WCAS pledged $600 million to expand Humana's primary care centers.

Anthem is doing the same thing overall — looking to align targets to change physician behaviors — though without deploying that capital itself, or without turning to a PE backer to get it. But success in integrated care is a deeply enticing prospect to investors.

United's stock, for example, has the highest forward valuation of any other managed care company. Investors are really attracted by its diversified model and how it's been able to reposition itself to have a huge addressable market, Mayo said.

Anthem doesn't have as much money as United. But "Anthem has clearly made a very big point to investors that like, 'You're going to see us accelerate the number of partnerships where we can accomplish almost the exact same thing'" — just in its own way, Mayo said.

Anthem did not respond to multiple requests for an interview on its value-based strategy. But it only appears poised to grow its value-based models, and the degree of risk it trades in.

Currently, 60% of Anthem's members are covered in value-based arrangements of different forms in commercial, MA and Medicaid. Of that group, only a mid-teens percentage are in full-risk models.

That's in large part because Anthem's diversified business group doesn't have the same ample testing ground as, for example, UnitedHealth with Optum, Jefferies analyst David Windley wrote in a recent note on Anthem. Instead, Anthem enters value-based models where viable, and is building value-based enablement businesses within its diversified business group, while owning stake in others.

"Needless to say, as the shift towards cap accelerates, [Anthem] is increasingly focused on deepening its exposure," Windley said, noting "that 60% could grow to mid-60s this year" with the needle moving more toward the riskier end of the value-based care continuum.

"Our strategy is different than others," Boudreaux said. "We see that as unique."