Yahoo Finance A Miami health company is changing after bankruptcy. What that means for your care
Can a healthcare company emerging from a financial free fall offer more healthcare for its patients?
Miami-based Cano Health, which runs 80 medical centers in Florida, says it’s now in a good place after cutbacks and bankruptcy — and is rolling out a series of improvements.
Those new services include physical therapy, massage therapy, physical medicine and rehabilitation. Prescription medications available to patients during the time of a primary care visit. And a new hotline allowing home patients to connect with nurse practitioners around the clock.
Founded in 2009, Cano Health specializes in primary care for seniors and operates medical centers, pharmacies and other programs, including at-home services. The goal is to to be a “one-stop shop” of care for patients, CEO Mark Kent told the Miami Herald in an interview.
“We’re looking at new things and different services across our various centers,” Kent said.
But it hasn’t been easy getting to this point.
The senior-centric healthcare company announced last week that it had “successfully emerged” from a months-long Chapter 11 bankruptcy. The previously public company is now private again and said it’s on track to meet cost-saving goals by the end of the year.
“I’m proud to say that we have seen through this turnaround — 2024 is a transformative year for our company,” Kent said.
Cano Health, which rapidly expanded to more than 170 medical centers across Florida, Texas, Nevada, Illinois, New Mexico, California and Puerto Rico, has a smaller footprint now. It sold all but 80 of its centers. The remaining primary care centers are in Florida, with more than half in Miami-Dade, Broward and Palm Beach counties.
Cano says its doctors treat more than 310,000 patients in the state at centers that offer primary and specialty care, dental, vision, and behavioral health treatment.
As part of the “new Cano Health,” patients will undergo an assessment so staff can better understand what type of services they need, the CEO said. Patients will then be assigned a care manager to help them and their families navigate the healthcare system, including hospitals and specialists.
Why did Cano Health declare bankruptcy?
Cano Health, one of the largest independent primary care physician groups in the United States, filed for Chapter 11 bankruptcy in February after an “aggressive strategy” to rapidly expand left it buried in debt.
The company’s “serious financial challenges” were caused by inefficiencies, more expenses and “increased competition in the Medicare Advantage insurance market,” Kent said in court records. And the bankruptcy news didn’t surprise healthcare experts.
Overly aggressive growth — a strategy that in 2019 led to the No. 1 spot on Inc’s 5000 list as the fastest growing healthcare company in the U.S. and No. 6 overall across all industries — mismanagement, and a focus on targeting seniors with Medicare Advantage plans at the worst possible time when reimbursements were decreasing turned into a “deadly” combination for the company, said Dr. Howard Forman, a professor of radiology, public health and economics at Yale who has kept tabs on Cano Health’s bankruptcy.
“When you’re chasing a wave and you get on that wave and you can ride it, that’s a good thing. But when you chase a wave and the wave gets away from you and all you do is fall into the water, that’s a bad thing, and I think in this case, they got on the wave too late,” Forman told the Miami Herald.
Cano Health was expanding and trying to build its practice at a time when companies with similar models of care were being acquired by large health plans, he said.
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How is Cano Health doing now financially?
Cano Health has emerged from bankruptcy with more than $200 million in new funding from existing investors. And instead of paying all the money it owed to creditors, the company said it struck a deal to convert more than a $1 billion of its debt into a stock system that turns creditors into shareholders.
The company is now doing “very, very well” financially, according to Kent, who was appointed as Cano Health’s CEO last year.
To help reduce costs, Cano Health laid off about 700 employees, or 17% of its workforce last year, sold its non-Florida centers — its Texas and Nevada centers, for example, were sold to Humana subsidiary CenterWell Senior Primary Care for $66.7 million — and got permission in court to terminate 72 “dark leases” for locations the company never opened but were paying rent.
So far, the company says it has saved more than $270 million and is “performing favorably” against its previously announced $290 million cost reduction goal for the year.
Forman, the Yale expert, said Cano Health’s decision to stay in Florida is a good one. The state has an aging population and also tends to have a higher volume of healthcare services, visits and procedures compared to other parts of the country.
But while the Medicare Advantage market in the U.S. has for more than a decade been “one of the most lucrative spaces in healthcare,” it has shrunk and become “relatively stagnant” since last year, and it’s unclear whether it will get a boost again over the next few years, Forman said.
It’s a wait-and-see approach on whether the market, which involves Medicare-approved private companies that cover most Medicare benefits, will become more profitable again.
And Cano Health will need to work on retaining and building trust with existing and new patients, he said.
Is growth still in the future for Cano Health?
For now, Cano Health plans to double-down its efforts in Florida, though the CEO is hopeful the company can eventually expand into other states again.
Kent says he has a “multi year plan” that will help create partnerships to bring Cano Health to other states. But the company will be more “prudent” with its growth this time around and likely won’t start looking into expansion until late 2025 and 2026, he said.
“One of the things that we’ve learned here — and I‘ve been an entrepreneur numerous times now and I learned this from my grandfather — if you do not do a rapid acceleration, then you don’t have to do the rapid deceleration,” Kent said. “But you know, if you’re slow and steady with your growth, if you’re very mindful, if you’re very planful, if you’re very strategic, you usually will hit your goal.”
Kent said the company’s leadership has also learned that they can’t “lose sight of the core, and our core is taking care of our patients.”
