Bruce Japsen Apr 17, 2019, 08:20am
UnitedHealth Group’s effort to acquire DaVita
Medical Group has dragged on longer than expected for an acquisitive healthcare
company known for closing transactions on time and with little regulatory
hassle.
But there appears to be little concern from
UnitedHealth executives who provided an update Tuesday on the $4.3 billion acquisition during
an 80-minute call to discuss first quarter earnings with
Wall Street analysts.
“We are progressing toward the close of the
DaVita Medical Group transaction and we look forward to adding more markets,
more doctors, and clinical staff serving more patients,” UnitedHealth CEO David Wichmann told
analysts.
The acquisition of DaVita, first announced in December of 2017,
has yet to close even after UnitedHealth and DaVita amended their original
purchase agreement to lower the price of the large operator of clinics and
doctor practices to help win approval of the deal from the
Federal Trade Commission.
The transaction was originally expected to
close in 2018, but that changed after the acquisition price fell by about $600 million from $4.9 billion.
And in a regulatory filing last year,
DaVita said it expected to close the transaction “in the first quarter of
2019.”
Generation Unlimited
Once it closes, UnitedHealth’s Optum medical
care provider business will gain a large network of nearly 300 medical clinics
that treat more than 1.7 million patients annually, the companies have
said.
“It is a critical part of the strategy that we
have around reinventing health care delivery to access more markets and at the
same time then go much deeper into those markets to make them work much more
effectively,” Wichmann said. “At this stage, we have a clear path to approval
in closing of the transaction, but unfortunately, we cannot comment on further
details or timing at this stage. We are working through a couple of matters
that remain.”
The deal is among a growing number of
transactions sweeping the healthcare industry to put providers of medical care
under the same umbrella as health insurance companies. Pharmacy giant CVS
Health last year bought Aetna, the nation’s third-largest health
insurer, insurer Humana has been signing deals with multiple providers
including drugstore giant Walgreens Boots Alliance, and big Blue Cross and Blue Shield
plans are investing in primary care providers.
DaVita Medical Group is a subsidiary of DaVita
Inc., which is a large provider of kidney care and dialysis services across the
U.S. UnitedHealth is not acquiring the kidney care centers. The DaVita
operations sold to Optum include urgent care centers, surgery centers and
medical clinics with primary care doctors and specialists in California,
Colorado, Florida, Nevada, New Mexico and Washington State.
The addition of the DaVita operations would
add to an already growing national network of medical care providers under the
Optum umbrella, executives have said.
“OptumCare's vision for care is to create a
leading value-based patient centric physician health care system in the United
States and we will do this through local markets,” Dr. Wyatt Decker, CEO of OptumHealth, who joined the company earlier this
year from the Mayo Clinic, told analysts Tuesday.
“We're already in 36 markets," Decker added. "And if
you include our MedExpress and ambulatory surgical centers, it would be 60
markets. We have 38,000 employed in affiliate physicians, and this will
continue to grow organically as well as inorganically.”
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