UnitedHealth to Acquire DaVita Medical Group

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In early December, UnitedHealth and Denver-based DaVita announced that UnitedHealth would spend $4.9 billion to acquire DaVita Medical Group, comprising a medical staff of about 2000 physicians in a group currently owned by one of the nation’s largest dialysis companies. United Health Group’s Optum segment has headquarters in Eden Prairie, MN, and has clinics or centers in more than 150 locations worldwide.

Under terms of the deal, Optum acquires from DaVita Medical Group physician groups in California, Colorado, Florida, Nevada, New Mexico, and Washington. The physician groups serve approximately 1.7 million patients per year in approximately 300 primary care centers, 35 urgent care centers, and six outpatient surgery centers. The acquisition will expand Optum’s strategic care delivery portfolio, according to a joint statement from both companies.

According to UnitedHealth’s third quarter 2017 highlights, all of Optum’s segments showed double-digit percentage earnings growth. By the end of 2016, Optum had care management programs assisting people across the care continuum—physical and mental health, complex medical conditions, disease management and support, hospitalization, transplant, and post-acute care.

“Following this transaction, DaVita will continue to be a leader in population health management, with a focus on our US and international kidney care businesses,” DaVita CEO Kent Thiry said. “We also expect to pursue other investments in health care services outside of kidney care.”

Jeffrey Loo, an industry analyst with the investment research firm CFRA, noted that the acquisition “should mesh well with Optum’s focus on primary care, urgent care, and outpatient care businesses.”

According to MarketWatch.com, in dollar terms the acquisition is small potatoes compared with CVS’s recent $69 billion acquisition of Aetna, a major health insurance company. UnitedHealth/Optum remains a step ahead of CVS, however, because it is now positioned to be a leading physician care platform for the transformed health care sector of the future, said Mizuho analyst Sheryl Skolnick.