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“Blurring the Lines” – UnitedHealth Group Buys Davita Medical Group

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In another example of the blurring boundaries in the healthcare industry, UnitedHealth Group, one of the nation’s largest insurers, is buying Davita Medical Group, a large physician group with a roster of 30,000 doctors. It seems that every day we are reading about more healthcare companies seeking to tighten their vertical integration by “blurring service lines” in the healthcare marketplace. Aetna/CVS, Humana/Walmart (rumored) and now UnitedHealthcare Group through their Optum subsidiary is buying DaVita Medical Group.

DaVita Medical Group serves approximately 1.7 million patients per year through nearly 300 medical clinics featuring primary and specialist care. The Group also operates 35 urgent-care centers and six outpatient surgery centers. UnitedHealth Group provides healthcare insurance coverage and benefits services, while their Optum subsidiary provides information and technology-enabled health services to 115 million consumers in 35 states.

The agreement, entered into on December 5, 2017, calls for Optum to acquire DaVita Medical Group for approximately $4.9 billion in cash. The transaction is expected to close in 2018. According to their press release, DaVita Medical Group will become part of Optum’s OptumCare division, which works with more than 80 health plans to serve consumers through 30,000 affiliated physicians and hundreds of care facilities.

Here is another example of “blurring the lines” with close integration of healthcare services: insurance provider, healthcare medical services provider, and information and technology-enabled practice management services. This acquisition and vertical integration will certainly strengthen the combined companies’ position in the marketplace, but will any cost saving benefits derived from this vertical integration be passed on to the consumers/patients of these combined companies? Let’s hope that happens.

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