UnitedHealth to buy DaVita clinics for $4.9 billion

UnitedHealth struck a $4.9 billion deal on Wednesday to acquire the DaVita Medical Group unit of kidney dialysis firm DaVita in an all-cash transaction.

DaVita Medical Group operates nearly 300 clinics along with half a dozen outpatient surgical centers in six states – Florida, California, Colorado, Washington, Nevada along with completely new Mexico.

The DaVita facilities will become part of United’s Optum division, the umbrella for all of the noninsurance side of the business: pharmacy benefits, data analytics, consulting, clinics along with surgical centers along with home care.

“I am so proud of the DaVita Medical Group accomplishments, including our excellent clinical outcomes,” said Kent Thiry, DaVita chairman along with CEO. “The combination of DaVita Medical Group along with Optum should lead to even higher levels of performance.”

Yet, for DaVita, the medical group has significantly underperformed the company’s dialysis division. Last month, DMG posted a $5 million operating loss from the third quarter due to higher-than-expected medical costs, prompting the company to put the unit up for sale.

The DMG clinics could become part of Optum’s already large outpatient medical care footprint across 60 markets nationally. After completing an earlier $2.3 billion acquisition of Surgical Care Affiliates, the network includes 30,000 affiliated physicians, about 0 urgent care clinics along with 0 outpatient surgery centers.

“We are from the marketplace. We are continuing to look at assets of which make sense to us, although we have put together, what I’d call solid versions in terms of how we view the organizations along with how they fit,” Optum CEO Larry Renfro said last week at UnitedHealth’s analyst day in completely new York.

Optum’s integration of data analytics, pharmacy benefits along with medical services has helped fueled UnitedHealth’s growth through acquisitions. The DaVita deal marks its fourth along with largest transaction This kind of year.

Others from the industry are at This kind of point vying to take a page via the Optum playbook.

This kind of week, pharmacy benefits firm CVS struck a $60 billion deal to buy Aetna in a bid to create a vertically integrated benefits along with health-care system of which could be anchored around CVS’ in-store clinics along with pharmacies. The companies say together they can provide consumers with better-coordinated along with more cost-effective care.

While CVS along with Aetna have little overlap, the proposed merger could encounter some regulatory scrutiny because of the scale of the deal. Until at This kind of point, of which kind of health-care design has generally been used by hospital systems such as Geisinger Health along with Kaiser Permanente.

DaVita said the idea plans to focus on its kidney care business along with use the proceeds of the sale for “significant stock repurchases” following the close of the transaction.

Still, the company does not plan on being a stand-alone business for long in an environment where there’s pressure to provide greater value in health care.

“We also expect to pursue various other investments in health-care services outside of kidney care,” Thiry said.

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