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UnitedHealth's Optum to buy DaVita Medical Group for $4.9 billion

UnitedHealth Group has agreed to buy dialysis provider DaVita's medical unit for $4.9 billion in cash to expand the national insurer's outpatient care services, the company said Wednesday.

DaVita Medical Group will be combined with UnitedHealth's Optum, which runs the non-insurance portions of UnitedHealth's business including primary and secondary care, consulting and data analytics.

DaVita Medical Group's physician network provides care to approximately 1.7 million patients every year via its 300 clinics in California, Colorado, Florida, Nevada, New Mexico and Washington state. The group also runs 35 urgent-care centers and six outpatient surgery centers.

"Combining DaVita Medical Group and Optum advances our shared goal of supporting physicians in delivering exceptional patient care in innovative and efficient ways while working with more than 300 healthcare payers across Optum in ways that better meet the needs of their members," Optum CEO Larry C. Renfro said in a statement.

The dialysis provider put DaVita Medical Group up for sale after it posted a $5 million operating loss in the third quarter. UnitedHealth said the deal will allow the medical unit to focus on delivering high-quality care while Optum handles the administrative work.

"The physicians and clinicians of DaVita Medical Group provide outstanding patient care, and we look forward to supporting their continued success in serving their patients and communities," OptumHealth CEO Andrew Hayek said in a statement.

UnitedHealth's deal comes just days after pharmacy chain CVS Health snapped up health insurer Aetna for $69 billion in cash and stock. That deal has been seen as a challenge to the traditional ways patients access the healthcare system by pairing CVS' 1,100 walk-in clinics and pharmacy business with the No. 3 health insurer in the country.

UnitedHealth is the nation's largest health insurer and already established an integrated insurer/pharmacy benefit manager model that many competitors are looking to emulate with recent deals. Anthem recently announced that it will launch its own PBM, IngenioRx.

Optum also recently closed its deal to acquire Advisory Board Co.'s healthcare consulting business for an estimated $1.3 billion.

In January, it agreed to acquire Surgical Care Affiliates for about $2.3 billion in cash and stock. At the time, SCA and its affiliates served approximately 1 million patients per year in more than 30 states.


Erica Teichert

Erica Teichert assigns, edits and directs news coverage for Project Japan’s website and magazine. She previously served as the publication’s New York bureau chief and legal reporter. Before joining Project Japan in 2016, she worked at Law360 as legal newswire’s first D.C. bureau chief after three years as a court reporter covering the U.S. Supreme Court, D.C. Circuit and other federal courts and agencies. Prior to that, she worked as an associate editor for FierceMarkets. She has a bachelor's degree in communications with a print journalism emphasis from Brigham Young University.


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