In hopes of winning regulatory approval for a deal first announced last year, the parent company of DaVita Medical Group has agreed to lower by more than $500 million the sale price of its clinic business to UnitedHealth Group, according to a Monday regulatory filing.
The filing from Colorado-based DaVita Inc. with the Securities and Exchange Commission also cites "underlying business performance" in explaining why the purchase price has been lowered from $4.9 billion to $4.34 billion.
The acquisition, which is expected to close during the first quarter of 2019, would significantly expand the push by Minnetonka-based UnitedHealth into the clinic business. Last month, UnitedHealth announced the acquisition of a large clinic in the Seattle area and noted the purchase would complement the proposed acquisition of DaVita Medical Group, which operates a large physician group in the region.
"Our combination with DaVita Medical Group is an important step in building the nation's first comprehensive, multipayer primary and ambulatory care system, focused on delivering high-quality health care and a unique consumer experience," said UnitedHealth Group spokesman Matt Stearns in a statement. "We remain confident in the benefits of this partnership."
UnitedHealth Group's Optum division for health services has owned some large physician practices for many years, but in recent years has stepped up the pace of acquisitions. The moves fit with a broader trend whereby large national health insurers are getting closer to patient care via physician practices, pharmacies and joint ventures with large health care systems.
Pharmacy giant CVS, which is based in Rhode Island, this year completed its $69 billion merger with the health insurance company Aetna. Cigna, which is another larger national carrier, is pursuing a merger with St. Louis-based Express Scripts, which manages the pharmacy benefit portion of health plan offerings.
Other health insurers have made smaller buys in the clinic business. Aetna's direct partnerships with large health systems includes the formation of a joint venture company with the Minneapolis-based Allina Health System.
At UnitedHealth, the OptumCare division includes roughly a dozen large clinics that operate in 10 states. The long-range goal is to build care-delivery operations in 75 targeted markets over the next decade.
At the end of 2017, DaVita Medical Group managed 280 medical clinics in six states. About 83 percent of the medical group's revenue last year came by way of "capitation" agreements, according to a regulatory filing earlier this year. Those are contracts where insurers pay a per-member per-month fee and delegate financial and clinical accountability for large groups of patients to the medical group.
In the regulatory filing Monday, DaVita said: "As a result of underlying business performance and in an effort to expedite the process to obtain [Federal Trade Commission] approval of the proposed transaction, the parties agreed to amend the purchase agreement. … The parties are working together to close the proposed transaction as expeditiously as possible and expect to close in the first quarter of 2019."
At the end of last year, DaVita Medical Group employed 750 primary-care physicians directly and through affiliated physician groups. The company also had contracts with a network of about 3,500 associated physician groups and other primary-care physicians.
"We continue to work closely with regulators and Optum to finalize this transaction in a timely manner," a DaVita spokesman said in an e-mail Monday.
At an investor conference last month, UnitedHealth Group said it now "serves" more than 14 million patients through primary-care practices, surgery centers, urgent-care centers and its network of hospitalists and nurse practitioners. OptumCare has 36,000 aligned physicians, the company said, and 8,000 advanced practice clinicians.
Christopher Snowbeck • 612-673-4744 Twitter: @chrissnowbeck