UnitedHealth Group is still working with regulators to close its acquisition of DaVita Medical Group, a $ 4 billion deal that has dragged on much longer than investors and observers of the health insurer have expected.
But there appears to be no cause for alarm from the nation’s largest health insurer even as the effort to finalize the deal heads into its 19th month.
First announced in early December of 2017, UnitedHealth’s $ 4.3 billion acquisition has closer scrutiny from regulators than expected. It’s also unusual for UnitedHealth, an acquisitive company that has built up its Optum health services business into a giant with more than $ 100 billion in annual sales through organic growth and other doctor practice and outpatient center acquisitions that have closed with few glitches.
The DaVita Medical transaction was originally expected to close in 2018 but that changed after the acquisition price fell by about $ 600 million from $ 4.9 billion. And in a regulatory filing last year, Davita said it expected to close the transaction “in the first quarter of 2019.” That deadline, too, was missed.Though UnitedHealth isn’t disclosing a future date for the close, it appears to be no cause for alarm.
“We are working diligently with regulators to complete our combination as soon as possible,” a UnitedHealth Group spokeswoman said Thursday. “We look forward to working together to deliver high-quality health care and a unique consumer experience while reducing costs and enabling physicians to focus on what they do best: care for their patients.”
Once it closes, UnitedHealth’s Optum will gain a large network of nearly 300 medical clinics that treat more than 1.7 million patients annually, the companies have said.
“It is a critical part of the strategy that we have around reinventing health care delivery to access more markets and at the same time then go much deeper into those markets to make them work much more effectively,” UnitedHealth Group CEO David Wichmann told analysts on the company’s first quarter earnings call last month. “At this stage, we have a clear path to approval in closing of the transaction, but unfortunately, we cannot comment on further details or timing at this stage. We are working through a couple of matters that remain.”
The deal is part an escalating battle in the healthcare industry to put providers of medical care under the same umbrella as health insurance companies. Pharmacy giant CVS Health last year bought Aetna, the nation’s third-largest health insurer, insurer Humana has been signing deals with multiple providers including drugstore giant Walgreens Boots Alliance, and big Blue Cross and Blue Shield plans including Anthem and Health Care Service Corp. are investing in primary care providers.
DaVita Medical Group is a subsidiary of DaVita Inc., which is a large provider of kidney care and dialysis services across the U.S.
Less than a month ago, DaVita’s board named a new CEO in Javier Rodriguez who is succeeding Kent Thiry, who is retiring after two decades, effective June 1. “Thiry will transition from his current role as chairman and CEO to executive chairman of DaVita’s board of directors,” DaVita said.
UnitedHealth is not acquiring the DaVita kidney care centers. The DaVita operations sold to Optum include urgent care centers, surgery centers and medical clinics with primary care doctors and specialists in California, Colorado, Florida, Nevada, New Mexico and Washington State.
The addition of the DaVita operations would add to an already growing national network of medical care providers under the Optum umbrella.
“OptumCare’s vision for care is to create leading value-based patient centric physician health care system in the United States and we will do this through local markets,” Dr. Wyatt Decker, CEO of OptumHealth told analysts in April on UnitedHealth’s first quarter earnings call.