UnitedHealth ventures deeper into patient care with $5B deal

DaVita United Health Group Walt Disney Home Depot- PRE-MARKET

The healthcare sector was in focus before the bell

"Combining DaVita Medical Group and Optum advances our shared goal of supporting physicians in delivering exceptional patient care in innovative and efficient ways", Larry C. Renfro, Optum's chief executive, said in a news release. DaVita's largest business is kidney care, through the 2,470 outpatient dialysis centers that it runs or provides administrative services to across the US, serving more than 200,000 patients a year.

Health insurers are trying to cut medical costs by playing a more direct role in medical services, arguing they can save money by shifting patients to cheaper, more accessible locations for routine or non life-threatening emergency medical services.

The proposed deal comes on the heels of news of another big insurer, Aetna, and its plans to merge with CVS Health.

Kidney-care provider DaVita had previously said that it was "pursuing strategic alternatives" for its physician operation, which has had bumpy financial results and recently surprised investors by driving down earnings for DaVita, which recorded a net loss in the third quarter.

Optum includes MedExpress urgent care centers, surgical centers from its $2.3 billion March acquisition of Surgical Care Affiliates, pharmacy benefit management and data services as well as a bank. That deal could position the company as a one-stop-shop for basic health care, chronic disease monitoring, prescriptions and insurance to cover those goods and services. The company already operates medical practices in Southern California and elsewhere, and it owns almost 250 MedExpress urgent-care clinics.

Reuters reported last month that DaVita was exploring a sale of its medical unit.

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Last January, UnitedHealth also acquired a chain of surgery centers, a move the company said could lower the expense of having an outpatient surgery by more than 50 percent.

Insurers are increasingly working with doctors and hospitals, experimenting with different methods of paying for care and attempting to provide better oversight of potentially expensive chronic conditions like diabetes or heart failure.

DaVita, a Fortune 500 company headquartered in Denver, will give Minnetonka-based UnitedHealth Group more access to dialysis patients across the country and medical-group patients in six states.

Earlier this year, Optum closed its $2.3 billion acquisition of Surgical Care Affiliates Inc., a major surgical company.

Kent Thiry, DaVita chairman and CEO said "I am so proud of the DaVita Medical Group accomplishments, including our excellent clinical outcomes". Aetna covers around 22 million people.

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