UnitedHealth Group's Optum unit has entered into an agreement with DaVita to acquire its subsidiary DaVita Medical Group for approximately $4.9 billion in cash.
Following the deal, DaVita Medical Group will join with Optum’s physician-led primary, specialty, in-home, urgent- and surgery-care delivery services business. The transaction is expected to close in 2018, subject to regulatory approval and other customary closing conditions.
The companies said the combination will improve care quality, cost and patient satisfaction through integrated ambulatory care delivery systems enabled by information technology and supportive clinical services. Optum’s data, analytics, technologies and clinical expertise will help DaVita Medical Group physicians deliver even higher quality care more effectively to the patients they serve.
With medical groups in California, Colorado, Florida, Nevada, New Mexico and Washington, DaVita Medical Group will expand the market reach of Optum’s strategic care delivery portfolio, including Surgical Care Affiliates, MedExpress and HouseCalls, it said.
"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 health care payers across Optum in ways that better meet the needs of their members," said Larry Renfro, CEO of Optum.
Kent Thiry, chairman and CEO of DaVita, added: "I am so proud of the DaVita Medical Group accomplishments, including our excellent clinical outcomes as reflected in our star ratings performance, our strong emphasis on growing physician leaders, our teammate engagement and advancing the care model. The combination of DaVita Medical Group and Optum should lead to even higher levels of performance."
DaVita plans to use the proceeds from the transaction for significant stock repurchases over the one to two years following the closing of the transaction, as well as to repay debt and for general corporate purposes.
"Following this transaction, DaVita will continue to be a leader in population health management, with a focus on our US and international kidney care businesses," Thiry added. "We also expect to pursue other investments in health care services outside of kidney care."
DaVita Medical Group will become part of Optum’s OptumCare division. Joe Mello, chief operating officer of DaVita Medical Group, will continue in a leadership role in the combined entity, as will the DaVita Medical Group leadership team.
DaVita Medical Group serves approximately 1.7 million patients per year through nearly 300 medical clinics featuring primary and specialist care. DaVita Medical Group also operates 35 urgent-care centers and six outpatient surgery centers.
Andrew Hayek, CEO of OptumHealth, commented: "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. We also look forward to working closely with the leadership team of DaVita Medical Group to combine our capabilities and, supported by the data analytics and technology capabilities of Optum, enhancing patient care and the value we provide to the communities we serve."
UnitedHealth Group, DaVita Medical Group, Optum, Acquisition, M&A, North America