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Optum Set to Acquire Davita Medical Group for $4.9B

Optum Set to Acquire Davita Medical Group for $4.9B

The deal has widely been compared to CVS’s proposed merger with Atena—since both cases involve the increasingly blurred lines in the healthcare industry—as insurance companies become more involved in direct care.

Minnetonka-based health insurance giant UnitedHealth Group is set to acquire Davita Medical Group for $4.9 billion in cash.

Davita Medical Group operates 300 medical clinics across half a dozen states, including  California, Colorado, Florida, and also has 34 urgent care facilities and six outpatient surgery centers. In total, the company says it serves 1.7 million patients a year. 

If the deal is approved, DMG’s network of facilities and physicians would join UnitedHealth’s Optum unit, which comprises all the non-insured side of its business, and is headquartered in Eden Prairie. Specially, the addition of DMG will expand the footprint of Optum’s extensive outpatient care network, which currently includes 30,000 affiliated physicians and hundreds of care facilities, the company 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 C. Renfro, CEO of Optum, in prepared remarks. 

But as CNBC points out, DMG has had its challenges: Last month it posted a “$5 million operating loss in the third quarter due to higher-than-expected medical costs.” As a result, its parent company Davita put the unit up for sale.

As part of UnitedHealth Group, the DMG clinics are set to benefit from Optum’s extensive analytics capabilities and clinical expertise.  

The deal has widely been compared to CVS’s proposed merger with Atena—since both cases involve the increasingly blurred lines in the healthcare industry—as insurance companies become more involved in direct care.  

This is the second major acquisition by Optum this year. In August, it purchased The Advisory Board, a consulting firm, for $1.3 billion.