UnitedHealth’s Optum to acquire DaVita Medical Group for $4.9B

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Optum, the consulting and services arm of health insurance giant UnitedHealth Group, has continued a series of major acquisitions with the announcement it will buy DaVita Medical Group, a division of kidney dialysis firm DaVita, for $4.9 billion.

The all-cash deal will add nearly 300 medical clinics, 35 urgent care centers and six outpatient surgery centers in California, Colorado, Florida, Nevada, New Mexico and Washington. It will also move UnitedHealth more in the direction of directly delivering medical care when combined with other recent acquisitions, such as its $2.3 billion deal to acquire Surgical Care Affiliates.

“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,” Optum CEO Larry Renfro said in a statement.

DaVita Medical Group will be folded into Optum’s OptumCare division, with Optum touting the combination as a way to “improve care quality, cost and patient satisfaction through integrated ambulatory care delivery systems enabled by information technology and supportive clinical services.”

The current leadership at DaVita, including chief operating officer Joe Mello, will stay in a leadership role in the combined company.

“I am so proud of the DaVita Medical Group accomplishments, including our excellent clinical outcomes,” said Kent Thiry, DaVita chairman and CEO. “The combination of DaVita Medical Group and Optum should lead to even higher levels of performance.”

DaVita said the sale will allow it to focus on its dialysis business and plans to use proceeds from the transaction for “significant stock repurchases,” though its press release did hint at diversifying in the future.

“We also expect to pursue other investments in health care services outside of kidney care,” Thiry said.