On February 22, 2023, UnitedHealth Group’s (UHG’s) Optum division, the health insurance giant’s care delivery arm, acquired Crystal Run Healthcare, a New York based physician group of almost 400 physicians, nurse practitioners, and other providers.1 This significant move is just the latest in UHG’s concerted effort over the past few years to acquire outpatient providers, surgery centers, and physician groups.2 This Health Capital Topics article will briefly survey some of the insurer’s recent acquisitions and initiatives to expand their physician services network.
UHG is the largest health insurance company in the U.S., offering benefit programs for individuals, employers, and beneficiaries with Medicare and Medicaid.3 The company has partnerships with over 1.3 million medical providers and 6,500 healthcare facilities across the U.S.4 Optum, a subsidiary of UHG, provides data analytics, infrastructure, a pharmacy benefit manager, OptumRX, and a bank providing loans to patients, OptumBank.5 Additionally, Optum is now the largest employer of physicians in the U.S., with over 70,000 physicians in 2,200 locations.6
In 2022 alone, UHG and Optum made five major acquisitions:
Texas Medicare insurer KS Plans Administrator;
Kelsey Seybold (a KS Plans Administrator affiliate), a group practice employing 500 physicians and allied health professionals offering treatments across 55 specialties in 24 locations throughout Houston;
LHC Group, a Louisiana-based home health company, was acquired for $5.4 billion;
Atrius Health, a Massachusetts-based health system employing over 645 physicians and primary care providers across 30 locations, was acquired for $236 million; and
Refresh Mental Health, a Florida-based mental healthcare provider with more than 1,500 employees spanning 300 outpatient sites across 37 states, was acquired for an undisclosed amount.7
This transactional activity follows a 2021 buying spree wherein the company acquired 10,000 physician practices.8 The care delivery arm of UHG reported total revenue of $71.2 billion in 2022 – five times the total revenue the company reported in 2015.9 Optum’s services include primary, specialty, urgent, and surgical care, with the company aiming to integrate more home health and behavioral services into their strategy for the delivery of care.10
UHG is able to keep more of the premiums that they collect when the medical providers a patient visits belongs to their company.11 By steering their members toward their own providers, profits will grow.12 While the corporate takeover of physician practices could pose a threat to healthcare costs and the autonomy of clinicians, it could also boost access for those who are insured, and provide better work-life balance for physicians.13 Working for a corporate-owned physician practice could potentially relieve a physician’s burden of managing the administrative duties of a practice, reduce their patient loads, provide better compensation, and allow for flexible schedules or hours that are reduced.14 Physicians may be flocking to companies like Optum due to burnout from being overworked, time pressures, a demanding pace, and the emotional intensity that comes with being a medical provider.15
Stakeholders have expressed concern regarding Optum’s moves in the physician services sector. Chip Kahn, President and CEO of the Federation of American Hospitals, stated that “efforts by Optum to dominate physician markets is a concern generally with consolidation of the insurance market. The two go hand-in-hand and it’s got to be of some concern to consumers and patients.”16 After a $7.84 billion deal was announced in March of 2021 between Optum and Change Health, a health technology company, the American Hospital Association (AHA) sent a letter to the Department of Justice (DOJ) requesting an investigation into possible antitrust concerns.17 In the letter, the AHA stated that proposed transaction “threatens to reduce competition for the sale of health care information technology (IT) services to hospitals and other health care providers, which could negatively impact consumers and health care providers.”18 AHA also expressed concerns related to the market power held by UHG, stating that such an acquisition could likely result in patients having lower quality outcomes, and providers having to pay more.
UHG is not the only insurer seeking to employ providers. In fact, Anthem invested so heavily in care delivery and health tech that it recently changed its organization’s name to Elevance Health to reflect the wide breadth of services offered by the company.19 In addition to UHG and Anthem, insurers Humana and Aetna have been similarly active in healthcare services space, blurring the line between payor and provider.20 These actions are indicative of a growing “payvider” trend, where organizations are streamlining their supply chain by acquiring both care delivery assets and plan assets.21 In response to changes enacted by the Patient Protection and Affordable Care Act (ACA), such as caps on the amount of profits providers can keep (due to medical loss ratio limits) and the significant growth in Medicare Advantage, insurers have shifted their business models.22 These insurers have pivoted to bringing providers and health plans under their umbrella in order to give them control over not just where patients seek care, but how that care is delivered, by aligning providers’ financial and care delivery incentives with that of the insurer.23
“UnitedHealth’s physician buying spree continues with takeover of Crystal Run” By Bob Herman, Stat News, April 10, 2023, https://www.statnews.com/2023/04/10/unitedhealth-crystal-run-physician-acquisition/ (Accessed 4/10/23); “Crystal Run Healthcare under new ownership” Mid Hudson News, February 25, 2023, https://midhudsonnews.com/2023/02/25/crystal-run-healthcare-under-new-ownership/ (Accessed 4/10/23).
Herman, Stat News, April 10, 2023.
“The Big Tech of Health Care” By Krista Brown and Olivia Webb, The American Prospect, April 5, 2021, https://prospect.org/health/big-tech-of-health-care-united-optum-change-merger/ (Accessed 4/24/23).
“Meet America’s largest employer of physicians: UnitedHealth Group” By Jakob Emerson, Becker’s Payers Issues, February 16, 2023, https://www.beckerspayer.com/payer/meet-americas-largest-employer-of-physicians-unitedhealth-group.html (Accessed 4/10/23).
“UnitedHealth’s year of acquisitions: 5 major deals to know” By Patsy Newitt, Becker’s ASC Review, August 16, 2022, https://www.beckersasc.com/asc-news/unitedhealth-s-year-of-acquisitions-5-major-deals-to-know.html (Accessed 4/10/23).
“Optum forms joint venture with healthcare media group” By Nona Tepper, Modern Healthcare, July 11, 2022, https://www.modernhealthcare.com/marketing/optum-forms-joint-venture-healthcare-media-group (Accessed 4/24/23).
Emerson, Becker’s Payers Issues, February 16, 2023.
“Profits swell when insurers are also your doctors” By Bob Herman, Axios, July 16, 2021, https://www.axios.com/2021/07/16/unitedhealth-optum-providers-intercompany-eliminations (Accessed 4/10/23).
“Commentary: Primary care takeovers by Amazon, CVS, Optum threaten clinician autonomy, healthcare costs” By Giles Bruce, Becker’s Health IT, January 12, 2023, https://www.beckershospitalreview.com/disruptors/commentary-primary-care-takeovers-by-amazon-cvs-optum-threaten-clinician-autonomy-healthcare-costs.html?utm_medium=email&utm_content=newsletter (Accessed 4/10/23).
“Corporate Investors in Primary Care — Profits, Progress, and Pitfalls” By Soleil Shah, et al., New England Journal of Medicine, January 12, 2023, https://www-nejm-org.libproxy.wustl.edu/doi/full/10.1056/NEJMp2212841 (Accessed 4/12/23).
“Physician Burnout” Agency for Healthcare Research and Quality, February 2023, https://www.ahrq.gov/prevention/clinician/ahrq-works/burnout/index.html#:~:text=The%20health%20care%20environment%E2%80%94with,of%20sense%20of%20personal%20accomplishment. (Accessed 4/24/23).
Emerson, Becker’s Payers Issues, February 16, 2023.
“AHA asks DOJ to probe possible antitrust concerns surrounding Optum-Change Healthcare deal” By Robert King, Fierce Healthcare, March 19, 2021, https://www.fiercehealthcare.com/hospitals/aha-asks-doj-to-probe-possible-antitrust-concerns-surrounding-unitedhealth-change (Accessed 4/10/23).
“AHA Urges DOJ to Investigate UnitedHealth Group’s Acquisition of Change Healthcare” American Hospital Association, March 17, 2021, https://www.aha.org/lettercomment/2021-03-17-aha-urges-doj-investigate-unitedhealth-groups-acquisition-change#:~:text=We%20respectfully%20request%20that%20DOJ,consumers%20and%20health%20care%20providers. (Accessed 4/10/23).
“Vertically integrated payer-provider groups raise antitrust concerns” By Nona Tepper and Alex Kacik, Modern Healthcare, March 22, 2022, https://www.modernhealthcare.com/operations/insurers-pave-new-vertically-integrated-provider-model (Accessed 4/24/23).
“The ‘payvider’ is on the rise” Advisory Board, March 18, 2023, https://www.advisory.com/daily-briefing/2022/12/09/radio-advisory-139 (Accessed 4/12/23).
Tepper and Kacik, Modern Healthcare, March 22, 2022.
Ibid; “The ‘payvider’ is on the rise” Advisory Board, March 18, 2023, https://www.advisory.com/daily-briefing/2022/12/09/radio-advisory-139 (Accessed 4/12/23).