|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
- Optum looks to acquire Houston-based Kelsey-Seybold Clinic. According to unnamed Axios sources, UnitedHealth Group’s Optum has signed a deal to acquire the independent 500-physician multispecialty group, which operates more than 30 clinic locations and one of the largest ambulatory surgery centers in Texas. With more than 41,000 enrollees, Kelsey-Seybold controls 8 percent of the lucrative Medicare Advantage market in the Houston metro area. In January 2020, private equity firm TPG Capital made a minority investment in the 73-year-old group, valuing it at $1.3B, to help expand its footprint. Should the current deal come to fruition, Kelsey-Seybold’s physicians would join the ranks of over 60K physicians owned by, or exclusively affiliated with, Optum.
The Gist: Fresh off last year’s acquisition of 700-physician, Boston-based Atrius Health, Optum is continuing its buying spree of large physician groups with a history of managing risk. It will be interesting to see how quickly UnitedHealth Group can combine its Optum-owned physician assets with its commercial insurance platform to create a compelling, lower-cost option for employers and Medicare Advantage enrollees—building on the model of its Harmony network in Southern California. Of note, Kelsey-Seybold and United Healthcare have offered a co-branded insurance product for years, and UHG executives have said they plan to roll out Harmony in Texas and Seattle next. Kelsey-Seybold is one a dwindling number of very large, independent multispecialty groups, and its sale to Optum may have other groups wondering about their ability to remain independent in an increasingly concentrated healthcare market.
- Walmart Health expands into Florida with five new clinics. Walmart has now opened its first health center in the Sunshine State, next to a Supercenter in Jacksonville. Four more clinics in the Orlando and Tampa areas are due to open soon. As in Walmart’s 20 other health centers in Georgia, Arkansas, and Illinois, the Florida clinics will offer a range of primary care services, including imaging and counseling, along with dental, vision, and hearing care. Walmart plans to roll out its Epic electronic health record (EHR) technology in the Florida clinics, as well as telehealth services, following its acquisition of MeMD last year.
The Gist: These Florida health centers represent the latest iteration of Walmart Health. Rather than coming in with disruptively low prices as it did in Georgia, where its strategy has been to appeal to uninsured customers, Walmart’s Florida clinics are pricing services closer to competitors’ rates in the markets, and expect to serve many insured patients. As ever, the retail behemoth’s every move in healthcare is worth watching carefully, given the enormous installed base of Walmart customers—more than half of Americans visit a Walmart store every week.
- Intermountain Healthcare completes its merger with SCL Health. Salt Lake City-based Intermountain and Broomfield, CO-based SCL Health have now formed a 33-hospital, $14B nonprofit health system, which immediately becomes the 11th largest nationwide. The system will operate across seven states under the Intermountain brand, although the SCL hospitals will keep their legacy names and Catholic affiliation. Regulators signed off on the interstate merger after the systems agreed not to close any locations or services.
The Gist: Intermountain has been trying to build scale across the Mountain West in the last few years, having recently come up short in an attempt to merge with South Dakota-based Sanford Health. The SCL deal will allow Intermountain to expand its SelectHealth insurance plan and integrated care model into the fast-growing Denver metro area, as well as into Kansas and Montana. As with any merger, the difficult work of combining cultures and demonstrating meaningful value for patients and consumers lies ahead.
Plus—what we’ve been reading.
- Adult caregiving depresses labor force participation rate. As opposed to caring for young children at home during the pandemic, caring for adult family members at home has received far less media attention as a significant—and sharply gendered—drag on labor force participation. A piece in the Washington Post highlights the substantial demands on a growing number of individuals who care for an adult spouse or relative at home; four times as many people report being out of the workforce to care for another family member, compared to those who left to care for children. In the absence of affordable care options or government support, family members, most often women, have been forced to scale back work hours or even exit the workforce entirely. And these caregiving absences are more likely to be permanent.
The Gist: Schools and daycares reopening have lessened caregiving burdens for many parents. But sick and elderly adults only grow more dependent on caregivers as they age, or as their disease progresses. And as the population ages, the economic impact of adult caregiving will only increase. Given persistent staff shortages, our nation’s long-term care facilities and home care agencies are unprepared for this increased demand. While there has been discussion of federal support for caregivers, as well as increasing investment in in-home care, home-based care providers remain unaffordable for most families.