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UnitedHealth to buy DaVita Medical clinics for $4.9 billion

06 December 2017

The nation's biggest health insurer is spending almost $5 billion to buy hundreds of clinics, just three days after rival Aetna announced a tie up with CVS Health Corp.

"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", said OptumHealth CEO Andrew Hayek.

On Sunday, CVS said it would pay about $69 billion for Aetna Inc., the nation's third-largest health insurer.

Health insurers are trying to cut medical costs by playing a more direct role in medical services, arguing they can save money by shifting patients to cheaper, more accessible locations for routine or non life-threatening emergency medical services.

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At a time of increasing uncertainty in the health care marketplace, insurers, hospitals, doctors and drugstores are looking outside their traditional businesses to join forces.

"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".

The deal will be financed with cash and would combine UnitedHealth's Optum unit with DaVita's 300 clinic network that serves about 1.7 people annually. The company already operates medical practices in Southern California and elsewhere, and it owns almost 250 MedExpress urgent-care clinics. The group employs around 2,200 health-care providers, including doctors, nurse practitioners and physician assistants.

Reuters reported last month that DaVita was exploring a sale of its medical unit.

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Earlier this year, Optum closed its $2.3 billion acquisition of Surgical Care Affiliates Inc., a major surgical company.

DaVita said it would use the proceeds from the deal with Optum for stock buybacks, debt repayment and other purposes.

Leerink analyst Ana Gupte said the purchase is likely to add to UnitedHealth earnings per share by 1 percent to 4 percent in 2018 and 5 percent to 7 percent in 2019, the first full year after the deal closes.

DaVita's physician network unit recorded sales of $4.11 billion previous year but had become a major drag on the company's financial performance in recent quarters despite contributing 30 per cent to total revenue.

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UnitedHealth to buy DaVita Medical clinics for $4.9 billion