Optum, a leading health services company, and DaVita Medical Group, one of the nation’s leading independent medical groups and a subsidiary of DaVita Inc. (NYSE: DVA), are combining. The agreement, entered into on December 5, 2017, calls for Optum to acquire DaVita Medical Group for approximately $4.9 billion in cash. The transaction is expected to close in 2018 and is subject to regulatory approval and other customary closing conditions.
DaVita Medical Group will join with Optum’s physician-led primary, specialty, in-home, urgent- and surgery-care delivery services business. The combination will improve care quality, cost and patient satisfaction through integrated ambulatory care delivery systems enabled by information technology and supportive clinical services. 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. With medical groups in California, Colorado, Florida, Nevada, New Mexico and Washington, DaVita Medical Group will expand the market reach of Optum’s strategic care delivery portfolio, including Surgical Care Affiliates, MedExpress and HouseCalls. Patients will further benefit from the sharing of best practices across both organizations.
“I am so proud of the DaVita Medical Group accomplishments, including our excellent clinical outcomes as reflected in our star ratings performance, our strong emphasis on growing physician leaders, our teammate engagement and advancing the care model,” said Kent Thiry, chairman and CEO of DaVita Inc. “The combination of DaVita Medical Group and Optum should lead to even higher levels of performance.”
“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.
DaVita Medical Group serves approximately 1.7 million patients per year through nearly 300 medical clinics featuring primary and specialist care. DaVita Medical Group also operates 35 urgent-care centers and six outpatient surgery centers.
Following the transaction, DaVita Medical Group will become part of Optum’s OptumCare division, which today works with more than 80 health plans to serve millions of consumers annually through 30,000 affiliated physicians and hundreds of care facilities. Joe Mello, chief operating officer of DaVita Medical Group, will continue in a leadership role in the combined entity, as will the DaVita Medical Group leadership team.
“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 Andrew Hayek, CEO of OptumHealth. “We also look forward to working closely with the leadership team of DaVita Medical Group to combine our capabilities and, supported by the data analytics and technology capabilities of Optum, enhancing patient care and the value we provide to the communities we serve.”
DaVita plans to use the proceeds from the transaction for significant stock repurchases over the one to two years following the closing of the transaction, as well as to repay debt and for general corporate purposes.
“Following this transaction, DaVita will continue to be a leader in population health management, with a focus on our U.S. and international kidney care businesses,” Thiry said. “We also expect to pursue other investments in health care services outside of kidney care.”
About DaVita Inc.
DaVita Inc., a Fortune 500® company, is the parent company of DaVita Kidney Care and DaVita Medical Group. DaVita Kidney Care is a leading provider of kidney care in the United States, delivering dialysis services to patients with chronic kidney failure and end-stage renal disease. As of September 30, 2017, DaVita Kidney Care operated or provided administrative services at 2,470 outpatient dialysis centers located in the United States serving approximately 218,200 patients. The company also operated 230 outpatient dialysis centers located in 11 countries outside the United States. DaVita Medical Group manages and operates medical groups and affiliated physician networks in California, Colorado, Florida, Nevada, New Mexico, and Washington in its pursuit to deliver excellent-quality health care in a dignified and compassionate manner. DaVita Medical Group’s teammates, employed clinicians and affiliated clinicians provided care for approximately 1.7 million patients.