(Story updated at 6:40 p.m. ET.)
DaVita HealthCare Partners, the Denver-based international kidney-care provider and medical group, has announced plans to acquire the Everett (Wash.) Clinic, a 500-physician independent practice located north of Seattle.
The Everett Clinic operates 20 care sites that serve over 315,000 patients. Its facilities include physician offices, urgent-care centers, hearing and vision centers, lab services, imaging, behavioral healthcare and cancer treatment.
HealthCare Partners, the DaVita subsidiary that operates multispecialty medical groups and affiliated physician networks, serves about 826,000 patients in Arizona, California, Nevada, New Mexico, Florida and Colorado. The sale, which is still subject to approval by Everett Clinic stakeholders, would expand the company into the Pacific Northwest.
“DaVita HealthCare Partners is honored to have this opportunity to join forces with an organization whose core values and mission so intentionally align with our own,” said Kent Thiry, chairman and CEO of DaVita HealthCare Partners, in a statement. “We are excited to work with the Everett team as we improve healthcare delivery and expand the leading independent medical group in America.”
DaVita didn't disclose the financial terms of the deal, which is expected to help Everett stay independent from health systems as physician groups face increasing pressure to merge with hospitals. It's a seller's market for physician groups, and health systems have proven that they're able to absorb docs while keeping practice costs down, despite previous doubts.
“Since there's so much consolidation in the hospital system arena we believe that practices like Everett and HealthCare Partners need to come together to avoid being at a competitive disadvantage,” Thiry said in an interview with Modern Healthcare Monday morning.
Everett CEO Rick Cooper said that the clinic's RFP attracted responses from a wide range of regional, national and international organizations, and the company made it a point to be open to differing models. “We don't do this as a strategy to find an alternative to health systems. It was more driven by our business plan,” he said.
Everett was a demonstration site for Medicare accountable care, which began in 2005, but after six years determined that Medicare managed care, or Medicare Advantage, was the best fitfor it. Starting in 2012, the clinic announced it would only accept Medicare patients enrolled in managed care.
Cooper said the clinic has seen a sharp increase in demand as the population in its service area has grown. The organization was looking for scale in order to continue its managed care model and serve more patients.
“HealthCare Partners has a distinguished track record in performing high-quality cost-effective care,” Cooper said. “That was an important consideration. We want to be able to successfully compete in population health, accountable care and retail medicine.”
DaVita ventured beyond its kidney care stronghold with the acquisition of HealthCare Partners in 2012 in hopes of creating an integrated delivery network in which they could receive the entire capitated dollar, as well as an outlet to manage the care of kidney patients before they reach end-stage disease. Thiry said Everett's concurrent focus on managed care was a major reason DaVita looked to the clinic as a strong acquisition.
“The Everett Clinic and HealthCare Partners look at integrated care and population health management through the same strategic lens,” Thiry said. “We are both intense believers in combining to make it possible to embrace broader pools (of patients) in more comprehensive population health responsibilities because we have the capital to support that long term investment and we have some of the tools to help execute on that.”
But Thiry has previously acknowledged that developing HealthCare Partners has left the company with “a lot of scars from our own learning in the process.”
HealthCare Partners has repeatedly posted lower year-over-year profits as compared to the company's kidney care business. In the second quarter, HCP saw a 2.8% increase in its managed membership, but reported $72 million in income on $966 million in revenue, affected by expenses as compared to $82 million in income on $887 million in revenue.
“On the business development side of HealthCare Partners, we are getting better,” Thiry said on a second-quarter earnings call. “We have two strong business positions both enjoying some steady unit growth … and we are investing significantly in our future.”
DaVita has inked several major deals in hopes of bolstering HealthcarePartners, including a joint venture with Englewood, Colo-based Centura Health and the acquisition of Colorado Springs (Colo.) Health Partners, a multispecialty group practice. Moving forward, Thiry said Monday that DaVita is concentrated on acquiring more physician practices that believe in value-based care.
“Our main stream focus is to partner with like-minded medical groups,” Thiry said. “Having said that, we are very open to partnering with health insurance companies or health systems if they fundamentally believe in moving down the path toward a greater value proposition and are not just focused on gaining market share to protect pricing.”