Optum, the consulting and services subsidiary of health insurance giant UnitedHealth Group, has acquired the administrative business of ProHealth Physicians, an independent physician group based in Connecticut.
It marks another transaction for Optum, which is the most profitable arm of UnitedHealth and has expanded heavily over the past two years. Some of Optum's most recent acquisitions include pharmacy benefits manager Catamaran Corp., urgent-care clinic operator MedExpress, care-management company Alere Health and physician consulting firm MedSynergies.
Under the latest deal, Optum bought ProHealth's management services organization for an undisclosed amount of money. That business component handles ProHealth's administration and other back-end operations. The primary-care medical group will continue to be physician-owned, an Optum spokesman said.
ProHealth hired consulting firm Strategy& to solicit bids, and there were about a dozen interested parties, ProHealth CEO Jack Reed said. The medical group signed a letter of intent with Optum in the spring and finalized the deal over the past several months.
Reed said the group went with Optum because of the company's ability to provide a large injection of cash, but also because of Optum's data analytics tools and other related services. ProHealth is moving more aggressively toward risk-based contracts with health insurers, in which physicians are paid based on the clinical outcomes of their patients, and it needed rapid access to information.
“It was pretty clear to us that an organization like ours … we needed to identify a strategic partner that would provide not only capital, but also bring key competencies so we could move more quickly into population health,” Reed said. He added that the Affordable Care Act's emphasis on moving away from fee-for-service medicine prompted the group to look for a partner like Optum.
ProHealth contracts with all insurance companies in its service area, including UnitedHealthcare. But ProHealth and other physician groups that have established financial relationships with Optum say they continue to negotiate rates at arm's length with UnitedHealthcare.
“Optum operates as a separate entity,” Reed said. “I could tell you quite confidently that the calls I'm making (about this deal) were met with very positive response and a high degree of encouragement.”