Optum's $2.3 billion deal with Surgical Care Affiliates continues its push to shift care away from the costly hospital setting and toward lower-cost outpatient providers.
While analysts see the deal as a smart way to get a handle on rising healthcare spending, UnitedHealth Group, which owns Optum, is the only insurer taking advantage of this strategy.
Optum announced Monday that it would buy Surgical Care Affiliates, a chain of outpatient surgery centers, for $2.3 billion. The Deerfield, Ill.-based chain, which operates 205 ambulatory surgery centers and partners with 3,000 physicians, will become part of Optum Care.
With massive uncertainty surrounding the repeal of the Affordable Care Act and its effects on the health insurance industry, Optum's deal with Surgical Care Affiliates is one sure bet.
“It's no regrets,” said Ana Gupte, industry analyst with Leerink Partners. No matter what happens with the ACA, “slowing down the rate of cost growth is going to be an imperative for the health insurance industry.”
The deal is another in a string of Optum acquisitions that move care into cheaper ambulatory care environments.
Optum's growing ambulatory-care catalog includes urgent-care clinics, hospice and primary care. It bought MedExpress, an urgent-care clinic operator, in 2015. The year before, it took on physician consulting firm MedSynergies and care-management company Alere Health.
Tackling surgery was a logical next step, Gupte said. “Surgery is very expensive in the hospital setting,” she said, so moving it to a freestanding ambulatory-care setting can fetch Optum's customers “a far lower price” for the same surgery.
Hospital care accounts for one-third of total U.S. healthcare spending—the biggest chunk of the pie—which reached $3.2 trillion in 2015. And it's rising every year.
Ambulatory surgery centers are able to provide steep discounts for surgical services that hospitals can't. Those discounts provided by such surgery centers, compared with inpatient prices, look good to health insurers and other payers who have been searching for ways to spend less in increasingly expensive healthcare budgets.
“This cost advantage, in our view, is starting to drive a new wave of site-of-service shifting, such as those that are beginning to emerge in the area of joint-replacement surgeries,” Jefferies equity analyst Brian Tanquilut said in a research note Monday. Surgical Care Affiliates focuses heavily on orthopedic surgeries, among other services.
Patients are seeking medical services in low-cost settings in this value-based era, especially as more health plans and employers shift their plan members to high-deductible plans. Health plans and employers can direct patients toward these higher-value settings with narrow networks and incentives.
“In general, payers have been driving patients to less-expensive points of care and out-patient facilities, other ambulatory-care services, that sort of thing. This seems to be part of that trend,” Pano Karambelas, Moody's vice president and senior credit officer, said of Optum's stock and cash deal.
But while other insurers contract with low-cost providers, UnitedHealth is unique in buying up low-cost provider settings. That's because other insurers don't have an Optum-type unit to build out networks on their own, Gupte said.
Optum, on the other hand, is in a league of its own. It can sell its less-expensive medical services to both UnitedHealthcare and third-party health plans. UnitedHealth benefits from its Optum unit providing greater value ambulatory care and by raking in a diversified source of revenue.
Other health plans would like an Optum of their own, but it takes years to create that kind of business, Gupte said. UnitedHealth just happened to be ahead of the curve.