In a big healthcare merger or acquisition, sometimes the divestitures required for regulatory muster tell a more interesting story. In OptumHealth’s purchase of DaVita Medical Group’s practices, Intermountain Healthcare taking on DaVita’s Nevada operations might be the most curious piece.
The deal impacts DaVita’s large medical groups in California, Colorado, Florida, Nevada, New Mexico, and Washington. Optum owns medical groups across the country, and it was a logical suitor when DaVita wanted to shed that line of business.
DaVita’s Las Vegas operations, HealthCare Partners Nevada, was always going to be a major sticking point. Optum already owns the market’s largest multispecialty practice, Southwest Medical Associates, which is vertically integrated with UnitedHealth-owned Health Plan of Nevada, the market’s largest HMO. Optum would have controlled 80 percent of southern Nevada physicians, so a sale of those operations was assured.
But Intermountain remains an intriguing choice. The highly advanced vertically integrated health system is Utah’s largest health system and owns Utah’s largest health insurer (SelectHealth). On a national front, Intermountain led the creation of CivicaRx, a nonprofit generic drug manufacturer created to help hospitals alleviate drug shortages.
If anything, Intermountain was a candidate hiding in plain sight. It’s the only non-Nevada health system in easy referral distance. Just 120 miles from the Las Vegas Strip, Intermountain operates Dixie Regional Medical Center, with 240-plus beds across two campuses of fast-growing St. George. Dixie opened a new cancer center in January.
In the open spaces of the Mountain West, 120 miles isn’t far at all. In the past, large public-sector employer coalitions have used sending patients to St. George as leverage to settle contract disputes with Las Vegas providers. Nothing ever came of those threats, but with a sudden Intermountain presence across southern Nevada, new opportunities for partnerships could arise.
The anchor of a large multispecialty Las Vegas practice could open a corridor to SelectHealth to enter the state. SelectHealth already teamed up with P3 Health Partners, a population health management company, to sell Medicare Advantage products in Vegas.
Commercial plans would be a much larger step, but the potential exists. HCP has been involved in ACO and medical home initiatives with payers such as Cigna and Humana, so it might not be averse to greater integration.
As it is, SMA’s vertical integration all but forces other insurers to contract with Healthcare Partners Nevada. For now, Healthcare Partners will hold onto its name. But the backing of Intermountain could make it a much different health practice soon.
Bill Melville is a principal analyst at DRG and national healthcare policy expert whose work appears in Health Plan Analysis and Market Overviews. Follow him @BillMelvilleDRG