While every insurer plays catch-up with UnitedHealth Group, UnitedHealth stays several steps ahead of the pack. Word of the proposed CVS Health-Aetna merger was still fresh when Optum announced plans to acquire the medical practice arm of dialysis giant DaVita Inc. for $4.9 billion.

After a buying spree - the latest practice was acquired less than two weeks before the Optum announcement - DaVita shifted strategy and decided to sell the medical group.

For any large insurer, the DaVita Medical Group was a prize. DaVita Medical group operates 300-plus clinics in six states: California, Colorado, Florida, Nevada, New Mexico, and Washington. While Nevada and New Mexico are smaller markets, DaVita practices are among the largest in both states. For Optum, DaVita Medical Group joins a portfolio that already includes approximately 30,000 providers (UnitedHealth and Optum are cagey about which practices they own, although the major ones have been made public).

If UnitedHealth moves for tighter integration with the DaVita Medical Group practices, it could roil the market in other ways. Insurers could be reticent to partner with a practice owned by a UnitedHealth subsidiary; years ago, when Optum bought California-based Monarch Healthcare, the deal scuttled a planned accountable care organization between Anthem Blue Cross of California and Monarch. DaVita Medical Group practices in New Mexico and in Florida have no ACO contracts with insurers, opening the door for UnitedHealth. In Washington, the Northwest Physician Network has ACO contracts with four insurers (Cigna, Humana, Premera Blue Cross, and Regence Blue Shield). Since Optum has operated quietly on many practice acquisitions, the existing ACO agreements could stay in place.

How UnitedHealth puts the pieces together will be curious. The move potentially sets up UnitedHealth to become more dominant, even in states like Colorado with competitive insurance markets. Just as CVS Health could use the Aetna merger to drive plans’ members to clinics and pharmacies, UnitedHealth could move more members to DaVita Medical Group clinics or design narrow-network plans among its providers.

In one DaVita Medical Group market, some divestitures will be necessary. In Las Vegas, UnitedHealth already owns Southwest Medical Associates, the region’s largest multispecialty practice. HealthCare Partners Nevada had been Southwest Medical’s primary preferred provider for other insurers in the market. Even in the Trump administration, market dominance of that scale would be a non-starter. Nevada has a precedent, where Renown Health System bought up northern Nevada’s largest cardiology practices and formed a virtual monopoly.

In Colorado and California, where a certain large, integrated insurer operates (Kaiser Permanente), UnitedHealth could boost its own vertical ingratiation capabilities. The transaction could give Optum ownership of Mountain View Medical Group in Colorado Springs. Combined with UnitedHealth’s purchase of Rocky Mountain Health Plans in western Colorado, a low-cost insurer with strong provider ties, UnitedHealth suddenly has huge potential for more integrated care. UnitedHealth has longstanding provider ties with Denver’s Physician Health Partners and New West Physicians, which would give it a chain of providers along Colorado’s populous Front Range.

Pair the DaVita clinics with Optum’s existing providers and other recent acquisition—Surgical Care Associates, with 200 ambulatory surgery centers in 35 states—and the potential for greater integration among UnitedHealth providers is evident.

Integrated delivery systems could face new competition from an Optum-owned integration system. As UnitedHealth continues to stay ahead of other insurers, the provider segment also needs to plan how to keep pace with UnitedHealth.

Follow Bill Melville @BillMelvilleDRG

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