June 20, 2019
2 min read

Federal Trade Commission approves DaVita Medical Group sale contingent on Nevada divestiture

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The Federal Trade Commission has approved the $4.3 billion sale of DaVita Inc.’s Medical Group to health care provider Optum, a division of UnitedHealth Group Inc., contingent on the divestiture of a physician practice group in Nevada.

A second agreement between Optum and DaVita and the Colorado Attorney General’s Office requires adjustments to market share in the Colorado Springs area.

The Federal Trade Commission (FTC) 4-0 vote comes a year and a half after DaVita first announced it had reached an agreement to sell the division to Optum. Last December, the dialysis provider took $560 million off the price tag due to lagging financial performance of the medical practice group.

“In joining Optum, DaVita Medical Group begins an exciting new chapter, helping physicians further advance patient care,” Kent Thiry, executive chairman of DaVita Inc., said in a statement. Optum serves more than 80 health plans and will provide care to a combined 16 million patients with the sale.

As part of the transaction, HealthCare Partners Nevada, DaVita Medical Group’s primary care practice in southern Nevada, will become part of Intermountain Healthcare.

The FTC said that divestiture was key for approval of the sale, since a UnitedHealth Group practice already exists in that area and the combined company with DaVita Medical Group would have controlled more than 80% of the market for managed care provider organization services to Medicare Advantage insurers.

Under the proposed settlement order, in addition to the divestiture obligations, the FTC said UnitedHealth Group and DaVita are required to:

  • provide transition assistance to Intermountain Healthcare that includes access to and use of intellectual property and business equipment and information;
  • properly transfer all confidential business information;
  • for 1 year after the divestiture date, provide Intermountain Healthcare with the opportunity to interview and hire employees to fill key information technology and critical services positions in HealthCare Partners of Nevada; and
  • until the divestiture is complete, maintain the assets and marketability of HealthCare Partners of Nevada.

Unrelated to the FTC decision, both Optum and DaVita Medical Group agreed to address concerns by the Colorado Attorney General’s Office about restricted competition in Colorado Springs if the sale was approved. Colorado Attorney General Phil Weiser filed a complaint in El Paso County District Court, prior to the FTC vote, to challenge the transaction.

“The combination of Optum and DaVita Medical Group would create significant market power with the ability and incentive to raise DaVita Medical Group’s price to other insurance companies that serve Medicare Advantage patients in the Colorado Springs Area. If left unchecked, the merger would result in reduced competition, higher health care costs, reduced benefits and fewer choices for seniors,” he said in a release.

UnitedHealthcare is the largest provider of Medicare Advantage plans in the area and DaVita Medical Group owns two large physicians’ groups in Colorado Springs — Colorado Springs Health Partners and Mountain View Medical Group.

A consent judgment, agreed to by the merging parties, requires UnitedHealthcare to lift its exclusive contract with Centura Health for at least 3.5 years, which will expand the network of health care providers available to seniors in Medicare Advantage plans offered by other providers. In addition, DaVita Medical Group’s agreement with Humana — UnitedHealthcare’s main competitor in Colorado Springs — will be extended without change through at least the end of 2020, ensuring stability for Medicare Advantage customers and UnitedHealthcare’s competitors, the attorney general’s office said.

Weiser’s office said it took the steps because the FTC “investigated the merger but declined to seek any remedies to protect Colorado consumers.”