Commercial healthcare providers heavily invest in home care sector as Medicare Advantage expands, aging in place trends up.
By Daniel Beaird
UnitedHealth Group reported a $5.8 billion profit in the third quarter as its Optum medical provider business and its health insurance plans grew by double-digit percentages. Revenue increased 14% to $92.4 billion thanks to its third quarter growth. Optum’s third quarter revenues rose 22% to $56.7 billion and operating earnings grew to $3.9 billion. Optum businesses include healthcare services like surgery centers, clinics, doctor’s offices and pharmacy benefit manager (PBM) OptumRx.
“Optum’s been the leader in showing how a managed care organization with an ambulatory care delivery platform and a pharmacy benefit manager all in house can lower or maintain and bend cost trend and then drive better market share gains in their health insurance business,” Ana Gupte, managing director of healthcare services at Leerink Partners, told Healthcare Dive.
Optum brokers deal with home care provider Amedisys
This year, Optum agreed to combine with Baton Rouge, La.-based Amedisys, a provider of home health, hospice and high-acuity care, with the acquisition of Amedisys’ outstanding common stock in an all-cash transaction for $101 per share. It outbid competitor Option Care Health, which offered an all-stock deal in May. Optum’s deal values Amedisys at approximately $3.7 billion.
The deal met shareholder approval in September, and it creates a massive combination of post-acute care services with over 16,500 employees and over 670 care centers in 46 states. And it followed Optum’s earlier $5.4 billion merger with home health provider LHC Group, which was folded into Optum.
Concern from industry stakeholders
But American Pharmacy Cooperative, Inc. (APCI) sent a letter to the U.S. Department of Justice (DOJ) in October opposing the Optum-Amedisys deal and requested it be scrutinized closely pursuant to DOJ and Federal Trade Commission’s (FTC) draft merger guidelines. The APCI letter calls the acquisition “a further descent into an already vertically integrated healthcare supply chain in which the largest insurers and their affiliated pharmacy benefit managers are able to profit off conflicts of interest and misaligned incentives.”
APCI is a member-owned cooperative made up of over 1,800 independent pharmacies in 23 states. It offers members group purchasing power and front-end merchandising services among other benefits.
But Optum says no single participant in the home care market has more than a single-digit percentage share and Optum is confident about its combination with Amedisys. As home-based care gains popularity and the Medicare Advantage population expands, companies like UnitedHealth Group and other commercial healthcare providers continue to eye a larger footprint in post-acute care.
Commercial healthcare providers ramp up investment in home care sector
CVS Health and Walgreens Boots Alliance both acquired home care companies as services moving into the home were accelerated by the Covid-19 pandemic and older Americans seeking to age in place. Optum says even with numerous home care providers, demand far exceeds available supply, creating the need for substantial investment in the sector to serve patients and their families more fully with high-quality care in their homes.
“Amedisys’ commitment to quality and care innovation within the home, and the patient-first culture of its people, combined with Optum’s deep value-based care expertise can drive meaningful improvement in the health outcomes and experiences of more patients at lower costs, leading to continued growth,” Patrick Conway, M.D., chief executive of Optum Care Solutions, said in a statement about the deal.