Forbes- Bruce Japsen – MAR 12, 2018 @ 08:00 AM
News that Centene is buying a large medical group is the latest sign that health insurers are engaged in a doctor-buying binge to compliment their Medicare Advantage businesses by owning group practices that treat a lot of seniors.
In Centene’s case, the health insurer is getting a provider of medical care in Community Medical Group that has 15 health centers throughout the Miami-Dade County area of south Florida. Centene last week described Community Medical as a “leading at-risk primary care provider” that serves more than 70,000 patients including those covered by Medicare Advantage.
It’s the kind of deal that insurers are scouting across the country.
“There will be more acquisitions of primary care groups,” Bill Frack, a managing director in L.E.K Consulting ’s health care services practice said in an interview. “Sophisticated groups are the best way to manage the cost of care in an effective manner. They have the resources to manage complicated cases in a sophisticated way.”
To be sure, health plans are on the hunt to buy doctor practices with the staff, technology, information systems and providers to effectively manage the complex care of elderly Medicare beneficiaries, particularly as value-based care takes hold. Practices that provide effective treatment upfront in the doctor’s office leave more of the premium dollar for an insurance company to profit from or share with the providers.
The Centene deal surprised some observers given the insurer is better known for administering Medicaid benefits for states and offering individual coverage under the Affordable Care Act. In buying Community Medical, it will get a provider of medical care that has patients insured by all three forms of insurance: Medicaid, Obamacare and Medicare.
Centene CEO Michael Neidorff said Community Medical will provide Centene with a “differentiated care delivery asset that shares our focus on commitment to government-sponsored programs and creates a foundation for future growth.”
Centene joins rivals including Anthem, Humana, Aetna, Cigna and UnitedHealth Group that are aggressively moving to tap into the lucrative Medicare Advantage business. These insurers are also establishing closer ties to medical care providers and buying up doctor practices and outpatient facilities at an unprecedented pace.
“When you own the providers, you can now invest in the practice and now it’s accretive,” John Gorman , executive chairman of Gorman Health Group said. “You can get these doctors to practice the way you need them to.”
UnitedHealth Group’s Optum unit is paying $4.9 billion in cash for DaVita Medical Group, adding a large network of nearly 300 medical clinics that treat 1.7 million patients annually.
Anthem in the last three months finalized the acquisition of Medicare Advantage plans in Florida that will add 170,000 Medicare Advantage members in the state this year. Anthem’s acquisition of HealthSun will add an “integrated network of 19 wholly owned Pasteur and WellMax primary care and specialty centers as well as a complementary network of unaffiliated medical centers,” an Anthem spokeswoman said.
Such provider deals are critical to signing up Medicare Advantage members and marketing an insurer’s brand. “If you can lock up a primary care physician group that has a good local reputation, it’s a good way to grow your Medicare Advantage (business),” L.E.K Consulting’s Andrew Kadar said.
Insurers are also looking to meld other services with their Medicare Advantage offerings. Humana, for example, is increasingly focused on integrating physician services and care in the home with its Medicare Advantage plans. Humana in December said it will acquire a 40% stake in Kindred Healthcare’s home care division for about $800 million.
Humana is also looking at merger and acquisition opportunities to grow its Medicare Advantage enrollment. “From an M&A perspective, we continue to look at strategic acquisitions to build out our capabilities, particularly in the primary care arena, but we also continually look for any other assets that could enhance our healthcare services segments,” Humana chief financial officer Brian Kane told analysts earlier this year.
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