As part of its push for dominance in the nation’s sprawling and fragmented primary-care market, insurance giant UnitedHealth Group is quietly acquiring independent medical clinic groups in Oregon.
So far, UnitedHealth has bought at least two Oregon clinic networks: Oregon Medical Group in Eugene-Springfield and GreenField Health in Portland.
UnitedHealth bought GreenField Health last year, public records show, and a spokesperson told The Lund Report it bought Oregon Medical Group in late 2020. Combined, the two systems have about 120 doctors and other clinicians at 11 locations.
The moves are a small part of publicly traded UnitedHealth’s nationwide buying spree in which it says it has accumulated about 1,500 primary care and specialty facilities nationwide totaling 60,000 doctors.
UnitedHealth is the nation’s largest health insurance company, but analysts say profits from that line of work are lackluster. UnitedHealth’s vehicle for growth – and more profits – is its Optum Health division. Optum has three arms – Optum Health, which manages the medical practices – plus a medical information technology division, and a pharmacy division.
Other major corporations are also snapping up primary care clinics, which traditionally have been independent and locally owned by physicians. Observers say the consolidation could improve the quality of care — or lead to higher prices as the corporate owners exploit their greater control.
It’s no surprise that independent primary care groups are seeking to sell, said Betsy Boyd-Flynn, executive director of the Oregon Academy of Family Physicians, a trade group representing doctors at both independent and corporate-owned practices.
“There are a lot of consolidating forces in play,” Boyd-Flynn told The Lund Report. “COVID-19 accelerated this, but it is not a new trend.”
The trend has drawn national attention.
“Never before have the titans of capitalism shown such interest in the humble family physician,” wrote David Blumenthal, president of The Commonwealth Fund, in an article in the Harvard Business Review in January. The article examined the moves by UnitedHealth and others to buy primary care groups.
“This new trend could greatly bolster, or dangerously distort, U.S. primary care, a critical component of a healthy health care system,” he wrote. The Washington, D.C.-based nonprofit researches ways to improve health care.
UnitedHealth tries to keep a low profile on its clinic purchases. It doesn’t announce many of them. It didn’t formally announce the Oregon purchases when they occurred. Optum’s website lists some but not all of the clinics Optum owns. The site doesn’t, for example, list that it owns any Oregon clinics — despite having owned Oregon Medical Group and GreenField for many months.
Company spokesperson Aaron Albright declined to provide The Lund Report with a list of all Optum facilities in Oregon or nationwide. Albright wouldn’t say whether UnitedHealth has bought other medical groups in the state — or has plans to buy more.
The prospect of good profits has lured UnitedHealth and other giants into buying primary care and other medical practices.
UnitedHealth’s push into medical information technology has drawn an antitrust lawsuit by the federal government.
Earlier this year, the U.S. Justice Department sued to stop UnitedHealth’s proposed $8 billion purchase of health insurance data giant Change Healthcare. Regulators alleged the deal would give UnitedHealth access to its competitors’ data and ultimately push up health care costs.
UnitedHealth and Change Healthcare offer competing software for processing health care claims and together serve 38 of the top 40 health insurers in the country, the Justice Department said in the complaint. Joined together, they would have at least 75% of that market, it said.
UnitedHealth is contesting the lawsuit, saying the deal would help streamline administrative and payment processes.
The American Hospital Association is siding with the Justice Department. In a letter to the agency last year, the trade group drew attention to Optum Health’s huge and growing lineup of medical clinics as a sign of UnitedHealth’s dominant position in U.S. health care.
Big Profits From Clinics
Optum Health’s primary care and specialty clinics are giving the parent company a big financial boost. In 2021, Optum Health reported $4.4 billion in profits on $54 billion in revenue, a sizeable chunk of UnitedHealth’s overall profit of $16 billion on revenues of $287 billion. Optum Health has grown fast. In 2019, it generated a profit of $3 billion on revenues of $30 billion.
UnitedHealth is continuing to grow this year.
Last month, it bought Refresh Mental Health, a Florida-based for-profit chain of 300 psychiatry and substance abuse clinics in 37 states for $1.2 billion, according to news reports. This month, it bought Kelsey-Seybold Clinic, which owns 30 facilities offering medical specialties in the Houston area and employs 500 doctors, according to news reports.
Too Much Paperwork
Independent practices increasingly struggle with escalating administrative complexities, she said. These include implementing electronic medical records systems, gathering increasing amounts of government-required data on race, disability and other characteristics of patients, and dealing with insurers, Boyd-Flynn said.
A big corporate owner can centralize these procedures, she said.
“It’s harder and harder for small clinics who are contracting with more and more insurers. They are juggling so many contracts,” she said.
But consolidation under a big owner has drawbacks.
“There is some pretty solid evidence that prices go up when independent practices become part of larger systems,” Boyd-Flynn said. “There is less pressure in the marketplace to keep costs lower. There is less competition.”
Also, corporate owners may opt to cut reproductive or gender-affirming services, or close clinics, she said.
Prior to its sale, Oregon Medical Group was physician-owned.
Oregon Medical Group is the dominant clinic system in Lane County, with a staff of about 600, including about 100 doctors and physician assistants at nine facilities in Eugene and Springfield. In addition to primary care clinics, it has specialty groups in fields such as neurology, orthopedics and dermatology. GreenField has a staff of about 40, including 14 doctors and other clinicians at two clinics.
What effect, if any, UnitedHealth’s purchases in Oregon have had on patients and employees is unclear.
In a statement to The Lund Report, Oregon Medical Group said: “Optum and Oregon Medical Group share common values and goals around providing patients with high-quality, local care with a focus on value and innovation. Oregon Medical Group … continues to be operated locally and now supported by the strong clinical, analytical and technological capabilities of Optum.” Oregon Medical Group earlier this year switched to a new electronic medical records system.
Oregon Medical Group officials didn’t reply to more detailed questions from The Lund Report.
GreenField Health did not respond to inquiries from The Lund Report. In a filing with the state, GreenField Health formally changed its name to OptumCare Portland last summer.
Higher Pay For Doctors?
According to The Commonwealth Fund’s Blumenthal, besides UnitedHealth, other conglomerates buying primary care clinic groups or creating their own include CVS-Aetna, Walgreens, Walmart and Amazon.
Blumenthal hopes the new corporate owners will focus on improving preventive care and overall patient health rather than simply having clinics treat illnesses as they crop up. Insurance giants such as UnitedHealth have a strong motive to do that, he wrote. They want to avoid paying for unnecessary hospitalizations and emergency room visits, he wrote. That could make primary care more profitable, and savings could be used to boost the pay of primary care physicians — traditionally among the lowest paid of doctors — Blumenthal wrote.
Whether that’s how the trend plays out — or whether corporate clinic owners will cut costs, raise prices and keep the profits — remains to be seen.
Blumenthal told The Lund Report he didn’t have any insight into whether UnitedHealth’s primary-care purchase drive was helping or hurting patient care.
Meanwhile, hospital systems, too, are buying primary care and other medical groups, according to the insurance trade group America’s Health Insurance Plans. The group says that trend is likely to drive up costs. One study shows that at the end of 2020, hospital and health systems employed nearly half of American doctors and that 18,600 doctors left independent practice to become employees of hospitals in 2019 and 2020, the group said.
Anxiety about the effects of mergers and acquisitions in health care prompted Oregon lawmakers last year to mandate a program that will require large deals to face state review to ensure they won’t harm health services for consumers.
The program, which took effect this March 1, requires review of proposed mergers and acquisitions in which one side has annual revenues of at least $25 million and the other at least $10 million. So far, no proposed deals have been submitted for review.
You can reach Christian Wihtol at [email protected].