Steward Buy Could Add 3,000 Doctors To Optum’s Physician Network, Regulator Says

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Dive Brief:

• UnitedHealth would add almost 3,000 doctors to its Optum medical network if the healthcare juggernaut’s proposed acquisition of Steward Health Care’s physician group goes through, according to a Massachusetts regulator.
• Optum already employs or is affiliated with 90,000 physicians — 10% of all U.S. doctors. In the state of Massachusetts, the UnitedHealth subsidiary contracts with 975 physicians through its affiliations with Atrius Health, Reliant Medical Group and MedExpress, said Kate Walsh, secretary for the Massachussetts Health Policy Commission (HPC), during a Thursday board meeting of the HPC.
• State and federal lawmakers have called for close antitrust scrutiny of the sale, concerned that Optum could drive up care costs in Massachusetts. The HPC — the first agency tasked with reviewing the deal — has yet to start the approval process, because Optum and Steward have yet to submit necessary documents, Walsh said.

Dive Insight:

Physician-owned health system Steward is looking to sell its physician group to generate enough cash to pay down its debts, according to the company. The company currently holds hundreds of millions worth of debt and has been granted a forbearance period until the end of the month as it seeks to restructure and chart a path toward sustainability.

However, details about the physician group, called Stewardship Health, remain murky. The entity is not listed on Steward Health Care’s wesbite and it’s unclear when the asset was formed. In a March letter to Steward’s CEO Ralph de la Torre, Sen. Elizabeth Warren, D-Mass., requested that Steward provide more clarity about Stewardship in light of the proposed deal.

Dallas-based Steward has yet to detail if and how selling its physician group could impact care at its 31 acute hospitals. The network includes approximately 2,950 doctors, according to Walsh.

During the Thursday hearing, HPC Committee Chair Barbara Blakeney said she was concerned about how the sale of those doctors to Optum might affect the quality of care provided at Steward’s other facilities.

“What happens to those hospitals? What happens to those providers? Do they leave those hospitals? Do they go someplace else?” Blakeney asked during the meeting. “The overarching question is, what happens to the health of the hospitals where the Steward physician [group is] practicing?… [The deal] influences the opportunity of those hospitals to provide care in their communities, and it has a huge impact.”

Although HPC’s review has not yet begun, Walsh said the independent agency intends to scrutinize the deal to assess its impact on care access, quality and cost.

The HPC can also consider “other factors in the public interest,” which “provides us some flexibility to tailor our reviews the specific facts of a given transaction,” Walsh said.

Steward and Optum have also filed pre-merger notifications with federal antitrust agencies, according to Walsh.

Antitrust review of the deal is likely to be an uphill battle, according to experts. The Department of Justice is already reportedly investigating Optum to determine whether the company’s acquisition of doctor’s offices could be creating anticompetitive effects.

Agencies need to complete regulatory review before the deal has a possibility of closing. That timeline complicates any hope Steward has of receiving a liquidity lift from the sale before its current forbearance period expires, experts say.

If the deal does close, Blakeney said she holds concerns about where the proceeds might flow. “How much of that money gets to Dallas and heads to corporate?” the HPC committee chair asked.

Warren raised similar concerns last week during a hearing on the impact of private equity on healthcare. During the hearing, the Massachusetts senator asked experts whether there were any guarantees that that proceeds of an Optum deal would be used to fund care in her state. Experts said there were no such safeguards.