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Scoop: Optum to buy Kelsey-Seybold

Apr 4, 2022
Illustration of a physician's hand holding a stethoscope coming out of a laptop screen.

Illustration: Gabriella Turrisi/Axios

UnitedHealth Group's Optum arm weeks ago signed a deal to acquire Kelsey-Seybold Clinic, a large integrated multispecialty care organization in the Greater Houston area, multiple sources tell Axios.

Why it matters: Optum isn't sitting on the sidelines as it prepares to defend its $13 billion merger with health tech company Change Healthcare.

Rather, the health care behemoth is aggressively buying other assets on the provider side in the end-markets it seemingly deems most important. Plan B, perhaps?

  • Optum last week forked out $5.4 billion in cash for LHC Group, staking a big foothold in home care.
  • Sarah reported in March that Optum quietly bought Refresh Mental Health from Kelso & Co. at an approximately $1.2 billion valuation, gaining a big access point in behavioral health.

Zoom in: Assuming this deal closes, Optum is making a big investment in value-based care, inheriting a large risk-bearing physician footprint in what is the country’s fourth-largest city as of 2018.

  • Kelsey-Seybold’s 500-plus physicians provide care across 30-plus locations, its website states, indicating the medical group has doubled its 16-clinic presence since TPG Capital invested a minority stake in January 2020.
  • Kelsey-Seybold, an Accountable Care Organization, offers coordinated care spanning 55 medical specialties, operating the largest freestanding ambulatory surgery center in Texas, as well as a cancer center, women's health center, specialized sleep center, among other offerings.
  • It partners with payers to offer value-based commercial health plans and also owns its own Medicare Advantage plan for seniors, KelseyCare Advantage.

Flashback: TPG's minority investment in Kelsey-Seybold was previously said to be done at a valuation around the ballpark of $1.3 billion.

  • The valuation of this deal remains unclear. (Have you heard? Write to us.)
  • Kelsey-Seybold did not entertain being acquired by a strategic buyer in its 2019 process but has long been on large payers' radar, sources tell Axios.

Meanwhile, Bloomberg reported Monday morning that New Mountain Capital is in advanced discussions to acquire ClaimsXten, Change Healthcare’s payment integrity business, at a potentially $2 billion-plus valuation.

  • Axios previously wrote that Barclays was advising on the potential divestiture of ClaimsXten.
  • The NMC deal is presumably contingent on Optum-Change extending the current timeline to complete their deal (the current deadline is set for Tuesday, April 5), and then the merger ultimately closing.
  • Anti-competitive concerns triggered the DOJ in February to file suit to block the transaction, but Optum has said it plans to fight to acquire Change at the upcoming August trial.

What we’re watching: How the Optum-Change saga unfolds and the acquirer's next buy.

💭 Our thought bubble: NMC would arguably be the perfect buyer of ClaimsXten.

  • The PE firm knows the space extremely well, having sold Equian, a health care payment integrity provider, to Optum a couple of years ago at a $3.2 billion valuation.
  • Equian, under Optum, competes with ClaimsXten, and hence, contributes to antitrust concerns linked to the UNH-Change tie-up.

Optum, Kelsey-Seybold and TPG declined to comment.

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