$5.4B LHC Group Deal Creates Home-Based Care Health System for Optum

Farma Darya

Last week, UnitedHealth Group (NYSE: UNH) revealed that it’s buying aging-in-place giant LHC Group Inc. (Nasdaq: LHCG) and combining the provider with its Optum business. In the aftermath of that announcement, one of the most interesting questions to ponder has been: How will LHC Group fit alongside the rest of Optum’s home-focused offerings?

Optum is a diversified health services company housed within UnitedHealth Group, the parent of UnitedHealthcare, the largest health insurance organization in the U.S., based on revenue. The business emerged in 2011, when UnitedHealth Group consolidated its care delivery, pharmacy benefits and analytics lines into a vertically integrated one-stop shop.

“We are aligning these businesses to better match the way we serve clients and the way our clients access health services,” G. Mike Mikan, Optum’s first CEO, said at the time. “This step will make it simpler for clients to connect with the broad expertise and innovative capabilities across our businesses, so we can help them improve population health, reduce the cost of care and make health care work better for everyone.”

Back then, Optum served a little over 60 million people, had about 30,000 employees and brought in about $25 billion in annual revenue. Now, Optum serves more than 100 million individuals, has roughly 180,000 employees and generates upwards of $155.6 billion in annual revenue.

Much of that growth has come originally, but Optum has also executed multiple big-ticket acquisitions over the past few years while simultaneously building a sizable physician house calls program.

Days before the LHC Group deal was announced, in fact, Optum reportedly acquired up-and-coming outpatient mental health provider Refresh Mental Health from private equity firm Kelso & Co. Shortly after that news broke, another report said it had likewise purchased Kelsey-Seybold Clinic, a multi-specialty group practice based in Houston, Texas.

Meanwhile, Optum last year quietly acquired Landmark Health – the in-home medical group founded by Adam Boehler, former head of the Center for Medicare and Medicaid Innovation (CMMI). And in 2020, it landed naviHealth, a company that provides post-acute care management services.

With Optum’s existing capabilities, LHC Group, Refresh, Landmark and naviHealth would collectively create a first-of-its-kind home-based care health system, I believe. That system, in turn, would accelerate home health care’s move toward value-based care, a point that Optum leadership has already emphasized.

“Now, we’ll be able to take the skills and offering of LHC Group and offer them to Optum Health patients much, much more broadly,” Dr. Wyatt Decker, Optum Health’s current CEO and a practicing emergency physician, explained in a video posted online. “We have over 4 million patients in value-based arrangements, and we’re very excited to be able to offer the services of LHC Group to these individuals.”

I dig into all this and more in this week’s exclusive, members-only HHCN+ Update.

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$5.4B LHC Group Deal Creates Home-Based Care Health System for Optum

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