Optum continues buying spree and scoops up Houston-based Kelsey-Seybold Clinic: report

Optum continues its buying spree and has picked up Kelsey-Seybold Clinic, a large, multi-specialty group practice based in Houston, Texas, Axios reported Monday.

With more than 500 physicians, Kelsey-Seybold Clinic operates multi-specialty care centers, a cancer center, a women’s health center, two ambulatory surgery center locations, and a specialized sleep center with more than 30 locations in the Greater Houston area. Kelsey-Seybold partners with major insurers to offer value-based commercial health plans. Kelsey-Seybold partners with major insurers to offer value-based commercial health plans. The organization partners with payers to offer value-based commercial health plans also owns its own Medicare Advantage plan for seniors, KelseyCare Advantage.

UnitedHealth Group's Optum arm signed a deal to acquire the group practice weeks ago, Axios' Sarah Pringle reported, citing multiple sources.

The deal, if it closes, represents a major investment in value-based care by adding a large, risk-bearing physician organization to its network.

A representative from Kelsey-Seybold Clinic declined to comment. A spokesperson from Optum has not responded to inquiries about the reported deal.

In early 2020, TPG Capital, the private equity platform of global alternative asset firm TPG, made a minority investment in Kelsey-Seybold. At the time of the investment, the medical group's valuation was estimated to be $1.3 billion, Buyouts Insider reported.

UnitedHealth has been aggressive in the merger and acquisition space, with many of its purchases joining the Optum fold. According to media reports, Optum quietly acquired Refresh Mental Health from private equity firm Kelso & Company last month, which gives the UnitedHealth Group subsidiary a greater foothold in the behavioral health space. The value of the purchase is unclear, but Kelso bought Refresh at a valuation of around $700 million in December 2020, Axios reported.

Just last week, UnitedHealth Group announced it would spend $5.4 billion for home healthcare provider LHC Group. When that deal closes, UnitedHealth will fold LHC into its Optum subsidiary as part of its Optum Health arm, which is one of the country's largest employers of physicians. LHC Group includes some 30,000 employees who provide more than 12 million in-home services each year.

Last year, UnitedHealth's Optum scooped up Atrius Health, the largest independent physicians network in Massachusetts, to expand its physician network. The nonprofit physician group operates 30 medical practices that offer primary care, more than 50 specialties, imaging, lab and pharmacy services to the Boston area.

UnitedHealth's aggressive acquisition activity comes as the company is gearing up to fight the feds to close its acquisition of Change Healthcare, which is valued at $8 billion in cash and $5 billion in debt.

Just today, Optum and Change Healthcare said they have further extended their merger agreement to Dec. 31, Paige Minemyer reported.

"The extended agreement reflects our firm belief in the potential of our combination to improve healthcare and in our commitment to contesting the meritless legal challenge to this merger," the companies said in a joint statement Tuesday.

The Department of Justice sued to block the merger in late February, alleging that the combination could allow UnitedHealth to get a leg up on its competitors in the insurance space. The deal was first announced in January 2021 and is valued at $8 billion in cash and $5 billion in debt.

A two-week trial set to determine the deal's fate is scheduled to begin on Aug. 1.

Earlier this week, Bloomberg reported that Change was close to a deal to sell off its ClaimsXten business arm to New Mountain Capital. ClaimsXten competes with Optum's Equian business, a healthcare payments firm that UnitedHealth Group acquired in 2019 from its private equity owner for about $3.2 billion.

Change Healthcare began mulling a sale of ClaimsXten in hopes of convincing the feds to sign off on the UnitedHealth merger, Minemyer reported.