Red Flag: The Blurring of Insurance Cos. and Health Care Providers

September 1, 2011

The Wall Street Journal
September 1, 2011
UnitedHealth Buys California Group of 2,300 Doctors
By Anna Wilde Mathews

UnitedHealth Group Inc. will acquire the operations of a major southern California physician group, in the latest example of how lines are blurring between insurance companies and health-care providers.

The purchase of the management arm of Monarch HealthCare, an Irvine, Calif., association that includes approximately 2,300 physicians in a range of specialties, establishes United’s Optum health-services unit as a formidable presence in the region. Optum had previously taken over the management arms of two smaller southern California groups, AppleCare Medical Group and Memorial HealthCare Independent Practice Association.

In California, deals involving control of medical groups are structured to comply with rules that block most entities from directly employing practicing physicians. Typically, a company like Optum might buy non-clinical assets and sign a long-term management agreement with an independent practice association of physicians such as Monarch.

United has said in the past that providers acquired by Optum will not work exclusively with United’s health plan, and will continue to contract with an array of insurers. But in one sign of the potential complications that might ensue, Monarch is currently in an arrangement with United competitor WellPoint Inc. to create a cooperative “accountable-care organization” aimed at bringing down health-care costs and improving quality.

http://online.wsj.com/article/SB10001424053111903895904576542553422509280.html

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