A new deal

UnitedHealth to operate Calif. physician group

Topics: Hospital-Physician Alignment, Physician Issues, Collaborative Relationships, Cost and Productivity, Efficiency, Performance Improvement, Accountable Care, Market Trends, Strategy, Health Policy

September 1, 2011

UnitedHealth Group this week announced plans to acquire the management division of Irvine, Calif.-based Monarch HealthCare, in a deal that blurs the lines between insurance company and health provider services, the Wall Street Journal reports.

The deal
With about 2,300 physicians across a range of specialties, Monarch is one of the largest physician groups in California. Its acquisition establishes UnitedHealth's health services division Optum , which previously acquired two other California physician groups, as "a formidable presence in the region," the Journal reports. According to Monarch's CEO, the agreement forms "a strategic relationship with Optum to support our physicians in providing high-quality, cost-effective patient care in Orange County."

Although UnitedHealth says Monarch will continue to contract with other insurers, the deal may foster potential conflict of interest issues, the Journal reports. For example, Monarch currently is working with UnitedHealth competitor WellPoint to develop an accountable care organization.

Example of a growing trend
The agreement is the latest example of payers forging closer relationships with health care providers as the federal health reform law encourages integration and consolidation. For example, earlier this year, Pittsburgh-based insurer Highmark announced plans to acquire five-hospital West Penn Alleghany Health System, and Humana last December purchased Concentra, which operates urgent and occupational care clinics (Wilde Mathews, Journal, 9/1; Blesch, Modern Healthcare, 8/31 [subscription required]; Crosby, Minneapolis Star Tribune, 8/31).

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