UnitedHealth Group (Minnetonka,MN) confirms that it has acquired the management assets of Monarch Healthcare (Irvine,CA), an independent practice association representing 2300 physicians. The deal doesn’t include any of the actual physician practices affiliated with Monarch, but rather the IPA assets, which will become part of United’s Optum division. Terms of the deal weren’t disclosed.
A United spokesman had no comment on any “grand strategy” behind the deal, and Monarch didn’t return calls for comment. The spokesman did say United has “a track record” for managing physician practices. He points to United’s 2008 acquisition of staff-model HMO Sierra Health Services (Las Vegas), which owns the Southwest Medical Associates multi-specialty physician practice. United also owns two other California IPAs: AppleCare Medical Group and Memorial HealthCare IPA.
So what’s in it for United? That’s not exactly clear. But consider that Optum offers a wide variety of products and services to physicians, including solutions for coding and billing, cost control, clinical quality, electronic data interchange, electronic health records, practice management, and financial management.
At the very least, United can use the Monarch acquisition to push these services down to IPA-affiliated physician practices. It can also use Monarch as a test-bed and proving ground for Optum’s expertise. It would be a similar approach to the one taken byAetna, which plans to use its acquisition of health information exchange technology vendor Medicity as a platform for pushing clinical decision-support applications to physician practices – a cornerstone of the company’s ACO strategy
In addition to targeting revenue streams beyond the core health insurance business, the strategy appears to be aimed at ensuring that insurers stay relevant as IPAs begin to take risk and perhaps even contract directly with employers.
But owning IPAs is likely to be a tricky proposition for a health plan and open to potential conflicts. For example, WellPoint’s Anthem Blue Cross (Woodland Hills, CA) – a competitor to United – already has an ACO arrangement with Monarch. A United spokesman says Monarch will continue to contract with all insurers.