Shared from the 10/7/2022 Houston Chronicle eEdition

Kelsey-Seybold advances expansion

No changes seen in care, pricing as Optum’s purchase of clinic helps complete a $1B plan

Kelsey-Seybold Clinic patients should not anticipate immediate changes to care or pricing, experts say, following the provider’s recent acquisition by Optum, a subsidiary of the insurer UnitedHealth Group.

The purchase, first reported by Axios in April, was part of a buying spree over the last year that saw Optum acquire several health care providers throughout the country, according to media reports. The Minnesota-based company has a portfolio that includes doctor groups, primary care clinics and surgical centers, as well as information technology and analytics services.

Optum and Kelsey-Seybold declined to disclose terms of the deal, but both said they align with each other on providing value-based care — a delivery model in which hospitals and doctors are paid based on health outcomes, not the number of services they provide.

The purchase also will help Kelsey-Seybold complete a $1 billion expansion plan. The multi-specialty clinic operates 32 locations throughout Houston with plans to reach 50-plus by 2026.

“With Optum as our partner, Kelsey-Seybold will continue to focus on and deepen our commitment to high-quality, patient-centered care at a lower total medical cost,” says Dr. Tony Lin, Kelsey-Seybold’s chairman and CEO. “This new partnership will help us fulfill our vision to expand the delivery of our value-based model of care in the greater Houston area.”

A spokesperson for Optum said the clinic will remain locally led. The merger also ended Kelsey-Seybold’s partnership with TPG Capital, a private equity firm that held a non-controlling interest in the clinic, Lin said.

Optum’s recent acquisitions come as many providers grapple with lingering financial fallout from the COVID-19 pandemic, facing labor shortages and increasing labor, supply, and drug costs.

UnitedHealth, the nation’s largest insurer, increased its profits 25 percent during the pandemic to $17.3 billion in 2021 from $13.8 billion in 2019, according to SEC filings. One of United-Health’s recent moves, a merger with health-technology firm Change Healthcare, was the subject of a federal anti-trust lawsuit, alleging the deal would unlawfully suppress competition in the health insurance market. A judge last month ruled in United-Health’s favor.

The deal with Kelsey-Seybold is an opportunity for Optum to boost profits by expanding the scope of its service, said Dr. Ge Bai, a professor of health policy and accounting at Johns Hopkins University. But she and other health care business experts do not expect the deal to increase costs for patients, unless Optum gains a stronger foothold in the local health care marketplace.

There is ample competition in Houston, with major providers, such as Memorial Hermann and Methodist, expanding into the suburbs, where Kelsey-Seybold also is trying to grow.

Kelsey-Seybold touts its ability to offer high-value care as Houston’s longest standing accountable care organization, which rewards providers for controlling costs and improving quality, rather than the traditional method of paying physicians for each service performed. It accepts more than 50 individual and marketplace health insurance plans, including those offered by UnitedHealth.

Dr. James Langabeer, a professor in entrepreneurial biomedical informatics who specializes in health policy at UTHealth Houston, said Kelsey-Seybold’s closer relationship with United-Health could lead to better coordination of care between the two entities, potentially affecting what types of services are covered by the insurer. But he does not foresee those changes happening.

The deal, he said, is likely meant to support Kelsey-Seybold's expansion plans and keep up with the larger players, which would lead to more competition and better choices for consumers.

“We’ll see how long this lasts and how well it works,” he said. “But I believe it’s going to be a good move for the consumers in Houston.” julian.gill@chron.com

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