The largest employer of physicians in the United States is not HCA, the VA, or Kaiser Permanente — it's UnitedHealth Group's Optum.
With 70,000 employed or aligned physicians across more than 2,200 locations in 2023, Optum has cemented itself at the forefront of the quickly changing healthcare delivery landscape. For comparison, Bloomberg reported in 2021 that Ascension employs or is affiliated with 49,000 physicians, HCA has 47,000 and Kaiser has 24,000. The U.S. had 1.07 million active physicians in 2022.
"The reason it's been so hard to make healthcare and the healthcare system work better in the United States is because it's rare to have patients, providers — especially doctors — payers, and data, all brought together under an organization," Optum Health CEO Wyatt Decker told the publication. "That's the rare combination that we offer. That’s truly a differentiator in the marketplace."
Optum Health, the care delivery arm, reported total revenues of $71.2 billion in 2022, or more than five times greater than in 2015. Last year, the company purchased Refresh Mental Health, which includes a network of more than 300 outpatient sites. It also bought Houston-based Kelsey Seybold Clinic, a group practice with 24 locations, and its Medicare Advantage plan. In addition, Newton, Mass.-based Atrius Health and Dallas-based Healthcare Associates of Texas were acquired last year.
Optum Health's services span primary, specialty, urgent and surgical care. UnitedHeath said Jan. 13 it's planning to integrate more behavioral and home health services into Optum's care delivery strategy as it continues to expand its value-based models.
Optum is also expected to close on a $5.4 billion acquisition of Lafayette, La.-based LHC Group this year, which employs 30,000 people across 37 states. The home health purchase allows the company to reach a majority of the nation's Medicare population.
Optum's dominance over physician employment has been a clear trend for years, but the COVID-19 pandemic has made that position even stronger. For many independent practices, the pandemic created a ripe situation for investors as expenses rose while patient visits declined.
From 2019 to 2022, corporate-owned practices grew 86 percent while corporate employment of physicians grew 43 percent, according to an Avalere study sponsored by the Physicians Advocacy Institute.
"Efforts by Optum to dominate physician markets is a concern generally with consolidation of the insurance market. The two go hand-in-hand and it's got to be of some concern to consumers and patients," Chip Kahn, president and CEO of the Federation of American Hospitals, told Becker's. "From our standpoint, we think a lot of the criticism in terms of hospital consolidation is unfounded, but it's partly driven by the tremendous consolidation on the part of insurers."
In 2018, when Optum Health was half its current size, physician group consulting firm Gist Healthcare told Bloomberg that the company was "scaring the crap out of hospitals in many markets."
Despite the concern, some health systems now view Optum and its services as an opportunity, which include a pharmacy benefits manager (Optum Rx) and a technology arm (Optum Insight). Those services will only improve as the company integrates data and analytics giant Change Healthcare, which it purchased for $7.8 billion in October.
In January, Optum said it would be hiring a combined 1,900 employees from Brewer, Maine-based Northern Light Health and Owensboro (Ky.) Health, along with taking on system functions like revenue cycle management and IT services.
Tim Dentry, Northern Light's president and CEO, told the Portland Press Herald the deal is expected to save $1 billion over 10 years by outsourcing billing and support operations to Optum.
"Nobody was going to save the day for us in healthcare," he told the newspaper. "This decision by Northern Light is going to take a huge amount of pressure off of individual entities like [Eastern Maine Medical Center, a hospital parented by the health system]."
"Over the last three or four years, we are indeed able to bring our more recent cohorts to a better economic position more quickly," UnitedHealth Group CEO Andrew Witty said Jan. 13. "That's allowing us then to continue to invest more aggressively in bringing new patients into the system."
Optum has inked similar partnerships in the past with St. Louis-based SSM Health, Greenbrae, Calif.-based MarinHealth, Cooperstown, N.Y.-based Bassett Healthcare Network, Boulder (Colo.) Community Health and Walnut Creek, Calif.-based John Muir Health.
Mike Valli, president of Optum's Northeast Region, says the organization is poised for more deals — that such quick succession is not mere coincidence.
"I would not be surprised if that's what you see in 2023," Mr. Valli told Becker's.
"A lot of these health systems are looking for a new relationship, or they're wondering, 'How do I make sure I'm staying an independent health system and continuing to deliver the best clinical care that I can?'" he said. "Over the past specifically five to six years, we've been aggregating a ton of assets that can help enable the administrative functions of these systems. The idea behind these relationships is, really, how do we bring everything Optum has to offer for a provider system to them in one relationship?"
While most large insurers now own a healthcare delivery unit, it's still murky how care quality will be affected across different populations. A Dec. 12 study published in JAMA Network Open did find that Optum patients who are in a two-sided risk Medicare Advantage plan have better health outcomes than patients enrolled in traditional Medicare.
From 2010 to 2021, private investment in primary care grew exponentially from $15 million to $16 billion, according to a Jan. 7 article published in the New England Journal of Medicine — much of that growth was likely influenced by Medicare Advantage.
The authors wrote that corporate takeovers of primary care practices from companies like Optum, CVS Health and Amazon threaten health equity, healthcare costs and clinician autonomy. Alternatively, the trend could increase care access for covered individuals, and improve professional work for clinicians.
"Corporate investors are moving aggressively into this field, drawn by financial opportunities created by the shift to value-based care, with major ramifications for the decades ahead," the article said. "It is critical that neither the historical creed of medicine nor patients' trust in primary care physicians be sacrificed along the way."