Two major deals made this a big week for healthcare dealmaking. The first was UnitedHealth Group’s acquisition of LHC Group for a whopping $5.4 billion. A second was Amazon’s purchase of healthcare provider One Medical for a cool $3.9 billion.
Both transactions — which were merely finalized this week— seem to reinforce two realities about healthcare today:
1. Healthcare is a hot commodity.
2. Home health is where the action is.
Regarding the first point, you only have to know the history of Amazon in healthcare to appreciate how interested the behemoth online retailer is in this space. Consider: Last August, Amazon disclosed it was shuttering Amazon Care, a primary care business offering in-home and telehealth. That was days after it jumped into the running for Signify Health, which CVS Health ultimately snatched.
You also may recall that in 2018 it partnered with Berkshire Hathaway and JPMorgan Chase to form Haven. That venture fell apart less than three years after the launch.
While Amazon clearly has some ground to make up to prove it has staying power in healthcare, it obviously sees healthcare as fertile ground. And it is not alone, with other retailers, such as CVS, Best Buy, Walmart and Dollar General investing in the healthcare arena.
Which brings us to the LHC deal. While it dragged on for nearly a year with Federal Trade Commission inquiries slowing the pace, for UnitedHealth, it likely will be worth the wait. (See second point.) It represents the second major purchase of a home care provider by an insurance company. (The first was Humana’s purchase of Kindred at Home.)
Given the growth in Medicare Advantage and value-based care, there’s no question that insurance companies see synergies between keeping people at home and capitalizing on value-based arrangements. And as primary care increasingly is becoming interconnected with home care — through house call situations, telehealth and other technologies — it makes sense that LHC is in UnitedHealth’s primary care Optum division.
Consolidation is quickening in home care. The LHC buy further illuminates that. It will be interesting to see how the big players influence the still-fragmented field and what changes and trends will trickle down to the smaller guys. If it’s more data-driven care and an emphasis on partnerships, it may well be positive — as a rising tide tends to lift all boats.
Liza Berger is editor of McKnight’s Home Care. Email her at [email protected].
