United Health Group is buying the healthcare business line of the Advisory Board Company to gain more access in the provider space and broaden ithe offerings of its Optum operating unit, which offers a wide range of services to healthcare organizations through software, technology and consulting services.
Both Optum and Advisory Board have developed expertise in value-based care, care management and risk purchasing, with Optum focusing more on provider organizations and Advisory Board having strengths in advising provider executive suites and in research, says Bill Spooner, founding advisor at Next Wave Health Advisors, a consultancy.
UnitedHealth Group agreed on Tuesday to acquire Advisory Board Co.'s healthcare analytics, research and consulting operations for about $1.3 billion, including debt. UnitedHealth and Optum executives both declined to comment further on the acquisition beyond the information included in the press release on the deal.
The deal comes down to growth in provider interest in value-based reimbursement, says John Osberg, a mergers and acquisition specialist at the Informed Partners consultancy.
“As the industry changes, this puts Optum in the forefront; they have the data assets to benefit providers and payers as the line between them blurs,” he notes. “Value-based reimbursement is a technology-driven change and can help Optum become a leader.”
Optum also maintains a large equity position in Evolent, which offers providers a package of population health management services to enable them to develop provider-payer models of care similar to the Kaiser model, Osberg adds.
Optum serves the provider, employer, insurer, life sciences, consumer and government sectors, covering pharmacy care, population health management, data and analytics, healthcare operations and healthcare delivery. The company has claims data on 180 million lives and clinical data on 85 million lives to support predictive analytics.
The Advisory Board combines research, technology and consulting to help 4,400 healthcare organizations improve their performance in driving growth, advancing care quality, reducing care variation and optimizing overall performance.
“By bringing together distinctive information and technology solutions with comprehensive data-driven research and advisory capabilities, the combined organization will be better positioned to help its members and clients respond to changing market dynamics and improve the health system for everyone,” the companies said in a statement.
Advisory Board, a publicly traded company, was looking to get out of the stock market and free of all its related costs and regulation, says Osberg. Optum, with technology tools but limited marketplace consulting abilities, was looking for “feet on the street,” and that’s what they get from Advisory Board, he adds.
Optum’s data analytics resources, investment capacities and operational experience in delivering large-scale solutions will enable the Advisory Board to better serve its members, according to Robert Musslewhite, CEO, who will continue to lead the Advisory Board’s healthcare business. The acquisition is expected to close late this year or early in 2018.
In a statement, Musslewhite said the transaction will enable Advisory Board “to accelerate the success of our healthcare and education businesses while realizing immediate value for stockholders.”
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