New United deal could spur more plan mergers

The AMA asked the Justice Dept. to block the acquisition of Sierra Health Services. The deal ends a yearlong break in major health plan consolidations.

By Bob Cook, AMNews staff. April 2, 2007.

UnitedHealth Group's newest acquisition not only makes a big company bigger, but it also makes the plan the operator of a large, multispecialty clinic that the company is using as a "petri dish" to test how it might deal with its contracted physicians.

On March 12, United said it would pay $2.6 billion in cash to acquire Sierra Health Services, a Las Vegas-based health plan that analysts identified as one of the few independent, sizable, for-profit regional health plans available. The deal makes United the No. 1 health plan in what has long been one of the fastest-growing metropolitan areas and one of the fastest-growing states in the nation.

The agreement also arouses organized medicine's long-held ire about health plan consolidation. The American Medical Association on March 19 sent a letter to the Justice Dept. asking federal regulators to block the deal.

Sierra also comes with Southwest Medical Associates, the state's largest multispecialty group practice, which includes an outpatient surgery center. Sierra has required Southwest Medical Associates physicians to use electronic medical records and electronic prescribing, as well as use the practice to help manage hospital utilization, among its attempts to -- in the company's eyes -- save costs and improve care. In acquiring Sierra, United wants to figure out how best to transfer the Sierra-Southwest model to its physician networks.

In a prepared statement, United CEO Stephen Hemsley said the company could "leverage [Southwest's] expertise in combination with our leading data assets to gain clinical insights that will be useful in a wide variety of broader care delivery settings in our network-based care model."