1 00:00:00,080 --> 00:00:02,319 This is Jacob Emerson with the Becker's Payer 2 00:00:02,319 --> 00:00:03,220 Issues podcast. 3 00:00:03,679 --> 00:00:06,480 Here is your biweekly industry news briefing for 4 00:00:06,480 --> 00:00:07,540 July 29th. 5 00:00:08,324 --> 00:00:11,205 Optum is closing clinics in multiple states and 6 00:00:11,205 --> 00:00:12,265 laying off 524 7 00:00:12,884 --> 00:00:14,425 employees across California. 8 00:00:14,964 --> 00:00:18,199 According to regulatory documents filed July 18th, the 9 00:00:18,199 --> 00:00:21,239 UnitedHealth Group company will terminate those employees in 10 00:00:21,239 --> 00:00:21,739 California 11 00:00:22,199 --> 00:00:25,739 starting September 16th through January of 2025 12 00:00:26,425 --> 00:00:29,144 at clinic and administrative office locations in the 13 00:00:29,144 --> 00:00:30,925 Bay Area and Southern California. 14 00:00:31,384 --> 00:00:34,265 The layoffs include some roam remote employees in 15 00:00:34,265 --> 00:00:37,420 other states. At Optum California's corporate office in 16 00:00:37,420 --> 00:00:38,079 El Segundo, 17 00:00:38,780 --> 00:00:41,520 64 employees will be laid off. Another 157 18 00:00:42,060 --> 00:00:43,579 employees will be laid off at an office 19 00:00:43,579 --> 00:00:44,320 in Cerritos. 20 00:00:45,005 --> 00:00:47,645 Landmark employees began posting on social media begin 21 00:00:47,645 --> 00:00:50,045 July 18th regarding a large reduction in force 22 00:00:50,045 --> 00:00:51,664 they say occurred nationwide. 23 00:00:52,429 --> 00:00:55,630 Optum described permanent closures at an additional 15 24 00:00:55,630 --> 00:00:58,510 addresses in California, including urgent and primary care 25 00:00:58,510 --> 00:01:02,244 clinics, infusion services, facilities, and medical groups. Across 26 00:01:02,244 --> 00:01:03,864 those facilities, 303 27 00:01:04,724 --> 00:01:06,265 employees will be terminated. 28 00:01:08,030 --> 00:01:10,590 Well, the justice department is pointing to antitrust 29 00:01:10,590 --> 00:01:12,829 scrutiny for why Optum backed out of its 30 00:01:12,829 --> 00:01:13,729 planned acquisition 31 00:01:14,030 --> 00:01:16,784 of Steward Healthcare's physician group Stewardship Health. 32 00:01:17,344 --> 00:01:20,225 Steward, which filed for chapter 11 bankruptcy back 33 00:01:20,225 --> 00:01:22,784 in May, is working to offload its 31 34 00:01:22,784 --> 00:01:23,086 hospitals alongside Stewardship Health. Steward was also recently 35 00:01:23,086 --> 00:01:23,605 hit with a criminal investigation 36 00:01:23,984 --> 00:01:26,810 by Stewardship Health. Steward was also recently hit 37 00:01:26,810 --> 00:01:29,450 with a criminal investigation by federal prosecutors at 38 00:01:29,450 --> 00:01:31,229 the US attorney's office in Boston. 39 00:01:31,795 --> 00:01:34,674 Optum backing out of acquiring Stewardship Health comes 40 00:01:34,674 --> 00:01:37,414 amid an antitrust investigation that the DOJ opened 41 00:01:37,474 --> 00:01:39,894 into UnitedHealth Group back in February. 42 00:01:40,435 --> 00:01:43,539 The investigation is partially looking into Optum's physician 43 00:01:43,539 --> 00:01:45,619 group acquisition and how the health plan and 44 00:01:45,619 --> 00:01:47,879 physician unit ownerships impact competition. 45 00:01:48,420 --> 00:01:51,355 Optum employs or is affiliated with more than 46 00:01:51,355 --> 00:01:51,855 90,000 47 00:01:52,155 --> 00:01:52,655 physicians. 48 00:01:53,915 --> 00:01:55,915 Well, Centene says it will exit a handful 49 00:01:55,915 --> 00:01:58,174 of state Medicare Advantage markets in 2025. 50 00:01:58,954 --> 00:02:01,820 On a July 26th investor call, its CEO, 51 00:02:01,820 --> 00:02:04,219 Sarah London, said the exits are designed to 52 00:02:04,219 --> 00:02:06,079 align with the company's company's 53 00:02:06,380 --> 00:02:08,784 longer term strategy. She said, we think the 54 00:02:08,784 --> 00:02:10,224 team has done a really good job in 55 00:02:10,224 --> 00:02:12,705 terms of thoughtfully designing bids consistent with our 56 00:02:12,705 --> 00:02:13,685 long term strategy 57 00:02:13,985 --> 00:02:16,069 even in a challenging bright year. We're being 58 00:02:16,069 --> 00:02:18,489 thoughtful about how to streamline that book further 59 00:02:18,709 --> 00:02:21,430 in alignment with our Medicaid footprint because that's 60 00:02:21,430 --> 00:02:23,495 where the puck is going. Centene is focused 61 00:02:23,894 --> 00:02:26,854 MA plans for beneficiaries duly eligible for Medicaid 62 00:02:26,854 --> 00:02:27,674 and Medicare. 63 00:02:28,134 --> 00:02:29,655 Other payers said they have also planned to 64 00:02:29,655 --> 00:02:32,520 exit the MA markets in 2025 as they 65 00:02:32,520 --> 00:02:35,099 face rising medical costs and a tougher reimbursement 66 00:02:35,400 --> 00:02:35,900 environment. 67 00:02:36,280 --> 00:02:38,760 Humana CFO, Susan Diamond, said in April that 68 00:02:38,760 --> 00:02:41,114 the company anticipates leaving some markets in 69 00:02:41,414 --> 00:02:43,894 2025 and expects a decline in membership. A 70 00:02:43,894 --> 00:02:47,174 similar message came from CVS Health executives earlier 71 00:02:47,174 --> 00:02:47,995 this year. 72 00:02:50,169 --> 00:02:53,770 Molina Healthcare has more acquisition opportunities in the 73 00:02:53,770 --> 00:02:56,030 pipeline. That's according to its CEO. 74 00:02:56,854 --> 00:02:59,014 In July, Molina said it plans to acquire 75 00:02:59,014 --> 00:03:01,275 ConnectiCare, a subsidiary of EmblemHealth 76 00:03:01,574 --> 00:03:02,555 in New York City, 77 00:03:02,854 --> 00:03:03,514 for $350,000,000. 78 00:03:05,254 --> 00:03:08,060 On a July 25th earnings call with investors, 79 00:03:08,199 --> 00:03:11,979 Molina CEO Joseph Zebratsky said the ConnectiCare acquisition 80 00:03:12,039 --> 00:03:14,360 is a departure from its previous mergers and 81 00:03:14,360 --> 00:03:15,579 acquisitions strategy. 82 00:03:16,155 --> 00:03:19,034 Historically, the company has only established marketplace and 83 00:03:19,034 --> 00:03:21,854 Medicare lines in areas where Molina already operates 84 00:03:21,914 --> 00:03:22,814 Medicaid businesses. 85 00:03:23,275 --> 00:03:23,775 Medicare 86 00:03:24,379 --> 00:03:27,580 operates Medicare Marketplace and some commercial plans in 87 00:03:27,580 --> 00:03:28,080 Connecticut. 88 00:03:28,699 --> 00:03:30,939 Connecticut would be the 2nd major acquisition for 89 00:03:30,939 --> 00:03:32,735 Molina in less than a year. Back in 90 00:03:32,735 --> 00:03:34,655 January, the company closed on its purchase of 91 00:03:34,655 --> 00:03:37,235 Bright Health Care's Medicare Advantage Business for $500,000,000 92 00:03:38,415 --> 00:03:39,635 adding over 100,000 93 00:03:39,935 --> 00:03:41,235 members to its ranks. 94 00:03:41,639 --> 00:03:43,500 Over 80% of Molina's 5,600,000 95 00:03:44,039 --> 00:03:46,299 total members are within the Medicaid business 96 00:03:46,680 --> 00:03:48,680 through its past due though its past due 97 00:03:48,680 --> 00:03:51,034 acquisitions were not Medicaid plans, they are still 98 00:03:51,034 --> 00:03:54,715 core acquisitions for Molina's business according to mister 99 00:03:54,715 --> 00:03:56,715 Zubretsky. And he said they have a very 100 00:03:56,715 --> 00:03:59,995 active pipeline of Medicaid acquisition opportunities on the 101 00:03:59,995 --> 00:04:00,495 horizon, 102 00:04:00,939 --> 00:04:03,919 hopefully over the next 12 to 18 months. 103 00:04:05,019 --> 00:04:07,580 Well, Humana is partnering with Google Cloud on 104 00:04:07,580 --> 00:04:08,400 cloud infrastructure 105 00:04:08,705 --> 00:04:11,264 and AI capabilities. The agreement builds on a 106 00:04:11,264 --> 00:04:13,985 previous partnership between Humana and Google to develop 107 00:04:13,985 --> 00:04:15,284 population health solutions. 108 00:04:15,810 --> 00:04:18,210 The financial terms of that deal was not 109 00:04:18,210 --> 00:04:20,610 disclosed, but they're hoping that can make contact 110 00:04:20,610 --> 00:04:23,910 centers more responsive, provider networks simpler to navigate, 111 00:04:24,050 --> 00:04:26,464 health care coverage easier to understand, and primary 112 00:04:26,464 --> 00:04:29,045 care better tailored to individual needs. 113 00:04:30,704 --> 00:04:33,264 Centene is selling collaborative health systems to Astra 114 00:04:33,264 --> 00:04:34,485 Health for an undisclosed 115 00:04:35,649 --> 00:04:38,449 amount. CHS is based in Tampa, Florida. It's 116 00:04:38,449 --> 00:04:41,589 a management services subsidiary that partners with independent 117 00:04:41,649 --> 00:04:42,709 primary care physicians 118 00:04:43,194 --> 00:04:45,754 around value based care models. It currently has 119 00:04:45,834 --> 00:04:47,694 it currently works with a 129,000 120 00:04:48,235 --> 00:04:48,735 beneficiaries 121 00:04:49,194 --> 00:04:50,470 across 17 states. 122 00:04:50,949 --> 00:04:54,730 Astrana, it's formerly called ApolloMed. They offer technology 123 00:04:54,790 --> 00:04:57,189 solutions that enable providers to participate in value 124 00:04:57,189 --> 00:05:00,125 based arrangements. They work with 10,000 providers and 125 00:05:00,125 --> 00:05:01,185 1,000,000 patients. 126 00:05:01,644 --> 00:05:04,685 Pending regulatory approvals, that deal with Centene is 127 00:05:04,685 --> 00:05:06,689 expected to close by the end of 128 00:05:07,069 --> 00:05:07,569 2024. 129 00:05:08,670 --> 00:05:10,589 If you'd like the latest health insurance industry 130 00:05:10,589 --> 00:05:12,589 news delivered straight to your inbox every morning, 131 00:05:12,589 --> 00:05:14,850 subscribe to the Becker's payer issues e newsletter 132 00:05:14,990 --> 00:05:16,425 on our web sites atbeckerspayer.com.