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Our Take: UHG’s Optum expands with acquisition of Kelsey-Seybold Clinic

Apr 11, 2022

News reports emerged early last week stating that UnitedHealth Group’s Optum has acquired Houston-based Kelsey-Seybold Clinic for an undisclosed sum.

The news dovetails with Optum’s recent announcements that it would combine with LHC Group, and that it had acquired Refresh Mental Health. According to Axios, Optum signed the Kelsey-Seybold deal weeks ago, though neither company has made a public announcement about it.

Kelsey-Seybold Clinic is a multispecialty group practice with more than 500 physicians and “allied health professionals” who practice at 30 locations throughout the Greater Houston area.

The organization includes a nationally accredited cancer center, a specialized sleep center, two ambulatory surgery center (ASC) locations — one of which is the largest freestanding ASC in Texas, a women’s health center, 19 onsite pharmacies and a specialty pharmacy.

In addition, Kelsey-Seybold partners with insurers to offer value-based commercial health plans, and it also has its own Medicare Advantage plan, KelseyCare Advantage.

Moreover, Kelsey-Seybold says it has been recognized by the National Committee for Quality Assurance as the first accredited accountable care organization in the U.S.

Our Take: In last week’s Our Take, we wrote about how UnitedHealth Group could become a contender for the title of the largest payvider in the U.S. With Optum employing more than 60,000 providers, UHG is already the country’s largest employer of physicians — though provider-based payviders such as Kaiser Permanente and now Intermountain Healthcare don’t lag far behind.

In a recent Modern Healthcare article, Gary Taylor, a senior equity research analyst at Cowen and Co., noted that health plans “made the lion’s share of physician practice acquisitions” in 2021. He said insurers that fail to invest in care delivery assets will end up losing members to competitors.

UHG/Optum bought 10,000 physician practices last year, giving it a total of approximately 60,000 practices. Adding one more to 60,000 or so may not seem significant, but, as you can see, Kelsey-Seybold Clinic is much more than a physician practice.

Most insurers that are acquiring providers say it’s about controlling costs or improving the quality of care, or possibly both. But Andrew Witty, UnitedHealth Group’s CEO, acknowledged another (relatively obvious) reason for buying up physician practices.

Modern Healthcare noted in the article that, in December, Witty said, “It’s an opportunity for us to lift our growth ambitions.”

Using Optum as a “front door” for patients, Witty said, gives UHG the opportunity to raise awareness of the brand among the entire U.S. population of 330 million. UnitedHealthcare, UHG’s insurance subsidiary, currently serves approximately 50 million patients.

By now, most of the largest insurers have joined the payvider bandwagon, probably for a variety of reasons. Whether this trend will lead to better care, though, remains to be seen.

Traditionally, insurers focus on containing costs, and it’s not hard to see how that could have the opposite effect on the quality of care. But because a payvider is responsible for both delivering patient care and assuming the financial risk associated with providing that care, there’s incentive to align the dual purposes.

If and when that happens, patients stand to benefit along with the payvider.

Humanizing Health Care with Dr. Summer Knight

We are thrilled to welcome Dr. Summer Knight to Health Care Rounds, former firefighter/paramedic-turned primary care and emergency room doctor, managing director at Deloitte Consulting’s Life Sciences & Health Care practice, and author of Humanizing Healthcare! Dr. Knight shares her fascinating path of entrepreneurship, and dives deep into the transforming trends and key disruptors in healthcare today. Tune in to hear John and Dr. Knight discuss the impact therapeutic alliances can have within our healthcare ecosystem, highlighting the movement toward patient-centric care.


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