Massachusetts Attorney General Maura Healey’s office has signed off on Optum’s acquisition of Atrius Health for $236 million, a critical step to allowing the national health care group to acquire the state’s largest independent physician organization.
The deal will transition nearly all of Atrius’s assets from a nonprofit to a for-profit entity and will still have to be reviewed by the state’s Supreme Judicial Court.
Healey’s approval comes more than a year after Atrius announced in March 2021 that it had signed an agreement to be acquired by an Optum subsidiary, which would bring Atrius into the sprawling national health care organization UnitedHealth Group, which includes national health insurer UnitedHealthcare.
Healey’s office said as a result of its review, the purchase price had been revised from $73 million to $236 million, which would be transferred to a foundation that would continue a charitable mission that closely resembled Atrius’s. In documents filed with the court, Atrius said the mission would include promoting the health of patients, especially in Eastern Massachusetts, through programs related to health equity, health maintenance, disease prevention, and others.
A majority of Atrius’s assets and employees would be acquired by Optum. Atrius physicians would be employed by a nonprofit affiliated group, which would then contract with the for-profit entity.
In addition to the purchase price, Optum will invest $200 million into Atrius over five years, which Atrius said it will put toward provider recruitment and infrastructure.
Atrius Health currently employs 645 physicians and primary care providers, along with 421 additional clinicians. Optum Care, the healthcare delivery division of Optum, counts 60,000 physicians at more than 2,000 sites across the United States.
“Our office carefully reviewed this proposed transaction,” said a spokesperson from the attorney general’s office in a statement. “While it will mean a loss in the charitable sector of an important health care provider, it will enable Atrius Health to continue to serve hundreds of thousands of patients, will preserve the value of the charitable assets, and ensure that the Atrius Health Equity Foundation will use sale proceeds to promote health equity.”
Atrius said that its mission and values remained unchanged and that it would continue to be accessible for patients with multiple insurance plans.
“Combining with Optum will enable us to advance our ability to keep people healthy through enhanced services that improve the care experience and lower costs,” said Dr. Steven Strongwater, CEO of Atrius Health, in an e-mailed statement.
The deal had received mixed reviews from the state’s health care watchdog agency, The Health Policy Commission. Though some commissioners expressed concern that the transaction could raise health care spending, ultimately the commission chose not to undertake a more extensive analysis.
The deal further strengthens Optum’s foothold in the state, after the provider group acquired Worcester-based Reliant Medical Group in 2018.
In filings with the Supreme Judicial Court requesting authorization for the transaction, Atrius outlined its most recent financial difficulties, which it said made it imperative for an acquisition to move forward.
The physician group recorded a $2.1 million operating loss in 2020 — substantially mitigated from an initial $48.8 million operating loss thanks to federal grants. In 2021, the group reported a $33.4 million operating loss, also mitigated through the use of $29 million in reserves.
Additionally, Atrius said it projected cumulative operating losses of $226 million from 2021 through 2024. Without additional capital, the group said it couldn’t fund even routine capital maintenance growth.
Last month, Atrius undertook a sizable layoff of nurses and some other staff, which nurses said was cost-cutting in anticipation of the acquisition. For its part, Atrius said the layoffs were unrelated to the Optum transaction and were in response to lower COVID-19 demand.