After a two-decade acquisition marketing campaign, Illinois’ largest unbiased physicians group is trying like a ripe buyout goal.
Having added greater than 70 healthcare suppliers this 12 months alone, DuPage Medical Group has assembled a neighborhood powerhouse with 800 medical doctors and web income of $1 billion. The Downers Grove, In poor health.-based firm’s dimension and robust place within the profitable Chicago-area market make it enticing to bigger healthcare corporations trolling for medical doctors’ workplaces to accumulate.
“Any group of DuPage’s dimension is a priceless acquisition goal for big well being plans,” says Dr. Lisa Bielamowicz, co-founder and president of consultancy Gist Healthcare.
On the identical time, strain is rising on unbiased physicians teams as deeper-pocketed hospital chains, well being insurers and nationwide retailers elbow into their enterprise. To compete within the consolidating market, DuPage Medical might want to make investments closely in new know-how and specialised medical care, and forge partnerships with well being methods or insurance coverage corporations to make sure favorable pricing for his or her providers.
The intensifying competitors and funding wants come at a troublesome time for medical doctors. COVID-19 has pushed down affected person volumes whereas driving up working prices and demand for digital care.
Due to a $1 billion funding from Los Angeles-based Ares Administration in 2017, DuPage Medical doubtless would not must discover a purchaser within the brief time period. However private-equity corporations count on to money out ultimately, typically by means of buyouts.
“We’re sturdy believers in DMG’s long-term aim to remodel healthcare by means of an built-in outpatient supply mannequin that’s patient-centered and physician-led,” Bennett Rosenthal, Ares co-founder and a director of Ares Administration Company, says in a press release. “Ares is dedicated to supporting DMG, its physicians and senior management in delivering on this imaginative and prescient and isn’t exploring a sale of the enterprise.”
In an interview, DuPage Medical CEO Steve Nelson would not straight reply when requested if the group is contemplating a sale, saying that it and Ares purpose to “proceed so as to add capabilities and develop DuPage Medical Group to supply higher entry to one of the best healthcare on the earth.” He acknowledges that “we’ll at all times be searching for strategic companions and capital buyers who share that keenness and mission.”
Nonetheless, Nelson insists, “I am not targeted on a transaction in any respect. I am targeted on remodeling heath care.”
Nelson, 62, beforehand led United Healthcare, the medical insurance enterprise of Minnesota-based UnitedHealth Group, which has been buying medical doctors workplaces for years. He retired in 2019 however got here out of retirement final July to take the highest job at DuPage Medical, which had been working with an interim CEO since Michael Kasper’s demise in Might 2019. Nelson bunks in Streeterville whereas protecting the Minneapolis house he shares together with his spouse.
Though 2020 has been a tough 12 months, Nelson says affected person volumes have returned to pre-COVID ranges. He will not focus on profitability however says the group is positioned properly because of its sturdy steadiness sheet and reserves, in addition to its agility.
Nelson arrived at DuPage as conventional market boundaries in well being care had been collapsing. Walgreens in July unveiled plans to place VillageMD clinics staffed by physicians in 500 to 700 of its drugstores over 5 years. CVS Well being plans to launch 1,500 HealthHUBs by the top of 2021, and Walmart just lately expanded its well being choices to incorporate dental care and counseling. In the meantime, insurers like Humana and UnitedHealth proceed scooping up physicians teams.
DuPage seems to suit the acquisition profile of Nelson’s former employer, Bielamowicz says.
“United has a historical past of searching for anchored teams in markets they need to transfer into, and Chicago is a market that is ripe for not simply disruption on the supplier facet but in addition disruption on the insurance coverage facet with a really dominant Blues plan,” Bielamowicz says. “It’s important to think about a bunch like DuPage is at or close to the highest of its checklist.”
Bielamowicz sees a parallel to United’s technique in Massachusetts, one other Blue-dominated market. The insurer’s OptumCare unit in 2018 acquired Worcester, Mass.-based Reliant Medical Group, which has about 500 suppliers, for $28 million.
Although Nelson shies away from buyout speak, he acknowledges discussions with insurers about potential partnerships. UnitedHealth, he says is “very all in favour of rising in Chicago. I used to be all in favour of rising in Chicago after I was there. Humana, Aetna, Cigna, they’re all very , and we symbolize a chance for them to develop if we work with them in the correct manner. So we’re having conversations with all these people attempting to determine, what’s the correct approach to be deliberate, strategic for the needs of remodeling well being care and bringing worth to the marketplace and to the sufferers that we serve.”
In a press release, Cigna calls DuPage Medical a “valued supplier community accomplice,” noting, “We regard the first and specialty care clinician as crucial to inexpensive, predictable and easy supply of care and strongly assist the function of the unbiased scientific group.”
UnitedHealth Group and Aetna decline to remark, and Humana didn’t reply to a request for remark.
As DuPage mulls potential relationships with insurers, its personal acquisition marketing campaign has extra room to run. The group provides medical doctors a chance to stay unbiased but in addition benefit from the reimbursement charges, know-how and information capabilities of a bigger group. Nelson says progress exterior of Illinois is “actually on the desk,” noting that the group is doubling its capital funding agenda in 2021 with a give attention to know-how and digital care capabilities.
Out-of-state acquisitions might be tough, Bielamowicz warns. “It isn’t straightforward to enter different markets and replicate the tradition and the observe mannequin that you have constructed over a few years in your hometown,” she says, however acknowledges that “as we emerge on the opposite facet (of the pandemic) in 2021, there’s more likely to be lots of medical doctors throughout the nation searching for companions.”