DaVita plans to acquire Mountain View; would form largest doctor group in southern Colorado

April 8, 2016 Updated: April 8, 2016 at 6:22 pm
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Denver-based kidney care giant DaVita HealthCare Partners Inc. tightened its grip on the Colorado Springs-area health-care market on Friday. (Denver Post file)

Denver-based kidney care giant DaVita HealthCare Partners Inc. tightened its grip on the Colorado Springs-area health-care market by agreeing earlier this week to acquire Mountain View Medical Group.

The move comes just 16 months after buying its largest competitor, Colorado Springs Health Partners.

The practices will continue to operate independently and the deal is not expected to affect patients, officials from DaVita and Mountain View said.

Terms of the transaction have not been disclosed. Completion of the agreement is expected in July, pending approval from regulators and Mountain View's 36 doctor shareholders. DaVita and Mountain View, which had been negotiating for more than 18 months, on Friday jointly announced the signing of a letter of intent.

"Mountain View Medical Group has a history of high clinical performance and a strong reputation in the Pikes Peak region," said Joe Mello, chief operating officer of DaVita's HealthCare Partners division. "We look forward to potentially partnering with them as we expand our medical group's presence in the Colorado market."

The acquisition would give HealthCare Partners control over the two largest physician practices in the Colorado Springs area, which together employ more than 140 doctors; more than 40 nurse practitioners and physician assistants; and more than 900 employees in 25 locations serving nearly 200,000 patients.

The deal comes as a wave of consolidation has swept the health-care industry. Physician practices are being acquired by hospitals, including Penrose-St. Francis Health Services and UCHealth Memorial Hospital, as well as large health-care companies like DaVita.

Mountain View CEO Bruce Minear said the practice has agreed to the deal because it faces increased risk in health care insurnace contracts that pay practices a set amount per year for all of a patient's care and because Mountain View has struggled to recruit new doctors when large health care systems offer higher initial salaries.

"We don't have the ability or size to deal with" the increased risk, Minear said. "We have trouble competing with the health systems for doctors because they can offer them more money upfront. In the long run, the doctor will make more money with us" because they will end up owning part of the practice.

The transaction is not expected to result in antitrust concerns, though the companies' combined share of the pediatric-care market is approaching levels that could trigger regulatory concern, Minear said. The practice was approached by DaVita about selling and had not put itself on the market, he said.

"Our mission is enhance the health and lives of our patients and their families and be the provider of choice for the Pikes Peak region," said Mountain View President Dr. Amy Owen. "As independent physician groups working together, we believe (we) will be able to provide the highest level of quality care to our patients and their families."

Mountain View was started in 1994, when Penrose-St. Francis acquired several physician practices and operated them as Penrose-St. Francis Medical Group, but the doctors split from the system in 2000 and changed their name to Mountain View Medical Group. The practice eventually grew to be the second-largest in the Springs area with 50 family practice and internal medicine doctors and medical specialists; 21 nurse practitioners and physician assistants; and 317 employees serving 80,000 patients

Colorado Springs Health Partners and Mountain View Medical Group in 2010 formed Colorado Innovative Physician Solutions, an organization that contracts with private health insurers and government health programs such as Medicaid, Medicare and Tricare.

In 2014, DaVita and Centura Health, which operates Penrose-St. Francis, partnered to provide Centura's Health Neighborhood program the technology and personnel to help doctors keep patients healthier at a lower cost. The Health Neighborhood Centers include primary-care doctors, medical imaging facilities, rehabilitation and physical therapy clinics and a variety of other medical services at the same location. DaVita said at the time that the relationships with Centura and Colorado Springs Health Partners would remain separate from its kidney care operations.

DaVita operates more than 2,200 outpatient dialysis centers nationwide serving 180,000 patients, and 118 centers in 10 countries. Its HealthCare Partners unit manages physician groups serving more than 800,000 patients in Arizona, California, Colorado, Florida, Nevada, New Mexico and Washington.

DaVita earned $269.7 million, or $1.27 a share, in profit from revenue totaling $13.8 billion last year, down from $723.1 million, or $3.41 a share, from $12.8 billion in revenue in 2014. The decline is mainly attributed to a $495 million settlement in 2015 of a whistle-blower lawsuit alleging DaVita defrauded the Medicare program.

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Contact Wayne Heilman: 636-0234

Twitter @wayneheilman

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