Dive Brief:
- Venture capital firm New Enterprise Associates has acquired DaVita’s direct primary care business Paladina Health, the subsidy announced Wednesday. The deal is for around $100 million, CNBC reports.
- Paladina operates more than 50 physician offices across 10 states, including Colorado, Ohio, Florida and Texas, and plans to continue to expand, according to the company.
- The deal comes about six months after UnitedHealth’s Optum announced it would acquire DaVita Medical Group for $4.9 billion.
Dive Insight:
The deal is the latest amid a growing number: In 2017, there were 579 healthcare deals, the second highest number on record, according to a recent report by Mergermarket and West Monroe Partners.
The shift from fee-for-service to value-based care appears to be a major component of the pact.
"We've closely followed the ongoing shift to value-based care in the U.S., and believe that Paladina Health is a pioneer in the space," said Mohamad Makhzoumi, NEA general partner and head of healthcare services and healthcare IT investing, in a statement.
Makhzoumi pointed to Paladina’s direct primary care model as desirable, saying it has shown high patient and provider satisfaction while keeping down costs. Under the model, physicians collect a monthly fee from employers to provide care for their workers, rather than accepting insurance.
But the model has shown some shakiness. Last year, Seattle-based DPC provider Qliance was forced to close its doors.
“DPC is no longer a new concept, but there remains a sufficient amount of execution risk,” Chris Miller, CEO of Paladina, previously told Healthcare Dive. “Strong players have exited the market, mostly due to business models that haven’t worked and the lack of barriers to entry.”
DPC models seems to be gaining traction as more businesses contract directly with providers for their employees’ healthcare needs. A recent survey from Willis Towers Watson found while only 6% of large employers currently have such an agreement, 22% are considering it for 2019.