https://mailchi.mp/39947afa50d2/the-weekly-gist-april-17-2020?e=d1e747d2d8

Blue Shield of California announced last Friday that its healthcare services division, Altais, is acquiring Brown & Toland Physicians, a multispecialty network of 2,700 physicians serving 350,000 patients in the greater San Francisco Bay Area. Brown & Toland, formed in 1993, is a clinically-integrated network of independent physicians that has received much attention nationally for its risk-based contracting as both a Medicare Pioneer Accountable Care Organization, as well for its landmark contract to manage state workers and retirees in the California Public Employees’ Retirement System (CalPERS).

While few details of the deal have been released, Altais says it will provide Brown & Toland with both capital for growth, and a technology platform that includes practice management, analytics tools, telehealth and electronic health record assistance. Brown & Toland’s CEO, Kelly Robinson, said the partnership would enable the group to expand geographically.

While Blue Shield’s purchase of Brown & Toland is the first noteworthy payer acquisition of physician practices we’ve seen in the post-COVID era, it’s likely just the first of many to follow in coming months. As we reported last week, the majority of physician groups—especially smaller independent practices—are suffering significant financial strain, which will likely make groups of all sizes more open to partnership options.

Recent reports suggest that payers in particular may be weathering the economic shocks of the crisis relatively well. This week UnitedHealth Group (UHG) announced it exceeded Q1 earnings targets, and would maintain its pre-COVID earnings guidance for the year, citing savings from cancelled routine care and elective procedures. Should payers continue to fare well, it’s likely that UHG and other health plans could enjoy an advantage in deploying the capital necessary to roll up distressed physician practices.