Private-equity-backed U.S. Digestive Health, the Philly region’s largest private GI group, has been sold to UnitedHealth unit
The seller was Amulet Capital Partners L.P., a private equity firm based in Greenwich, Conn. Amulet founded U.S. Digestive Health in 2019. The sale price to UnitedHealth was not disclosed.
The sale of Southeastern Pennsylvania’s largest private medical practice of gastrointestinal specialists to a subsidiary of the nation’s largest health insurer showcases the behind-the-scenes impact of private equity investment in healthcare.
U.S. Digestive Health has been sold to a unit of UnitedHealth Group Inc., which owns the insurer and has a network of more than 90,000 physicians.
Amulet Capital Partners L.P., a Greenwich, Conn.-private equity firm, sold U.S. Digestive Health in late January without announcement. The deal slipped by with little notice outside local gastroenterology circles.
“Private equity firms benefit from being allowed to operate in relative secrecy. This is another example of that,” said Michael Fenne, a research and campaign coordinator for the Private Equity Stakeholder Project, which describes itself as a nonprofit watchdog. “The public has a right to know who owns their provider.”
The Inquirer learned of the U.S. Digestive sale last week from a retired physician. UnitedHealth confirmed Monday that U.S. Digestive is now part of SCA Health, which UnitedHealth acquired in 2017.
“This will allow U.S. Digestive Health to continue providing digestive care excellence in every community they serve, while advancing our shared efforts to provide quality-driven, high-value and innovative care,” SCA said in an email.
U.S. Digestive employs 149 doctors, provides services at 24 ambulatory surgery centers, and employs 1,250 people in Pennsylvania and Delaware, according to its website. The company is based in Exton.
At its seven surgery centers in Pennsylvania, U.S. Digestive doctors performed 46,568 procedures last year, according to state data. The state report does not specify how many were colonoscopies, its most commonly performed procedure.
UnitedHealth, based in Minnetonka, Minn., is under civil and criminal investigation for Medicare billing practices, company officials told investors last month.
Textbook PE deal
Amulet provided the financial backing in 2019 to create U.S. Digestive through the consolidation of three already sizable physician groups: Regional GI of Lancaster, Digestive Disease Associates of Wyomissing, and Main Line Gastroenterology Associates.
Private equity firms, which invest for wealthy individuals, pension funds, and other institutions, generally want to cash out their investments in seven years or less. Amulet owned U.S. Digestive for a little more than five years.
What’s not known is whether Amulet made money for its investors. UnitedHealth is not expected to disclose the amount it paid, because the deal is not substantial enough to require such disclosure for a company with $400 billion in revenue last year.
Following Amulet’s sale of U.S. Digestive to a publicly traded company, some large Philadelphia-area physician groups remain in the hands of private equity.
They include Axia Women’s Health owned by Partners Group, Premier Orthopaedics/Philadelphia Hand to Shoulder Center owned by Linden Capital and Audax Private Equity, and MidLantic Urology owned by Lee Equity Partners.