Minnesota’s UnitedHealth closes 16 clinics, lays off 572 in N.J.

Eden Prairie’s UnitedHealth Group is closing 16 clinics and laying off hundreds in its fast-growing Optum Health business, which has become a major provider of medical care.

The closures include five clinics and a lab in New Jersey, where the company recently disclosed job cuts affecting 572 workers. The health care giant also confirmed to the Minnesota Star Tribune clinic closures in Arkansas and Texas as it tries to control costs and refocus strategy.

Last month, company chief executive Stephen Hemsley told investors that UnitedHealth remains committed to the clinic business, but likely would cut operations in a few geographic markets.

“We are consolidating locations and completing plans addressing the geographic markets in which we will serve patients, all intended to operationally advance and scale the leading value-based clinical care business of Optum Health,” Hemsley told investors.

The pullbacks continue a recent trend of relatively small retreats at UnitedHealth Group, Minnesota’s largest company, which had a largely unblemished track record of profitable growth for investors until this year. The company’s UnitedHealthcare division is the nation’s largest health insurance company.

In February, UnitedHealth Group started offering buyouts to a number of workers without saying how many jobs it was targeting overall. The company also confirmed in January it had significantly scaled back its MedExpress urgent care business.

Last year, Optum announced it was eliminating more than 800 jobs across New Jersey, California and Ohio.

These clinics implement “value-based care” contracts, where health care providers are compensated for treating patients within a budget while also meeting quality standards. The contracts contrast with “fee-for-service” agreements that are common in health care, and have been criticized as giving incentives for hospitals and clinics to provide duplicative and unnecessary care.

Krista Nelson, the chief operating officer at Optum Health, said during last month’s investor call that the company was in the midst of a “portfolio rationalization” that would help manage operating costs.

On Tuesday, UnitedHealth Group said it regularly reviews its services, corporate footprint and staffing levels with the goal of making health care more affordable.

“We are supporting affected team members with job placement resources and will redeploy our talent to suitable open roles within the company,” the company said. “And we are providing clear information and support to our patients to ensure uninterrupted care.”

For years, Optum Health has helped drive earnings at UnitedHealth Group as the company touted the prospects for value-based care to improve the nation’s health care system while better managing costs.

Hemsley has said UnitedHealth remains committed to value-based care, but is refocusing on its original mission with the idea. That includes moving to employed or contractually dedicated physicians whenever possible, company officials say, and separating from some health care providers.

“Our belief in the need for, and impact of, value-based care remains intact,” Hemsley said during the call with investors.