Dive Brief:
The Department of Justice is suing to block UnitedHealth’s proposed $3.3 billion acquisition of home health provider Amedisys, alleging the merger would give the healthcare behemoth too much control of the hospice and home health market.
In a complaint filed Tuesday, the DOJ alleges that the merger will have anticompetitive effects since UnitedHealth owns LHC Group, a rival to Amedisys that UnitedHealth acquired for $5.4 billion in 2023. Amedisys and LHC are two of the largest home health companies in the U.S.
The attorneys general of Maryland, Illinois, New Jersey and New York also signed onto the DOJ’s complaint. UnitedHealth and Amedisys denied that the deal is anticompetitive and said they remain committed to the transaction.
Dive Insight:
Amedisys agreed to be acquired by UnitedHealth last June, after the Minnesota-based healthcare giant outbid a preexisting deal with Option Health Care. However, the the DOJ requested more information on the merger two months later, sparking speculation that regulators — which have aired broader concerns about UnitedHealth’s far-reaching power in the healthcare industry — might sue to halt the deal.
To assuage antitrust concerns, UnitedHealth and Amedisys agreed to sell certain medical centers to VCG Luna, a subsidiary of Texas home health and hospice company VitalCaring Group, should the deal go through.
However, that agreement clearly didn’t pass muster with federal regulators.
“Eliminating the competition between UnitedHealth and Amedisys would harm patients who receive home health and hospice services, insurers who contract for home health services, and nurses who provide home health and hospice services,” the DOJ said in a statement Tuesday.
In acquiring Amedisys, UnitedHealth would expand its home health and hospice business to an additional five states, and add almost 500 locations in the 32 states where LHC already competes, regulators said.
Specifically, UnitedHealth’s market share after the transaction would make the merger presumptively illegal in hundreds of local home health markets in 23 states and Washington, D.C.; dozens of local hospice markets in eight states; and hundreds of local markets for home health and hospice nurse labor in 24 states.
“UnitedHealth’s proposed acquisition of Amedisys would be the largest and most significant instance of a trend towards concentration in the home health and hospice markets,” the complaint reads. “It would eliminate the fierce head-to-head competition between UnitedHealth and Amedisys that has improved home health and hospice quality and service, helped control home health costs for Medicare Advantage plans, and enhanced compensation and other employment terms for the nurses critical to providing care in these markets.”
Regulators said that the proposed deal with VitalCaring wouldn’t alleviate potential harm in more than 100 markets. And, the DOJ took issue with VitalCaring itself, arguing the company was a poor potential buyer due to its financial challenges and low quality scores.
The DOJ’s challenge is intentionally broad, according to Tyler Giesting, a healthcare and life sciences director at consultancy West Monroe.
“From probably just a strength of the case perspective, they’re adding in all of the different dynamics that they think might be important to consider. And they know that any one alone, or maybe two of the multiple, potentially might not be enough,” Giesting said.
Spokespeople for UnitedHealth’s healthcare services division Optum and Amedisys refuted that the merger is a bad deal for patients.
“The Amedisys combination with Optum would be pro-competitive and further innovation, leading to improved patient outcomes and greater access to quality care. We will vigorously defend against the DOJ’s overreaching interpretation of the antitrust laws,” the Optum spokesperson said.
“We remain committed to the transaction, which we believe will create more opportunities to deliver quality, compassionate and value-based care to patients and their families. We look forward to supporting Optum in presenting our case,” the Amedisys spokesperson said.
Under the Biden administration, antitrust regulators have been more aggressive in moving to stop what they see as harmful business practices and M&A, even taking aim at some of the largest companies in the healthcare industry. That includes UnitedHealth, which operates one of the largest insurers in the nation, a major pharmacy benefit manager and a healthcare technology company, and employs thousands of physicians.
The DOJ is currently investigating the conglomerate for its potential anticompetitive effects, including the relationship between insurer UnitedHealthcare and Optum. Meanwhile, the Federal Trade Commission is suing UnitedHealth’s PBM, Optum Rx, for allegedly driving up the price of insulin.
However, antitrust actions seeking to stop UnitedHealth’s expansion haven’t always been successful.
The DOJ sued to stop UnitedHealth’s acquisition of healthcare technology firm Change Healthcare in 2022, but a judge allowed the deal to go through. Change faced a massive cyberattack this year that drove U.S. payments processing to a halt, exposing the company’s scale and causing lawmakers to question whether UnitedHealth is overly dominant in the healthcare sector.
Giesting noted it’s difficult to say whether the DOJ’s challenge will prove effective, especially given the upcoming administration turnover in Washington. President-elect Donald Trump, a Republican, is expected to be friendlier to dealmaking than President Joe Biden’s regime.
“It is hard to predict, but the track record for the government succeeding in these cases — regardless of the party that’s in power at the time, plus the fact that it is now going to be a more deal-friendly White House — casts a little bit of doubt on the lawsuit succeeding,” Giesting said.
