UHG, Amedisys divesting care centers to smooth merger bid
The move was announced after Oregon regulators said they were investigating the merger for potential anticompetitive effects.
Photo: Matt Mawson/Getty Images
The planned $3.3 billion merger of UnitedHealth Group and Amedisys will likely close in the second half of the year, with both companies making a bid to mollify federal antitrust regulators by divesting care centers to VCG Luna, a VitalCaring Group affiliate, according a filing with the Securities and Exchange Commission.
According to the filing, the divestment agreement is contingent on the successful closing of the merger, with both companies looking to avoid any potential monopoly issues.
The move was announced after Oregon regulators said they were investigating the pending deal. In a separate SEC filing in March, the regulators said the deal is subject to "approval from the Oregon Health Authority (OHA) in connection with the Health Care Market Oversight Program Notice of Material Change filed with respect to the proposed acquisition."
The U.S. Department of Justice requested more information from Amedisys about the UHG deal in August, and two months later, the potential transaction caught the attention of Sen. Elizabeth Warren (D-Mass.) and Rep. Pramila Jayapal (D-Wash.), who asked antitrust regulators to scrutinize the deal. The DOJ is currently investigating the merger's potential anticompetitive effects.
Financial details of the proposed divestitures have not been disclosed. In June 2023 UHG subsidiary Optum submitted a full-cash proposal to combine with Amedisys, citing at the time the potential for better health outcomes and lower costs.
WHAT'S THE IMPACT
The Wall Street Journal reported that the DOJ is looking into ties between UHG and its Optum subsidiary, investigating any potential impacts of the company's doctor-group acquisitions on both business rivals and consumers.
In-home care is provided by thousands of organizations nationwide, with no single participant having more than a single-digit percentage share. Optum cited that as a reason it's confident it can secure approval for the combination.
If the deal goes through, Amedisys will be folded into Optum. Last year, UHG outbid Option Care Health; Amedisys had entered into a merger agreement with Option in May 2023, but a month later the two companies entered into a termination agreement, effective upon receipt of a $106 million termination fee payable within 24 hours of the execution of the agreement.
The OHA offered a preliminary report earlier this year saying the deal, if it goes through, could accelerate the consolidation of the home health market, and could have anticompetitive effects as part of a vertical integration.
The transaction, said OHA, would "increase concentration in Oregon's market for home health and hospice services, and further vertical consolidation of a large health insurer with a provider organization may increase the risk of anticompetitive effects."
THE LARGER TREND
When the deal was first proposed, Dr. Patrick Conway, CEO of Optum Care Solutions, said, "Amedisys' commitment to quality and care innovation within the home, and the patient-first culture of its people, combined with Optum's deep value-based care expertise can drive meaningful improvement in the health outcomes and experiences of more patients at lower costs, leading to continued growth."
One of Optum's most notable recent deals involved its merger with Change Healthcare. The Department of Justice and the states of Minnesota and New York had brought a lawsuit to stop the $13.8 billion merger, but dropped their appeal in March.
Optum and Change officially merged in October 2022, after winning their case in federal court in September of that year. Judge Carl Nichols had rejected the DOJ's argument that UnitedHealthcare, UHG's insurance arm and the nation's largest insurer, would use payers' sensitive claims data provided by Change to competitive advantage.
Change suffered a ransomware attack in February, shutting down its claims processing business, which affected the finances for numerous hospitals and physician practices. The incident exposed the vulnerability of an interconnected health system.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
