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UHG and Amedisys are divesting call centers to facilitate merger proposal
Photo: Matt Mawson/Getty Images
The planned $3.3 billion merger between UnitedHealth Group and Amedisys is likely to close in the second half of the year, with both companies making a bid to appease federal antitrust regulators by divesting care centers to VCG Luna, an affiliate of VitalCaring Group, according to a archiving 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 seeking 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, regulators said the deal is subject to “approval by 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.”
US Department of Justice requested more information Amedisys filed a complaint 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 called on antitrust regulators to examine the deal. The DOJ is currently investigating the potential anticompetitive effects of the merger.
Financial details of the proposed divestitures were not disclosed. In June 2023, UHG subsidiary Optum filed a full cash combination proposal with Amedisys, citing at the time the potential for better health outcomes and lower costs.
WHAT IS THE IMPACT
O The Wall Street Journal reported that the DOJ is investigating ties between UHG and its subsidiary Optum, looking into any potential impacts of the company’s acquisitions of medical groups on both business rivals and consumers.
Home care is provided by thousands of organizations across the country, with no single-digit percentage shareholder. Optum cited that as a reason it is confident it can secure approval for the combination.
If the deal closes, Amedisys will be merged into Optum. Last year, UHG outbid Option Care Health; Amedisys had reached a merger agreement with Option in May 2023, but a month later the two companies entered into a termination agreementeffective upon receipt of a termination fee of US$106 million, payable within 24 hours of execution of the agreement.
The OHA offered a preliminary report earlier this year, saying the deal, if completed, could accelerate consolidation in the home health market and could have anticompetitive effects as part of a vertical integration.
The transaction, OHA said, “would increase concentration in Oregon’s home health and hospice services market, and further vertical consolidation of a large health insurer with a provider organization may increase the risk of anticompetitive effects.”
THE BIGGER TREND
When the deal was first proposed, Dr. Patrick Conway, CEO of Optum Care Solutions, said, “Amedisys’ commitment to quality and innovation in home care, and the patient-first culture of its employees, combined with Optum’s deep value-based care expertise, can drive significant improvements in health outcomes and experiences for 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 sued to block the $13.8 billion merger, but withdrew their appeal in March.
Optum and Change officially merged in October 2022, after winning the 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 sensitive payer claims data provided by Change to gain a competitive advantage.
The change has undergone a ransomware attack in February, ending its complaints processing business, which affected the finances of several hospitals and medical practices. The incident exposed the vulnerability of an interconnected health system.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
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