The U.S. Department of Justice (DOJ) is gearing up to file a lawsuit aimed at blocking UnitedHealth Group Inc.’s proposed acquisition of Amedisys Inc., a deal valued at $3.3 billion. This legal action is primarily driven by concerns that the merger could negatively impact competition within the home-health services market.
According to sources familiar with the situation, DOJ antitrust officials have reached a consensus to pursue legal action in federal court, with filings expected as early as this week. This decision comes after a recent meeting between executives from UnitedHealth and the DOJ, which was intended to address and potentially alleviate the government’s apprehensions regarding the merger.
The DOJ’s antitrust division is particularly worried that the merger could lead to increased prices for home healthcare services, especially in regions where Amedisys competes directly with UnitedHealth’s LHC Group. UnitedHealth had acquired LHC Group in the previous year, further intensifying the scrutiny surrounding its latest merger attempt.
While both UnitedHealth and the DOJ have refrained from commenting on the matter, Amedisys has acknowledged its ongoing cooperation with the Justice Department in a securities filing dated November 7. Following the news of the potential lawsuit, Amedisys shares experienced a decline, reflecting market concerns about the deal’s viability.
In a bid to secure approval for the merger, Amedisys and UnitedHealth proposed divesting over 100 clinics to VCG Luna, an affiliate of the Texas-based VitalCaring Group, a home health and hospice company. However, these measures have not sufficiently addressed the DOJ’s concerns regarding competitive practices in specific areas.
Both UnitedHealth’s LHC Group and Amedisys operate in numerous states, leading to significant overlaps in their service areas. Although the combined entity would only command a modest share of the overall home healthcare market nationwide, the concentration of services in certain southern states has raised red flags for antitrust regulators.
This impending lawsuit marks the second occasion the Biden administration has taken legal action against UnitedHealth over antitrust issues. In 2022, the DOJ attempted to block UnitedHealth’s acquisition of Change Healthcare, a health IT firm, but was unsuccessful in that endeavor.
The DOJ initiated a comprehensive investigation into the proposed merger last summer, amid a broader scrutiny of several acquisitions by UnitedHealth. Notably, in July, the insurance giant opted to withdraw from its plan to acquire Stewardship Health Inc., which involved the physician practices of the bankrupt Steward Health Care System, following similar antitrust concerns.
UnitedHealth has been actively merging various sectors of the healthcare industry, including insurance, physician practices, and drug benefits, to establish itself as the largest health services company in the United States by revenue. This aggressive strategy has drawn increasing scrutiny from antitrust officials, who are keen to ensure fair competition in the healthcare market.
As the DOJ prepares to move forward with the lawsuit, the implications of this legal battle could have far-reaching effects on the home healthcare industry and the competitive landscape of healthcare services in the United States. Stakeholders and industry observers are closely monitoring the developments, as the outcome may influence future mergers and acquisitions in the sector.
With the DOJ’s commitment to enforcing antitrust laws, the case against UnitedHealth and Amedisys will be pivotal in shaping the future of healthcare mergers and the regulatory environment surrounding them. The focus will remain on the balance between fostering innovation and maintaining competitive markets in an industry that significantly impacts the lives of millions of Americans.
