About a year ago, UnitedHealth Group’s Optum announced that it plans to acquire home care company Amedisys for about $3.3 billion, beating out Option Care Health. The deal would be an all-cash transaction for $101 per share. The announcement came at a time when several healthcare companies were making moves in the home care space, including CVS Health and Walgreens.
But it hasn’t been smooth sailing for Minnetonka, Minnesota-based UnitedHealth Group and Baton Rouge, Louisiana-based Amedisys. The U.S. Department of Justice (DOJ) has been scrutinizing the deal, and the Oregon Health Authority launched a review to see if the deal would harm people in Oregon. The DOJ has also reportedly launched an antitrust investigation into UnitedHealth Group (UHG).
In late June, however, Amedisys disclosed in a filing with the Securities and Exchange Commission that Amedisys and UHG have entered into a purchase agreement to sell certain Amedisys home health care centers and certain UHG care centers to VCG Luna, an affiliate of VitalCaring Group. The divestiture of the unknown number of care centers is contingent on the consummation of the merger between Amedisys and UHG, which is expected to close in the second half of 2024, according to the filing.
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Will this move assuage the DOJ and prompt it to approve the Amedisys/UHG merger? The agency did not return a request for comment, and UHG declined to comment. But several experts said they believe the deal will likely go through — potentially with some small changes.
“I think they’re aiming to find the least amount of land necessary to give up without exceeding more than is essential. If I was a betting person, I would bet that now the odds are that the deal will either go ahead as now scheduled, or maybe with small modifications,” said Dr. Robert Pearl, former CEO of the Permanente Medical Group and current professor at Stanford University School of Medicine and Stanford Graduate School of Business, as well as a healthcare author and podcaster.
These modifications could include divesting additional home health centers, though probably not a lot more, Pearl added. For example, Amedisys and UHG may divest 100 centers initially (though the exact number is unknown). But the government may say that’s not enough and tell them to divest 20 more, according to Dr. Adam Brown, an emergency physician and founder of ABIG Health. But the divestitures would likely still be in the home health space since that’s where there is crossover between UHG and Amedisys.
Pearl noted, however, that this divestiture to VitalCaring most likely happened after a period of negotiations, so “all of the pieces are in place unless something unexpected happens — such as a Congressional or Presidential intervention.”
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Another expert agreed that there could be more divestitures beyond this initial deal, but it’s “more likely than not that [the merger] will go through.”
“If there are other steps they need to take, I think that they’re going to work towards those because Optum seems pretty inclined to continue with the deal and do what they have to do to make that happen,” said Tyler Giesting, director of healthcare and life sciences at Chicago-based West Monroe. “So I would say it’s more likely than not, but you can never be sure.”
One industry expert — Hal Andrews, president and CEO of Trilliant Health — noted it’s “likely that UHG received a ‘head nod’ that the proposed divestitures would be sufficient.”
That said, “prognosticating what happens in Washington, D.C. right now is a bit like shaking the Magic 8-ball — especially in an election year,” he added.
While several experts say it’s probable the merger between Amedisys and UnitedHealth Group will go through eventually, Brown is still worried about the downstream effects of the merger.
“I am deeply concerned about the growing control UHG exerts over the U.S. healthcare system,” Brown said in an email. “UHG already runs the largest private health insurer in the country and manages a substantial physician network. Their influence and market dominance make negotiating with them or competing against them extremely challenging.
“The DOJ’s scrutiny of this particular merger is essential, but we should also consider the broader implications,” he continued. “UHG’s recent Change Healthcare hack highlighted industry-wide financial and patient care challenges. At what point will we recognize that UHG is becoming a ‘too big to fail’ behemoth that we continue to feed?”
Indeed, UHG has grown exponentially over the years, having spent more than $41.4 billion on 26 acquisitions since it was founded in 1977, including Change Healthcare (acquired in 2022), LHC Group (acquired in 2023) and DaVita Medical Group (acquired in 2019). It also employs or contracts with thousands of physicians and owns OptumRx, one of the top three pharmacy benefit managers. Its insurance arm, UnitedHealthcare, controls 15.7% of the health insurance market.
Pearl said he’s not sure UHG is necessarily a villain. Rather, it’s the entire healthcare system as a whole that needs changing. He reiterated what he told MedCity News in an earlier interview.
“I think UnitedHealth Group is the biggest so it becomes the target,” Pearl previously said. “But it is not intrinsically — from what I know about it — a more problematic company than any other company in healthcare. I think it is the broken system that everyone is trying to work around, plug holes and involve a lot of middlemen.”
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