Feds sue to block UnitedHealth’s proposed $3.3 billion merger with competitor

(CN) — Looking to thwart UnitedHealth Group’s proposed $3.3. billion acquisition of competing home health and hospice services provider Amedisys, the Justice Department lobbed an antitrust suit against the healthcare giant Tuesday.

“We are challenging this merger because home health and hospice patients and their families experiencing some of the most difficult moments of their lives deserve affordable, high quality care options,” said Attorney General Merrick Garland in a statement following the complaint’s filing in Maryland federal court.

The Justice Department said patients who need care after hospitalization or who need regular help managing chronic conditions “like heart failure, diabetes, or lung disease,” could see price spikes if the merger goes through — as could millions of hospice patients seeking end-of-life, at-home care. They also argued that the merger would eliminate employment competition for home health and hospice nurses.

“The Justice Department will not hesitate to check unlawful consolidation and monopolization in the healthcare market that threatens to harm vulnerable patients, their families and health care workers,” Garland said.

Maryland, Illinois, New Jersey and New York joined the federal government as plaintiffs against the Minnesota-based insurance mammoth.

The plaintiffs said allowing the deal to proceed would give UnitedHealth home a home health and hospice care presence in five new states as well as an additional 500 locations across 32 states where it already provides care.

The Justice Department noted that UnitedHealth acquired LHC Group, a prior rival of Amedisys, just last year, and that its absorption of Amedisys would harm consumers — and make it more expensive for them to get skilled healthcare at home.

UnitedHealth proposed the acquisition in June 2023 hoping to fold Amedisys into its subsidiary Optum, a health care, pharmacy and technology services provider.

At the time, Optum CEO Patrick Conway praised Amedisys for its “patient-first culture” and suggested that a merger could result in health care for “more patients at lower costs, leading to continued growth.”

Optum said Tuesday the acquisition “would be pro-competitive and further innovation” and that it will “vigorously defend against the DOJ’s overreaching interpretation of the antitrust laws.”

Aiming to address some of the issues present in merging UnitedHealth and Amedisys, UnitedHealth said earlier this year it will divest certain assets to VitalCaring Group, a third competitor in the market.

However, the Justice Department slammed this idea in its complaint, calling the buyer out on its lack of experience in the market and low-quality care, and maintaining this would not “eliminate the threat to competition presented by the merger.”

“Even if VitalCaring were an adequate buyer, the divestiture does not resolve the competitive overlap in over 100 home health and hospice markets across 19 states and the District of Columbia, accounting for well in excess of $1 billion in total commerce,” the Justice Department wrote in its complaint. “Nor does the divestiture address the harm to thousands of home health and hospice nurses in labor markets across 18 states.”

The transaction with VitalCaring is contingent upon the deal’s closing.

Louisiana-based Amedisys said it is still hoping to close the deal Tuesday with the much larger competitor. UnitedHealth earned $372 billion in revenue in 2023 while Amedisys earned $2.2 billion.