DOJ to block UnitedHealth-Change Healthcare buy: report

Change is controversial, at least for UnitedHealth. Healthcare Dive reported today that the Department of Justice (DOJ) is preparing a lawsuit to block UnitedHealth from purchasing Change Healthcare. Their source is a report published on a subscription financial website, Dealreporter, that their sources say that both companies will be meeting with the DOJ for what is charmingly called a ‘last rites’ meeting. Apparently, all the companies’ plans for divestitures [TTA 26 Jan] are not enough to satisfy DOJ on the antitrust issues raised not only by the DOJ, but also strongly by the American Hospital Association and the National Community Pharmacists Association.

Announced in January, the merger approval had been tabled in August and October/November, with the closing delayed accordingly, so the DOJ action resulting from their mandatory review under the Hart-Scott-Rodino Antitrust Act (HSR) was anticipated. Even in August, the delay did not bode well for this $8 billion in cash/$5 billion in debt deal.

What’s at issue here is the consolidation of data and businesses both UH and Change are in–health IT and revenue cycle management–and reduced competition that drives up costs for health systems and providers. As this Editor observed in March, OptumInsight, Optum’s data analytics unit, and Change provide a similar range of services in health IT and revenue cycle management (RCM). As one of the largest independents in these areas, Change contracted with providers and had access to the data of 1 out of 3 patients. Optum’s parent, UnitedHealthcare, is also the largest US payer. These were the factors that made those represented by the American Hospital Association (AHA) very nervous indeed [TTA 25 Mar] regarding pricing of these services–and they expressed their misgivings cogently in a seven-page letter (PDF link) to DOJ on 17 March. In their view, Change integrated into OptumInsight would reduce competition and increase pricing in RCM, claims clearinghouse and payment accuracy services, and clinical decision support services.

In DC, the view of what is anti-competitive is cyclical. The 2020 acquisition of WellCare by Centene was approved with nary a whinny. CVS-Aetna took forever because of a showboating judge, but was finally approved in 2019. Yet only two years before, the Aetna-Humana and Anthem-Cigna mergers were doomed to fail. In this administration, large mergers do not fare well; both Aon-Willis Towers Watson and Lockheed-Aerojet Rocketdyne were canceled.

Expect to hear more by end of month. 

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