- The Department of Justice is reportedly considering a lawsuit to block UnitedHealth Group's $8 billion acquisition of data analytics company Change Healthcare as the Biden administration steps up its antitrust efforts.
- According to The Information, which cited people familiar to the matter, the DOJ recently reached out to private attorneys about the possibility of litigation to halt the transaction as it evaluates whether UnitedHealth, which owns the biggest private payer in the U.S., might have an incentive to block access of competing insurers to Change.
- The deal was first announced in January and immediately drew opposition, including from competing payers, the American Hospital Association and the American Antitrust Institute, over anticompetitive concerns.
According to The Information, several state attorneys general have aired issues with the transaction, and the DOJ has been looking for sworn witness testimony for the potential trial. In late March, UnitedHealth and Change disclosed the DOJ had requested additional information and documents from them as it embarks on deeper scrutiny of the proposed tie-up.
A UnitedHealth spokesperson declined to answer questions about its response to the potential suit or how it could change the timeline of the deal. But despite the stricter DOJ review, the two said earlier this year they still expected the deal to close in the second half of this year.
And in the merger agreement, UnitedHealth said it would be open to divesting assets if required for approval, though it noted such divestitures couldn't account for more than $650 million in annual revenue, which would be a "burdensome condition."
AHA in March called on the DOJ to give the merger a stringent review, as the deal — meant to beef up UnitedHealth's data analytics arm OptumInsight — could also result in less competition for health IT and revenue cycle management services, and give UnitedHealth's payer business UnitedHealthcare an unfair edge in contract negotiations with hospitals, the hospital lobby alleged.
AHA also aired concerns the tie-up could result in a massive consolidation of healthcare data under UnitedHealth, which could distort decisions about patient care, claims processing and denials. Currently, Change as an independent alternative to Optum serves as a check against those outcomes, AHA said.
In response to the concerns, UnitedHealth has maintained Optum's and UnitedHealthcare's operations are kept separate.
"With distinct and complementary capabilities, this combination will help health care providers and payers better serve patients by more effectively connecting and simplifying key clinical, administrative and payment processes to the benefit of the health system and the people we serve," an Optum spokesperson told Healthcare Dive on Thursday.
The potential suit comes as the Biden administration steps up its antitrust efforts. On Tuesday, the Federal Trade Commission, said that due to a "tidal wave" of recent merger filings, it would now potentially deem combinations unlawful even after the companies consummate their merger. The alert could dampen accelerating M&A, as unwinding a transaction that's already closed is expensive and complex.
The FTC has also said it's prioritizing healthcare as part of its enforcement strategy over the next decade, as the lack of competition in the industry can lead to price hikes that threaten patient access to care.
And the DOJ's already taken its opposition to a major healthcare deal to court this year.
In June, the DOJ sued to block Aon's $30 billion acquisition of Willis Towers Watson, saying it would harm competition in retiree multicarrier healthcare exchanges, among other markets. The deal was then called off in late July after the two insurance brokers failed to reach an agreement with regulators.
Change management did not take questions from investors on a Thursday morning call on its first quarter results, citing the pending acquisition. However, the Nashville-based health IT company's stock took a nosedive on Wednesday following the news, dropping roughly 7% in morning trading.