FTC hits UnitedHealth, LHC with another request for information on $5.4B buy
- UnitedHealth and LHC Group have been hit by a request for additional information on their acquisition from the Federal Trade Commission, as regulators take an increasingly active role in overseeing healthcare M&A.
- The second request extends the waiting period the FTC has to challenge the deal. UnitedHealth agreed to acquire home health and hospice provider LHC for $5.4 billion in March.
- in a filing with the SEC on Friday, the companies said they have been complying with regulators and will continue to do so.
Antitrust regulators have interrupted UnitedHealth’s M&A plans this year. The Minnesota-based healthcare giant, which owns the biggest private payer in the U.S., expected to close its $13 billion acquisition of data analytics firm Change Healthcare earlier this year, but the the Department of Justice halted the deal over anticompetitive concerns in February. The DOJ trial contesting the deal is scheduled to begin Aug. 1.
The combination of Louisiana-based LHC and Optum, UnitedHealth's health services arm, is meant to aid UnitedHealth in providing more integrated care, the companies said in March. Payers have taken an increasingly direct role in home health delivery, as COVID-19 accelerates the trend of care being delivered outside of hospital settings.
But marrying LHC, which manages a sizable share of the home health market with locations in 37 states, with Optum, one of the biggest physician groups in the country, has raised regulators’ eyebrows.
LHC and UnitedHealth can’t consummate the deal until the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ends, according to Friday’s filing.
UnitedHealth and LHC filed their respective notification and report forms with the Department of Justice and the FTC under the HSR Act on April 7. In the filing, LHC said UnitedHealth voluntarily withdrew its pre-deal notification with regulators on May 5 in order to give them more time to review the acquisition, before re-filing them May 11.
On June 10, both companies received a request for additional information and documentation from the FTC. The second request extends the waiting period under the HSR Act until the 30th day after “substantial compliance” with the request.
When the deal was announced, analysts said that acquiring home health assets made sense for large Medicare Advantage insurers, allowing them to track patients’ health conditions and coordinate care in the home.
However, ancillary services in the privately run Medicare plans are fueling concerns that MA plans are using chart reviews and health risk assessments to get higher payments from the government. Regulators have increasingly been cracking down on MA fraud in the past few years, even as payments in the increasingly popular program continue to rise.