Antitrust regulators at the U.S. Justice Department are scrutinizing UnitedHealth Group's $13 billion proposed acquisition of a health care IT company, after hospitals complained the deal could give the nation's biggest insurer too much power.
UnitedHealth's Optum unit announced plans in January to acquire Nashville-based Change Healthcare in a cash deal that valued the company at nearly $8 billion. UnitedHealth would assume another $5 billion in debt from Change, making the deal the second-largest in UnitedHealth's history.
The American Hospital Association (AHA) earlier this month urged the DOJ's Antitrust Division to devote special scrutiny to the deal because it would eliminate two competitors in the field for outsourced IT services.
Just as notable, the hospitals said, was that the combination would give UnitedHealth Group — which owns the largest insurer in the nation, UnitedHealthcare — access to much more "competitively sensitive health care data" than it has today.
"The combination of the parties' data sets would impact [and likely distort] decisions about patient care and claims processing and denials, to the detriment of consumers and health care providers, and further increase UHG's already massive market power," wrote Melinda Hatton, general counsel for Washington-based AHA hospital trade group, in a March 17 letter.
One week later, antitrust regulators sent UnitedHealth Group and Change Healthcare a "second request" for information about the proposed acquisition, according to a Securities and Exchange Commission filing by Change.
By law, all corporate acquisitions worth more than about $92 million are scrutinized by the Justice Department or the Federal Trade Commission, but the vast majority of deals are allowed to go through using the initial round of paperwork.
A "second request" is made when the initial documents suggest a deal may illegally reduce competition, if it goes through as proposed. Regulators may eventually decide the deal is fine, or suggest changes, or they may sue to block it.
"The parties have been working cooperatively with the DOJ and will continue to do so," Change Healthcare told investors in its March 24 filing. The deal was originally slated to conclude by the end of this year.
Optum said in written statement that the two companies share a goal of better health outcomes and experiences at lower cost.
"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," the Optum statement said.
UnitedHealth shares were little changed Monday, closing at $379.06.
Joe Carlson • 612-673-4779
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