UnitedHealth and Amedisys to Enter Mediation with DOJ Over $3.3 Billion Merger

In a significant development in the healthcare industry, UnitedHealth Group and Amedisys are set to enter mediation with the U.S. Department of Justice (DOJ) over their proposed $3.3 billion merger. The mediation, scheduled for August 18, comes as the DOJ seeks to block the deal on antitrust grounds.

DOJ's Antitrust Concerns

The DOJ filed a lawsuit in November, arguing that UnitedHealth's acquisition of Amedisys, one of the largest home health and hospice providers in the United States, would lead to higher prices for consumers in more than 20 states. The lawsuit, joined by Maryland, Illinois, New Jersey, and New York, highlights growing concerns about market concentration in the healthcare sector.

According to the DOJ's complaint, if the transaction proceeds, UnitedHealth's Optum division would control 30% or more of the home health or hospice markets in eight states. This level of market dominance, regulators argue, could harm patients and providers by eliminating competition.

Proposed Divestitures and Negotiations

In response to the DOJ's concerns, UnitedHealth and Amedisys have offered to divest certain assets. A court filing in February revealed that the companies proposed selling more than 120 home health and hospice facilities. If approved, these divestitures would significantly reduce UnitedHealth's market share, leaving the company operating only 10% of home health and 4% of hospice services in the U.S.

Despite these offers, the DOJ remains unconvinced, necessitating the upcoming mediation. Judge Susan Gauvey of Maryland's district court has scheduled a mediation conference where a magistrate judge will assist the parties in finding a resolution to the antitrust concerns.

Broader Scrutiny of UnitedHealth Group

The proposed merger and subsequent legal challenges come amid broader scrutiny of UnitedHealth Group's market power. The company's diverse portfolio, which includes one of the nation's largest insurers, a major pharmacy benefit manager, and a healthcare technology company, has drawn increasing attention from regulators.

Reports suggest that the DOJ is investigating UnitedHealth for potential anticompetitive effects, including the relationship between Optum and its insurer UnitedHealthcare. Additionally, the Federal Trade Commission is pursuing legal action against UnitedHealth's pharmacy benefit manager, Optum Rx, along with other PBMs, alleging that they have contributed to rising insulin prices.

As the August mediation approaches, all eyes will be on UnitedHealth, Amedisys, and the DOJ to see if a compromise can be reached that addresses antitrust concerns while allowing the merger to proceed in some form. The outcome of this case could have significant implications for future healthcare industry consolidation and antitrust enforcement.