UnitedHealth Closes $3.3B Amedisys Acquisition Amid Regulatory Scrutiny

UnitedHealth Group has finalized its $3.3 billion acquisition of home health and hospice provider Amedisys, marking a significant expansion in the home healthcare sector. The deal, which folded Amedisys into UnitedHealth's health services division Optum, concluded after a prolonged regulatory battle with the U.S. Department of Justice (DOJ).

Settlement Paves Way for Merger Completion

The acquisition, initially agreed upon in 2023, faced intense scrutiny from antitrust regulators. The DOJ sued to block the deal in November, citing concerns over reduced competition in hundreds of U.S. markets. However, a settlement reached on August 7 cleared the path for the merger's completion.

Under the terms of the settlement, UnitedHealth and Amedisys agreed to divest 164 home health and hospice locations. This concession, while less extensive than some antitrust lawyers anticipated, was deemed sufficient by the DOJ to preserve both price and wage competition in the affected markets.

An Optum spokesperson expressed satisfaction with the deal's closure, stating, "We're pleased Optum's combination with Amedisys has closed," and emphasizing the critical role of home health in Optum's commitment to patient care.

Implications for the Home Health Landscape

The merger positions UnitedHealth as a major player in the home health and hospice services sector, potentially becoming the largest provider in the United States. This development builds upon UnitedHealth's previous acquisition of LHC Group for $5.4 billion in 2023, which already offered home health and hospice care across multiple states.

Amedisys brings significant scale to the merger, serving more than 465,000 patients annually across 38 states and Washington, D.C. While analysts suggest that Amedisys will only modestly contribute to UnitedHealth's earnings, the acquisition aligns with the company's vertical integration strategy, leveraging synergies between its UnitedHealthcare insurance arm and healthcare delivery assets.

Ongoing Scrutiny and Investigations

The merger's completion comes amid broader scrutiny of UnitedHealth's business practices. A group of Democratic lawmakers criticized the DOJ's settlement, arguing that it fails to adequately protect competition and could lead to higher costs and reduced access to home health and hospice care.

Additionally, UnitedHealth faces several other challenges:

1. An investigation by two influential Democratic senators into the company's care for nursing home residents, following reports of restricted hospitalizations allegedly to protect profits.
2. Criminal and civil investigations by the DOJ regarding alleged Medicare fraud.
3. A lawsuit from the Federal Trade Commission accusing the company of driving up insulin prices in the U.S.

These ongoing issues highlight the complex regulatory environment in which major healthcare conglomerates operate, even as they continue to expand their market presence through strategic acquisitions.