The U.S. Department of Justice, along with attorneys general from Maryland, Illinois, New Jersey and New York, have filed suit in the U.S. District Court for the District of Maryland to block the merger of two of the nation’s largest home health and hospice services.
The DOJ is alleging UnitedHealth’s attempted $3.3 billion acquisition of Amedisys would result in reduced competition in the home health market, potentially setting the stage for an increase in prices.
In its filing, the government used the words of company executives to suggest the potential adverse effects are “not a secret,” and quoted Amedisys’s board chairman as saying the “pure competition” between Amedisys and UnitedHealth means the two companies “keep each other honest and we keep driving better and better quality. And who benefits from it? Our patients.”
If the purchase is completed, UnitedHealth will acquire 500 locations across 32 states that it already competes in and expand to five more states. It also would control 30% or more of the home health or hospice services in eight of those states.
The DOJ used the words of UnitedHealth executives to build its case, stating the company has boasted its “first line of attack” in recruiting campaigns is to target Amedisys, and celebrates “kicking (Amedisys’s) ass in hiring.”
In February 2023, UnitedHealth purchased LHC Group, which at the time was the nation’s third-largest home health provider and a large hospice provider. Under UnitedHealth’s umbrella, LHC has grown to become the second-largest home health provider, the government stated.
The DOJ suggests UnitedHealth’s proposed acquisition came after Amedisys showed interest in purchasing infusion provider OptionCare, which UnitedHealth saw as a potential threat.
Court documents suggest UnitedHealth took two actions to stop the acquisition:
1) Paid a “breakup fee” to OptionCare to entice the company to terminate its merger with Amedisys.
2) Offered Amedisys a $3.3 billion merger.
“Even though Amedisys’s chief financial officer and chief operating officer acknowledged in handwritten notes that the OptionCare deal would be better for both employees and patients, Amedisys ultimately agreed to be subsumed into UnitedHealth’s fold,” lawyers for the government wrote.
Impact on Labor
In addition to the negative effect on patients, the DOJ suggests the acquisition could bring adverse conditions for nurses working in the industry by reducing competition and “deprive nurses of valuable competition for pay and other employment terms.”
UnitedHealth and Amedisys proposed divesting assets in hundreds of separate markets to VitalCaring Group as part of the acquisition, but the government claims this is only because the two companies are aware of the “illegal and anticompetitive impact of the proposed merger.”
The DOJ claimed that the move would be largely superficial due to VitalCaring Group’s lack of establishment in the industry, having only operated for three years, and its potential inability to effectively operate after nearly doubling in size overnight.
In response to the DOJ’s filing, Optum, a subsidiary of UnitedHealth, released a statement claiming the acquisition “would be pro-competitive and further innovation, leading to improved patient outcomes and greater access to quality care.”
The company pledged to vigorously defend against the DOJ’s “overreaching interpretation of the antitrust laws.”