The U.S. Justice Department last week moved to stop a $3.3 purchase of a home health and hospice company by a massive conglomerate that is already operating in that and many other parts of the health sector.
It’s one of several antitrust actions taken after a long era of corporate consolidation.
The Justice Department — along with attorneys general from Maryland, New York, New Jersey and Illinois — filed suit in a Maryland federal court to stop the purchase of Amedisys Inc. by UnitedHealth Group, the fourth-largest corporation by revenue in the United States.
In a statement announcing the suit, the Justice Department noted that UnitedHealth last year purchased Amedisys’s main competitor, LHC Group, and that left UnitedHeath and Amedisys as the two largest providers of home health and hospice care. Further consolidation would stifle competition and hurt people, the statement said.
“We are challenging this merger because home health and hospice patients and their families experiencing some of the most difficult moments of their lives deserve affordable, high quality care options,” the statement quoted Attorney General Merrick Garland as saying. “The Justice Department will not hesitate to check unlawful consolidation and monopolization in the healthcare market that threatens to harm vulnerable patients, their families, and health care workers.”
For its part, UnitedHealth said the merger would be good for competition.
“The Amedisys combination with Optum would be pro-competitive and further innovation, leading to improved patient outcomes and greater access to quality care,” the company said in a statement. “We will vigorously defend against the Department of Justice’s overreaching interpretation of the antitrust laws.”
In addition to seeking to block the merger, the Justice Department is seeking sanctions against Amedisys on allegations that it failed to produce millions of documents and might have deleted others even though their disclosure is required under the Antitrust Improvements Act of 1976, the statement said.
UnitedHealth has gotten the attention of other antitrust watch dogs. It owns a top-10 health insurer and as of last year its Optum subsidiary employed more than 70,000 primary-care doctors.
But it’s the activities of the company’s drug middleman — OptumRx — and those of two other health conglomerates that have garnered the attention of the other major federal antitrust investigator, the Federal Trade Commission. Optum and the other two companies, CVS Caremark and Express Scripts, together control access to about 80% of insured patients in the United States.
Critics have long said the middlemen use that concentration to squeeze huge rebates out of drugmakers in exchange for covering their products, and to squeeze down reimbursements to pharmacies that say they have little choice but to contract with the middlemen on whatever terms they offer.
The consequence, critics say, is higher costs for consumers and a growing number of pharmacies forced out of business.
The FTC in 2022 undertook a major investigation of the middlemen, known as pharmacy benefit managers, and earlier this year released an interim report saying that they appeared to be raising costs and hurting patients.
Then in September, the agency sued the three companies, accusing them of engaging in practices that caused insulin prices to skyrocket starting around 2012.
Alvaro Bedoya, a member of the commission, in 2022 said that the primary goal of antitrust law in the United States is to treat consumers and small players in the marketplace fairly. But starting in the 1970s, some economists argued that the real goal is efficiency, and that larger players are often better able to do that. A long period of mergers followed.
But federal antitrust regulation has been more vigorous during the presidency of Joe Biden.
In addition to the FTC’s actions against the pharmacy benefit managers, it’s suing to stop the merger of grocery giants Kroger and Albertsons, saying that would lead to even less competition in that sector. The Justice Department’s Antitrust Division also is suing to break up Ticketmaster and Live Nation, and is suing Visa on accusations that it monopolized debit transactions.
In the Justice Department statement, Antitrust Division head Jonathan Kanter said that UnitedHealth can’t be allowed to dominate the home health and hospice care sector.
“American healthcare is unwell,” he said. “Unless this $3.3 billion transaction is stopped, UnitedHealth Group will further extend its grip to home health and hospice care, threatening seniors, their families and nurses.”