$3B Health Care Merger Would Be Bad For New Jersey, Other States: Feds

NEW JERSEY — The U.S. Department of Justice (DOJ) is attempting to snuff out a deal between UnitedHealth Group Incorporated and Amedisys Inc., arguing that the proposed merger would be a bad deal for hospice patients, homebound residents and workers in New Jersey and several other states.

Federal prosecutors and the attorney generals in four states, including New Jersey, filed a civil antitrust lawsuit on Tuesday in an attempt to block UnitedHealth’s $3.3 billion purchase of its rival home health and hospice services provider, Amedisys.

UnitedHealth contracts with more than 1.7 million physicians and care professionals and 7,000 hospitals and other care facilities nationwide, including in New Jersey. Amedisys also operates in locations across the U.S. and New Jersey, including Bedminster, Bloomfield, Budd Lake, Burlington, Hackensack, Linwood, Secaucus and Toms River.

According to the DOJ, some locations in New Jersey that would be impacted by the merger include Bayonne, Clifton, Hackensack, Parsippany, Saddle Brook, Secaucus and Wayne.

If the merger proceeds, the combination of UnitedHealth and Amedisys would result in UnitedHealth’s control of 30 percent or more of the home health or hospice services in eight states, prosecutors say.

Both companies are currently “fierce competitors” – and that’s a big part of the problem, federal prosecutors allege.

If the merger happens, it will likely lead to deteriorating quality and service for patients, prosecutors say. Meanwhile, health care workers will lose some key leverage with their employers – putting them at a disadvantage when it comes time to talk salary or conditions on the job.

“American health care is unwell,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division.

“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,” Kanter alleged.

PLANS TO FIGHT LAWSUIT

UnitedHealth wants to add Amedisys to Optum, its subsidiary that provides care as well as pharmacy and technology services.

Optum said it plans to fight the antitrust lawsuit in a statement issued Tuesday.

“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 wrote. “We will vigorously defend against the DOJ’s overreaching interpretation of the antitrust laws.”

According to Optum, if the merger goes through, the new entity would operate “just a fraction” of all the home health and hospice care markets in the U.S. The company says that demand for these services is growing and creating highly competitive markets – and a merger wouldn’t adversely impact services.

To help keep things competitive, UnitedHealth/Optum has agreed to divest a “significant number” of home health and hospice care centers to a third company, VitalCaring Group.

But according to prosecutors, it’s not nearly enough:

“As the complaint alleges, the proposed divestiture does not alleviate harm in over 100 home health, hospice, and labor markets, which generate at least a billion dollars in revenue annually, serve at least 200,000 patients, and employ at least 4,000 nurses. As further alleged in the complaint, VitalCaring has lower quality scores than either UnitedHealth or Amedisys and is beset by financial challenges, including a potential legal judgment approaching a half-billion dollars. According to a Texas court, before becoming CEO of VitalCaring, its current CEO was running a competitor of VitalCaring while also running VitalCaring ‘from the shadows.’”

The other states involved in the lawsuit are Maryland, Illinois and New York.

UnitedHealth is a publicly traded Delaware corporation headquartered in Minnetonka, Minnesota. Amedisys is a home health and hospice services provider and a publicly traded Delaware corporation headquartered in Baton Rouge, Louisiana. The lawsuit was filed in the District of Maryland.

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