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DOJ's UnitedHealth antitrust probe may have M&A ripple effect

Illustration of a gavel hitting the floor and generating ripples.

Illustration: Aïda Amer/Axios

The Justice Department's antitrust investigation into UnitedHealth may cause dealmaking ripple effects.

Why it's the BFD: If the DOJ successfully files a claim, UnitedHealth could no longer be the BFD of health services strategic buyers.

Zoom in: DOJ investigators are examining Optum's acquisitions of doctor groups, and how owning physicians and a health plan impacts competition, the Wall Street Journal reported yesterday.

  • Investigators have been interviewing health care industry representatives in recent weeks, asking if Optum-owned groups have been favored in UnitedHealthcare's contracting practices.
  • Investigators are also looking at the reverse impact, trying to determine if Optum's physician ownership unfairly challenges rival health insurers.
  • Optum's Medicare billing is being scrutinized, including practices around documenting patients' illnesses.

What they're saying: "These relationships and their operations have been shrouded in secrecy for years," says Scott+Scott partner Patrick McGahan.

  • While UnitedHealth and Optum are no strangers to antitrust scrutiny, this multi-pronged investigation is a wide-reaching opportunity to improve transparency and accountability, he adds.
  • "UHG is likely well prepared for this investigation," says Brad Haller, a senior partner in West Monroe's M&A practice.

What's next: "Wide-ranging and unfavorable impacts to scaled provider groups and health care technology companies that see UnitedHealth, and its competitors, as likely exit opportunities," should the DOJ succeed, Haller says.

The big picture: After buying up provider groups like gangbusters, Optum is now the largest employer of physicians in the U.S.

  • The company employs some 90,000 doctors, WSJ says — plus surgery centers, countless health tech units and one of the largest pharmacy benefit managers.

Catch up quick: DOJ is also eyeing UnitedHealth's planned $3.3 billion acquisition of home health player Amedisys, hitting both parties with a second request in August.

  • And California hospital system Emanate Health launched a private antitrust suit against UnitedHealth, alleging the company pressured the health system not to compete with its primary care groups.

Flashback: The DOJ tried and failed to block UnitedHealth's $13 billion acquisition of Change in 2022.

By the numbers: UnitedHealth's stock has dipped about 4% at time of writing since market open.

The bottom line: In the last decade, UnitedHealth built an enviable vertical integration strategy emulated by peers and private equity alike — but today's regulatory environment is a different beast.

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