DOJ Extends Review of UnitedHealth, Change Healthcare Deal

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U.S. antitrust regulators are taking a closer look at UnitedHealth Group Inc.’s proposed $8 billion deal to acquire data and payments company Change Healthcare Inc.

Officials from the Department of Justice asked both companies for more information about the transaction, according to a filing from Change Healthcare Friday. The so-called second request gives regulators more time to review the takeover beyond a standard 30-day period.

If the deal closes, it would wrap a major supplier of health information-technology services into one of the largest U.S. health services and insurance providers. The Biden administration has recently signaled that it plans to take a more careful look at corporate mergers, including in the health-care industry.

Change Healthcare’s shares dropped 1.2% in latet rading Friday after the filing. Spokespersons for Change Healthcare and UnitedHealth declined to comment on the DOJ review.

Hospitals and other companies use Change Healthcare’s services to submit claims and collect payment from insurers. Change Healthcare also offers systems for assessing whether appropriate care was provided to patients.

UnitedHealth’s OptumInsight business, into which Change Healthcare would be folded if the deal goes through, offers some similar services. UnitedHealth, which reported revenue of $257 billion last year, also owns the nation’s largest health insurer and a growing care-delivery arm with more than 50,000 physicians.

Hospital Opposition

The American Hospital Association in a letter this month urged U.S. regulators to scrutinize the deal, saying it threatens to reduce competition and “will likely result in higher prices for providers and in lower quality clinical outcomes for patients.”

The hospital group said the companies are the largest suppliers of certain “must-have” services, including clearinghouses that rout claims to insurers for payment.

In response to the letter, a spokesman for Optum said in a statement that the companies have “distinct and complementary capabilities” and the combination would improve care by simplifying administrative, clinical and payment processes.

The companies have said they expect the transaction to close in the second half of 2021. Concerns about antitrust hurdles were evident during the merger discussions, according to a securities filing from Change Healthcare.

On Nov. 15, as deal talks were underway, the companies’ legal advisers discussed how far UnitedHealth would be willing to go to gain regulatory approval of the transaction, and drafted an “antitrust efforts proposal,” according to the filing.

The following week, Change Healthcare’s board determined it wouldn’t continue to explore the deal “unless UnitedHealth Group further strengthened its commitment to obtaining antitrust approval,” according to the filing. The deal proposal was later updated “in a manner that the Board viewed as more favorable to Change.”

The agreement says the companies may sell assets if required for approval, though divestitures accounting for more than $650 million in annual revenue would be a “burdensome condition” UnitedHealth wouldn’t be bound by, according to the filing.

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