Change Healthcare may divest $1B for regulatory OK of UnitedHealth deal
Change Healthcare is reportedly considering a sale of its $1 billion payment integrity business to persuade regulators to approve its $13 billion merger with UnitedHealth Group.
The data analytics firm is working with advisers to sell its ClaimsXten business, according to Bloomberg. According to an analyst note from Credit Suisse, ClaimsXten represents only part of Change Healthcare’s payment integrity unit, and given the data pointed to by Bloomberg, the company may be considering other services, such as its coding consultant, audit and recovery unit. Potential buyers could include payment integrity firm Cotiviti, repricer MultiPlan or fintech Zelis Healthcare, the report said.
Both Change Healthcare and UnitedHealth Group declined to comment on the reported asset sale.
“If Change Healthcare and UnitedHealth Group are indeed exploring these divestitures, it could be a sign that discussions are moving in the right direction,” Credit Suisse analysts wrote.
UnitedHealth Group announced last year that its fastest-growing subsidiary, Optum, would pay $13 billion to acquire Change. The largest U.S. insurer initially aimed to close the deal last September, although both companies have now pledged to regulators not to close the deal before Feb. 22. UnitedHealth Group has pushed back an internal deadline to complete the acquisition to April 5.
One Changes to Healthcare SEC Filings It noted last year that the companies could sell assets if antitrust approval is required, although UnitedHealth Group’s divestiture valued at more than $650 million is a “onerous condition” for the health giant.
Even if Change Healthcare reports the divestiture, there’s no guarantee that regulators will be happy with the deal.Proposed deal draws backlash from hospitals and hospitals pharmacist, they claimed the merger would reduce provider competition for health IT services, undercut prices for independent pharmacists, and increase health care costs for consumers.The American Hospital Association accuses the companies of having sold millions of dollars in assets to avoid scrutiny from antitrust regulators — who are also skeptical of the proposal.
Last summer, reports emerged that the Justice Department was considering a lawsuit to block the deal. The DOJ did not respond to interview requests about a possible injunction or how Change Healthcare’s asset sale could affect its merger decision. But the agency has been hinting at greater scrutiny of those mega-deals.
On Jan. 24, the Justice Department’s new antitrust chief said he intended to review a potential merger with an eye toward denial rather than allowing companies such as Change Healthcare to develop specific areas of their business.
Antitrust Assistant Attorney General Jonathan Kanter told the New York State Bar on Jan. 24 that more than 75 percent of U.S. industries have seen increased concentration in some companies, including health care. That trend will only accelerate, Kanter said. , noting that the number of pre-merger notices received by the Justice Department in 2021 reached a record high of 3,500 last year.
“I’m concerned that merger remedies that don’t block transactions tend to fall through the cracks,” Kanter said. “Complex settlements, both conduct and structure, have significant flaws. So I think when the department concludes When thinking that a merger might reduce competition, in most cases we should seek a simple injunction to block the deal.”
On Jan. 24, the Justice Department announced a new initiative to help other federal agencies win cases against industry-specific anticompetitive practices. Last week, the Justice Department and the Federal Trade Commission also sought public comment on how to strengthen merger oversight, particularly for vertical deals such as UnitedHealth Group’s acquisition of Change Healthcare.
“The settlements are not going to move the law forward,” Kantor said. “We need a new opinion from the courts to apply the law in the modern market in order to provide businesses with a clear message. This requires litigation that sets the legal boundaries that apply to the current market, and we need to be willing to take risks and ask the courts to reconsider putting the old The precedents apply to these markets.”