Massachusetts lawmakers name on regulators to assessment Steward-UnitedHealth deal

Dive Temporary:

• Massachusetts’ congressional delegation has requested the Federal Commerce Fee and the Division of Justice to “closely scrutinize” UnitedHealth’s proposed acquisition of Steward Health Care’s doctor group.
• The proposed deal, which was introduced late final month, may provide indebted Steward a wanted inflow of money Health-Care-Broadcasts-Six-Level-Motion-Plan-and-Framework-for-Future-System”>as IT seeks to restructure and maintain hospitals open. Nonetheless, a “fast repair” sale to “a vertically built-in UnitedHealth colossus” may do extra hurt than good if IT stifles competitors, lawmakers warned in a letter despatched final week.
• The deal, which is predicted to shut within the second quarter of this yr, can be being reviewed by the Massachusetts Health Coverage Fee, which oversees healthcare spending within the state. The HPC has till April 25 to resolve whether or not to refer the proposed transaction to state Attorney Normal Andrea Campbell for additional assessment.

Dive Perception:

Resolving Steward’s monetary issues has proved vexing for stakeholders.

On one hand, Steward seems to be bancrupt. IT owes lots of of tens of millions to a wide selection of distributors and to its landlord, Medical Properties Belief. Squeezed for money, the Dallas-based, for-profit Health community has abruptly shuttered a number of hospitals in current months.

Massachusetts Gov. Maura Healey has sworn there can be no bailout for Steward and known as on the corporate to swiftly exit the state. 

Promoting Steward’s doctor group — which Sen. Elizabeth Warren, D-Mass., known as “the final asset of any worth left at Steward” throughout a Senate subject listening to final week — could possibly be one of many Health community’s few choices to safe the liquidity IT must maintain operations working. In February, Steward listed the doable sale of its doctor group as step certainly one of its six-point motion plan towards turning into a sustainable enterprise. 

Regulators is perhaps sympathetic to the deal given Steward’s monetary troubles, in line with Nathan Ray, who leads the healthcare merger and acquisitions observe at consultancy West Monroe.

“The federal government [isn’t] within the enterprise of not permitting struggling companies to determine methods to proceed present,” Ray mentioned.

Nonetheless, Steward’s issues don’t grant the deal a “corridor move” to shut with out regulatory assessment, he cautioned.

Scrutiny of healthcare offers has elevated in current months, Ray mentioned. In December, the FTC and DOJ overhauled steerage they may use to problem business tie-ups.

Whereas regulators and lawmakers typically need Steward to stay open, Ray mentioned the deal is additional difficult by UnitedHealth’s involvement, which he known as the “largest acquisitive asset in healthcare.”

Federal regulators have just lately scrutinized UnitedHealth.

The FTC and DOJ challenged UnitedHealth’s acquisition of Technology agency Change Healthcare in 2022. Nonetheless, the antitrust companies misplaced the case and the deal closed later that yr, in what was considered as a significant setback for the DOJ.

The healthcare conglomerate is at present beneath investigation by the DOJ for doable anticompetitive practices associated to its acquisition of physician’s places of work, in line with stories from the Wall Road Journal. UnitedHealth’s subsidiary Optum Care, which might buy Stewardship Health, employs 10% of all physicians nationwide.

Lawmakers of their letter accused UnitedHealth of purposefully shopping for distressed doctor teams to increase its grip in the marketplace.

The proposed merger additionally doesn’t assure Steward amenities will stay open long-term and UnitedHealth may enhance related care prices, the lawmakers mentioned.

In testimony final week earlier than the Senate’s Health, Training, Labor & Pensions subcommittee, consultants famous how UnitedHealth may worsen healthcare high quality ought to the deal undergo.

“[Optum is] completely the world’s professional on upcoding; they really personal firms for the aim of upcoding,” mentioned Don Berwick, former Health coverage adviser to the White Home and present president emeritus and senior fellow on the Institute for Healthcare Enchancment. “They’ve achieved that everywhere in the nation, and I think that we’re going to see prices rise [here, too].”

Berwick expressed concern that earnings from the deal could possibly be redirected as dividends to traders or as government bonuses, as a substitute of Steward’s hospitals.

Steward declined to remark. Optum Care and United Health didn’t reply to requests for remark.