Aetna's proposed $1 billion buyout of Prudential's managed-care business is unlikely to be challenged wholesale by federal antitrust officials.
But it could inspire an intense analysis by state antitrust regulators in places like Georgia, New Jersey, New York, Pennsylvania and Texas, where the combined companies would have significant market shares.
The deal is expected to be completed by early summer, although the timing depends largely on whether regulators ask for more data from the two companies.
Antitrust officials at the federal and state levels are being lobbied hard by the American Medical Association and several state medical associations to derail or at least thoroughly investigate the merger.
Ironically, the AMA and state medical societies have lobbied the same law enforcement officials for years for more antitrust leniency for physicians, who want more collective bargaining clout with managed-care plans.
Aetna is already unpopular with many physicians for its tough negotiating stance on managed-care contracts and what some consider too rigid utilization controls.
Linking Prudential HealthCare with Aetna U.S. Healthcare would create the nation's largest health insurer, with 22.4 million enrollees, including 18.4 million in managed care (Dec. 14, 1998, p. 6).
Atlanta, Dallas, Houston, New York and Philadelphia are areas where the proposed combination would result in a market share of 30% or more, according to a recent report by the investment firm Sanford C. Bernstein in New York.
In Philadelphia, for example, Aetna would control nearly 40% of the managed-care market after acquiring Prudential's HMO business.
An attempt by regulators to derail the deal is highly unlikely, said William Kopit, a healthcare antitrust attorney with Epstein, Becker & Green in Washington.
"If they (regulators) do anything, they would look at specific localities. It's a market-by-market determination," Kopit said.