The American Hospital Association has called on federal antitrust regulators to investigate and potentially block UnitedHealth Groups proposed $2.6 billion acquisition of Sierra Health Services, Las Vegas.
In an April 10 letter to the Justice Department, the AHA said the merger, announced last month, would jeopardize healthy competition by giving Minnetonka, Minn.-based UnitedHealth an 80% share of Nevadas commercial HMO market and control over a full 94% of the commercial HMO market in the greater Las Vegas area. Such market dominance could allow UnitedHealth to cut payment rates to hospitals and dictate contract terms, the AHA said.
Consolidation on the payer side has the potential to create must-have payers who represent so large a share of any providers business that the provider has no alternative but to adopt the programs and initiatives of that payer to the exclusion of others, AHA Executive Vice President Richard Pollack wrote in the letter. The American Medical Association voiced its opposition to the merger in a similar letter sent to the Justice Department on March 19.
UnitedHealth, the nations second-largest insurer by enrollment, has been the target of Justice Department enforcement actions before. In late 2005, antitrust regulators approved the insurers $9.2 billion acquisition of PacifiCare Health Systems only after the companies agreed to sell portions of their operations in Arizona and Colorado. But in the case of a UnitedHealth-Sierra union, the AHA suggested that divestitures may not be enough.
In this instance, it may be more appropriate for the (Antitrust) Division to block the proposed merger to protect competition, Pollack wrote.
The AHAs action comes on the heels of a U.S. Senate Judiciary Committee hearing held April 9 on the planned merger of Pennsylvanias two largest health plans, Highmark and Independence Blue Cross. That merger would create a company with control of 53% of the states insurance market. -- by Laura B. Benko