Nevada healthcare providers who opposed the sale of Las Vegas-based Sierra Health Services to UnitedHealth Group said they are exploring whether to take legal action to block the acquisition, which was approved conditionally by the Justice Department and completed last week.
The Department of Justice really missed an opportunity to send a clear signal on the overwhelming consolidation of the health insurance market, said Larry Matheis, executive director of the Nevada State Medical Association. Were looking at all our options.
The $2.6 billion acquisition was given a green light on the condition that UnitedHealth divest most of its Medicare Advantage business in the Las Vegas area. Humana agreed to buy UnitedHealths SecureHorizons Medicare Advantage HMO business, with 25,000 members in the region, for $185 million in cash.
Both the Justice Department and Nevada attorney general filed proposed consent decrees in U.S. district courts that would block the acquisition pending UnitedHealths acceptance of a number of terms, which the Minnetonka, Minn.-based insurer said it would accept. Both consent decrees require a judges approval.
The acquisition as originally proposed would have created a combined controlling interest of 94% of the Medicare Advantage market in the Las Vegas area and resulted in higher prices, fewer choices and a reduction in the quality of plans in the area, the Justice Department said in a written statement.
The conditions got mixed reviews. While this divestiture provision is good news for seniors in the region, it is a piecemeal approach to a big deal that will affect many more patients in Nevada, said Hilary Haycock, spokeswoman for Service Employees International Union Nevada, representing nurses at hospitals around the state. Were not sure it goes far enough in protecting patients and providers.
The American Hospital Association, which sent letters to the Justice Department in opposition, said it would have preferred the deal be blocked entirely to protect patients and providers, spokeswoman Alicia Mitchell said.
A spokeswoman for Las Vegas largest hospital, the 635-bed Sunrise Hospital and Medical Center, said it was too early to speculate on the impact of the merger, but added that we have an excellent relationship with Humana.
The Nevada medical associations Matheis applauded Nevada Attorney General Catherine Cortez Mastos proposed consent decree, saying that she took pains to protect providers and consumers.
Among Mastos proposed conditions, filed in the U.S. District Court of Las Vegas, are the Medicare Advantage divestiture and annual company audits. She also calls for a two-year window for new competitors to enter the market and offer contracts to hospitals and medical providers. She ordered UnitedHealth to contribute $15 million to Nevada healthcare organizations, including $7 million to Las Vegas public safety net hospital, 588-bed University Medical Center.
These actions will go a long way to minimizing the impact on Nevadans, Matheis said. Her order anticipates the worst possible effects of this deal.
Nevertheless, a coalition of providers that includes the American Medical Association, SEIU Nevada and the state medical association could take legal action to try to foil the acquisition, including seeking to block the consent decrees or filing a separate lawsuit, Matheis said.
Officials for UnitedHealth said that they intend to comply with the conditions. Our goal is to offer Nevadans the most comprehensive range of cost-effective, innovative healthcare products and services in the Southwest, said Ken Burdick, president and chief executive officer of the companys health insurance unit, UnitedHealthcare, in a written statement.
Jonathan Bunker, president and chief operating officer of Sierra Health Services, added that the combined organization will build upon our legacy by providing more options for our members and expanded access to the largest national network of hospitals, physicians and other care providers.
The acquisition will create a formidable player in Nevada. UnitedHealth is the nations largest health insurer, with 70 million members and 2007 revenue of about $75 billion. Sierra Health is Nevadas largest health insurer, with more than 655,000 members and 2007 revenue of $1.9 billion. Sierra also owns the largest medical group in Las Vegas, Southwest Medical Associates, representing 250 physicians and other healthcare workers.
Nevada Gov. Jim Gibbons, who voiced strong misgivings about the deal, said in a written statement that both the Medicare Advantage divestiture and the $15 million charitable contribution will help protect consumers. Nonetheless, both the federal and state governments must remain vigilant in their efforts to ensure that the terms of any settlements or orders are strictly complied with.
UnitedHealth has been under fire in recent months for customer service and reimbursement issues. The company told investors in January that it expects to lose 400,000 customers nationally because of poor customer service. Also in January, California regulators said they would seek up to $1.3 billion in fines from UnitedHealth for 130,000 identified claims processing violations by PacifiCare after its 2005 sale to UnitedHealth. New York Attorney General Andrew Cuomo in February said he would sue UnitedHealth and probe 16 other insurers for alleged unlawful out-of-network medical charges (Feb. 18, p. 12).
UnitedHealth has said the company is working to overhaul its customer service divisions.
We anticipate the sorts of problems doctors in California and New York have experienced with UnitedHealth, Matheis said. But ... we hope they will change their ways.