UnitedHealth Group subsidiary Optum health services signed a $5.4 billion acquisition deal for home healthcare business LHC Group, The Wall Street Journal reported.
LHC Group is one of the biggest home healthcare agencies in the U.S. Optum’s portfolio of companies includes other home healthcare firms in addition to physician groups and surgical centers. The acquisition is expected to be officially announced on Tuesday (March 29) and close in the second half of this year.
“This trend has really only just begun, of how much care can truly be delivered in the home,” Optum Health CEO Wyatt Decker told the WSJ. “We can give care in the home, which is a lower-cost setting … than nursing homes or more advanced care facilities.”
Headquartered in Lafayette, Louisiana, LHC operates in 37 states and cares for more than 500,000 patients every year. Many of its home healthcare and hospice programs are operated in partnerships with hospital networks.
Related: UnitedHealth Group’s $13B Acquisition of Change Healthcare in DOJ Crosshairs
The deal coincides with an ongoing antitrust lawsuit by the U.S. Department of Justice (DOJ) regarding UnitedHealth’s proposed $13 billion acquisition of health technology firm Change Healthcare.
The lawsuit’s position is that the acquisition would give UnitedHealth an unfair advantage because it would be able to see the rules its competitors use to process claims along with other data. UnitedHealth maintains that the Change deal would result in better prices and services for consumers and that the DOJ lawsuit is rooted in a “deeply flawed position,” PYMNTS reported.
UnitedHealth’s UnitedHealthcare is the biggest health insurance firm in the U.S. and has been focusing on increasing the role of home healthcare and emphasizing it as a less expensive option compared to nursing homes. Home healthcare is also touted as a cost-effective means of reducing hospital stays, especially among Medicare users, a lucrative market for the industry, according to the report.
Humana, UnitedHealthcare’s biggest competitor, recently acquired a 60% stake in Kindred at Home for roughly $5.7 billion. Humana claims that it is the biggest home healthcare provider in the country, according to the WSJ report.
Home healthcare spending is anticipated to reach $226.4 billion in 2030, according to the Centers for Medicare and Medicaid Services. Spending in 2021 is estimated at $121.6 billion.
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