The only development in the Sierra Health - UnitedHealth that can be called substantial is the apparent lack of continued, public, and motivated opposition of the merger from entities other than the AMA and its associated groups. Joining the AMA in recent weeks as opponents are the Nevada State Medical Association, American Hospital Association, and Clark County Medical Society -- organizations that tend to represent physicians more than the general public.
Conspicuously absent is opposition from politicians within Nevada who have remained absolutely silent to this point. As of this entry, there does not appear to be a single Nevada public figure that has openly stated opposition to the merger, which is somewhat surprising given the AMA's vocal opposition. This deal is clearly not encountering the resistance experienced in the Pacificare-UnitedHealth merger.
The Las Vegas Sun published this article on June 6 suggesting that the DOJ's second request and associated opposition may be more serious then generally assumed. Some excerpts from that article include that following:
The Justice Department or FTC rarely challenges a proposed merger. It happened in only four of 50 investigations in 2005.
(Interviewed attorneys) said the most recent health care challenge may be a bad omen for United and Sierra Health.
"In 2006 the Justice Department obtained a consent decree requiring United to divest holdings when it merged with PacifiCare Health Systems. The new company gave up about 6,000 members in Boulder, Colo., and 54,000 members in Tucson . United's market share would have been much smaller in those cities than it would be in Las Vegas if it merged with Sierra Health. The new entity would have controlled 33 percent of the market share for health insurance sold to small-group employers in Tucson , and would have been responsible for more than 30 percent of total payments to physicians in Boulder.
While the Pacificare-UnitedHealth analogy certainly has some relevance to the pending merger, there really is no direct comparison with respect to overlapping operations and local/regional impact of the deals. As is well-known at this stage (presumably by the DOJ), UNH's presence in Nevada is very small, and almost negligible when compared to the overlaps in the Pacificare transaction. Furthermore, the issues in the Pacificare deal were fairly obvious from the outset -- divestitures were a given and factored into the merger process very early on.
Similarly, the second request in this merger was fully anticipated and can not be perceive!
d as a major concern this early in the process, particularly when factoring in the actual dynamics of the markets involved. The bottom line remains fully intact: the Nevada healthcare market will not be significantly altered by this transaction when viewed objectively. It is more a transfer of SIE's operations in Nevada (and other areas) to UNH, rather than a merger of competing entities. The fact that UNH is outpacing its rivals on a broad regional scale may be a problem to certain groups, but it will have minimal affect on consumers.
In short, this publication remains extremely positive on the deal's chances for obtaining DOJ consent without major difficulties. Completion in a September / October time frame remains the projected outcome at this stage.
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