The FederalTrade Commission said Wednesday that it had signed off on thetie-up after UnitedHealth agreed to sell assets to resolvecompetition problems in the Las Vegas area. (Photo:Shutterstock)

UnitedHealth Group Inc. won U.S. antitrust approval for its $4.3billion acquisition of DaVita Inc.'s physician practicegroup, letting the health conglomerate close a deal it struck 19months ago to expand its business of taking care of patientsdirectly.

The Federal Trade Commission said Wednesday that it had signedoff on the tie-up after UnitedHealth agreed to sell assets toresolve competition problems in the Las Vegas area. UnitedHealth,the U.S.'s biggest health insurer, will add DaVita's medicalclinics to the 35,000 physicians who already work for its Optum unit.

Related: About that CVS-Aetna merger…

DaVita shares closed up 3.1 percent to $51.27.UnitedHealth rose 1.8 percent to $250.19.

Policy makers have become more concerned about how consolidationin the health care industry affects the price of care. A Trumpadministration report in December took note of “a level ofconsolidation that is changing the competitive landscape for theworse,” and recommended reducing regulations and making otherchanges to improve competition.

Optum said in a statement that the unit provides services toabout 80 health-care plans and a total of 16 million patients. Thecompany is one of the U.S.'s biggest employers of doctors.

The settlement with the FTC followed a separate agreementannounced Wednesday with Colorado Attorney General Phil Weiser.

Weiser said that without condition imposed on the deal,UnitedHealth would gain the power to raise prices on elderlyconsumers enrolled in Medicare plans offered by private companies,known as Medicare Advantage. He criticized the FTC for not takingaction in his state, saying the agency “declined to seek anyremedies to protect Colorado consumers.”

“The merger would result in reduced competition, higherhealth-care costs, reduced benefits, and fewer choices forseniors,” Weiser said. “We are taking action today to protect olderColoradans from increased prices and decreased options in healthcare.”

Under the FTC settlement UnitedHealth will sell DaVita'shealth-care provider organization in the Las Vegas area toIntermountain Healthcare, a Utah-based health-care provider andinsurer. Without the sale, the deal would increase costs toMedicare Advantage insurers, the FTC said.

Consolidation concern

The deal was first announced in December 2017 at a price of $4.9billion. A year later, the companies reduced the transaction priceto $4.3 billion, “as a result of underlying business performanceand in an effort to expedite” the antitrust review, DaVita said ina regulatory filing.

UnitedHealth has built up Optum, which includes physicianpractices, drug benefits and consulting, mostly through small,local deals. It already has doctors in many areas where DaVitaMedical Group operates, including Southern California, Las Vegasand Florida, according to the companies' websites.

Under the agreement with Colorado, UnitedHealth will lift anexclusive contract with hospital chain Centura Health for at leastthree-and-a-half years. That will give seniors enrolled incompeting Medicare Advantage plans an additional health-careprovider to choose from. Colorado is also requiring that DaVitaMedical Group's agreement with insurer Humana Inc. be extendedthrough at least 2020. Humana competes against UnitedHealth.

Peter Grauer, the chairman of Bloomberg LP, the parent companyof Bloomberg News, is a member of DaVita's board.

–With assistance from Joshua Fineman.

Read more: 

• FTC calls for more aggressive scrutiny of healthcare mergers
• How broker consolidation and industry alliances arechanging the industry
• Bucking merger trend, Walgreens doubles down onpartnerships

Copyright 2019 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.