Two Potential Insights into the Trump Administration’s Impact on the Healthcare Industry

The Trump administration's actions relative to two pending antitrust enforcement actions will provide early insight into the new Administration's stance on healthcare regulation. The pending matters, brought by the Biden Administration, reflect a strict stance on anti-competitive behaviors in the healthcare industry and aim to promote competition and reduce healthcare and prescription drug costs.

The first antitrust action concerns United Healthcare’s proposed $3.3 billion acquisition of Amedisys, which was announced on June 26, 2023. Amedisys provides home health, hospice, personal care, and high-acuity services in thirty-eight states. This acquisition would mark United Healthcare’s second major purchase in this industry segment, following its completion of a $5.4 billion acquisition of LHC Group in February 2023. Before United Healthcare’s acquisitions, LHC Group held a 4.4% market share, and Amedisys had a 5.0% market share in the home health industry. The combined market share raised concerns that Amedisys attempted to alleviate by proposing to divest over one hundred of its locations to Vital Caring, a competitor in the industry. However, on November 12, 2024, the Justice Department sued to prevent United Healthcare’s acquisition of Amedisys, asserting it would diminish consumer access to home health care and hospice services.

The second antitrust action involves the Biden Administration’s efforts to regulate the pharmaceutical industry. On September 20, 2024, the Federal Trade Commission (FTC) filed a lawsuit against Caremark Rx, Express Scripts, and OptumRx, the nation’s three largest pharmacy benefit managers (PBMs). The FTC alleges these PBMs engaged in anti-competitive practices favoring higher-priced insulin products. A central tenet of the FTC’s complaint is that the PBMs excluded specific lower-priced insulin options from their formularies to increase the rebates they received from insulin manufacturers. Furthermore, the complaint highlights a pattern whereby the PBMs favored higher-priced drugs, fully aware that this would increase out-of-pocket expenses for patients.

While the outcomes of these matters remain uncertain, resolving either matter during the Administration's early days could be pretty revealing. The Trump Administration’s position on these cases is unclear, but past Republican priorities have generally promoted deregulation, flexibility, choice, and accessibility in healthcare. How these matters proceed under the Trump Administration could indicate the direction in which healthcare regulation will take over the next four years.

A reduction in government regulation and oversight could fuel additional consolidation in the healthcare industry. This new wave of consolidation would likely increase the valuations in segments, like physician practices, that remain particularly attractive to large corporate and private equity buyers. The professionals at BFMV will continue to monitor these developments and provide ongoing analysis of their impact on healthcare valuations.