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Why 4 M&A Deals Were Recently Stopped in Their Tracks

Analysis  |  By Jay Asser  
   February 26, 2024

Hospitals and health insurers have seen their plans to consolidate go awry after being under the microscope.

A flurry of healthcare transactions have been delayed or dissolved in the past few months, whether by regulatory or stakeholder pressure.

With financial headwinds influencing many organizations’ need to seek out partnerships, more dealmaking could be on the way and with it, increased scrutiny from regulators.

According to the annual Hart-Scott-Rodino Report by the Federal Trade Commission and Department of Justice, the agencies cracked down at their highest level in two decades by filing 50 merger enforcement actions in 2022, representing the most actions since 2001 (55).

Here are four deals that were tripped up lately:

SCAN Group and CareOregon

The health insurers mutually agreed to abandon their planned merger, which would have united them under HealthRight Group and created $6.8 billion in revenue to go with a membership base of 800,000.

SCAN Group CEO Sachin Jain told HealthLeaders in March of last year, four months after the move was announced, that the merger would allow the nonprofits to scale and take on their for-profit competitors.

However, following criticism from Oregon’s Medicaid Advisory Committee and politicians over the affect on taxpayer money and access to care, the organizations called it off.

BCBS Louisiana and Elevance

The $2.5 billion sale between the payers was met with skepticism from state regulators, who raised concerns over the impact on competition, premiums, and proceeds.

A big sticking point in the deal was Blue Cross Blue Shield of Louisiana (BCBSLA) switching to a for-profit entity, even after BCBSLA proposed a new reorganization plan in December to give the state more oversight.

The organizations appear open to continue pursuing a merger, but it’s clear it will require jumping through several regulatory hoops to bring it to life.

Marshfield Clinic and Essentia Health

Nearly six months after they signed an integration agreement to form a 25-hospital health system in the Midwest, the two sides mutually decided that “a combination at this time is not the right path forward.”

The only widely known regulatory scrutiny of the deal came from Minnesota Attorney General Keith Ellison, who said in October 2023 that his office would review the transaction’s compliance with state and federal antitrust laws.

It was the second instance of Marshfield Clinic pulling out of a potential merger in the past four-plus years, having previously withdrawn from a deal with Gundersen Health System to create a 13-hospital system.

John Muir and Tenet

In this case, the FTC stepped in with a motion to block the transaction that would have given John Muir Health full control of San Ramon Regional Medical Center.

A court ruling wasn’t necessary as the organizations chose to not challenge the agency and drop the deal, which then resulted in the FTC moving to dismiss the case.

Regulators argued that acquisition would have eliminated competition between the two sides in California’s I-680 corridor and led to higher prices.

Jay Asser is the contributing editor for strategy at HealthLeaders. 

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