UnitedHealth conquers Nevada

by Anne Law, February 29th, 2008, 6:09 am

The Department of Justice approved UnitedHealth’s acquisition of Nevada insurer Sierra Health Tuesday, allowing the top US health plan provider to widen its girth yet again despite protests from state and national officials.

The closing of the deal is contingent on UnitedHealth divesting its individual Medicare Advantage plan policies in the Las Vegas area, where it and Sierra Health together control more than 90% of the Medicare alternative plan market. The assets will go to Humana with hopes that the provider will bolster competition. Whether the divestiture will be enough for parties that avidly protested the deal and ultimately delayed its closing is yet to be seen.

UnitedHealth has been on an acquisition rampage for most of this decade, and concerned parties have worried not only over unfair market shares but also over the possibility that Nevada health care customers would suffer as a result of the merger, much as customers in California have suffered from UnitedHealth’s $9 billion acquisition of PacifiCare two years ago.

UnitedHealth effectively swallowed PacifiCare’s operations and parceled them out to various other business units, but in the process created a mountain of administrative errors. The company is facing fines from California regulators over mishandled claims (its practices are being scrutinized in other markets as well), and many fear that the latest acquisition could result in a similar customer service downfall.

This is not the only acquisition on UnitedHealth’s buffet table — it recently scarfed down Fiserv’s health businesses, and it has a deal in the works to add Midwest provider Unison Health. It would seem that perhaps the company cannot get enough of growth and has little care for customer concerns over whether it can effectively manage such a large mass of combined policies.

UnitedHealth has admitted its blunder during the PacifiCare integration, and one would hope that the health care giant has learned its lesson and will proceed with care in its present and future business combinations. A statement on the Sierra Health web site outlines that while the acquisition is a done deal, its integration will be held off until UnitedHealth divests its Las Vegas ops. I’m betting that UnitedHealth won’t be able to keep its finger out of the Sierra Health pie for long though.