Experts say the Federal Trade Commission’s skepticism over tech-based healthcare mergers could spell trouble for Amazon and One Medical.
For years, the FTC has tried to prevent mergers between major hospital systems. Recent action suggests its focus could be expanded to include mergers involving digital healthcare providers and major tech companies.
Erik Gordon, an assistant professor at the University of Michigan’s Ross School of Business, said the FTC may view companies sharing patient data with third parties as an anti-competitive practice and use it as an excuse. due to prevent these proposed mergers.
“There’s a lot of uncertainty about what kinds of combinations you can make in the healthcare sector,” says Gordon. “If you’re trying to build a new kind of healthcare provider, how sure can you be that the government will allow it? If I were to advise one of these companies, I would ask them to include a large parting fee in the contract in case the deal stalls.”
In September, the FTC began investigating tech giant Amazon’s $3.9 billion merger plan with One Medical, a combined primary care company.
Earlier this month, The Wall Street Journal reported that the FTC was preparing a possible antitrust lawsuit against Amazon. A separate report from DealReporter this month said the agency is hiring outside economists to review the proposed Amazon-One Medical merger. If the deal is not approved by federal regulators, One Medical will owe $195 million.
An Amazon spokesperson declined to comment. Spokespersons for One Medical and the FTC did not respond to requests for comment.
The federal government has been looking at a number of well-known healthcare mergers in the last year, particularly vertical ones. In June, the FTC requested more information about UnitedHealth Group’s proposed $5.4 billion acquisition of home health care provider LHC Group. In October, the Department of Justice probed CVS Health’s possible $8 billion acquisition of Signify Health, a technology company that provides at-home health risk assessments.
“These combinations will raise a whole new set of antitrust questions,” says Gordon.
Experts aren’t sure if Amazon’s plan to buy One Medical is at the center of a potential antitrust lawsuit. But what is clear is that regulators have been looking increasingly closely at the use of health data by all tech companies. Earlier this month, the FTC accused GoodRx of sharing consumers’ personal health information with Facebook, Google and other third parties.
Robert Miller, a partner at law firm Hooper, Lundy & Bookman, said for big tech companies, scrutiny will be even higher and could affect any mergers already planned. plan.
“The [Biden] The administration has signaled that it is not only very interested in healthcare, but also very interested in scrutinizing the role big technology plays in the US economy,” Miller said. “This is not just a merger between two companies operating in the healthcare sector… The FTC can see this as an example of the interest of the tech giants in the healthcare sector. Strong.
Gordon says FTC Chair Lina Khan is likely to interpret antitrust law differently than her predecessors at the agency, which could mean more rigorous scrutiny of Amazon and One Medical. . Khan wrote a legal article in 2017 to bring an antitrust lawsuit against Amazon.
“[Khan] made it clear that she had a much broader view of what merger law is, or what merger law should be,” Gordon said. “She’s informed people that she’s going to enforce the law the way she thinks it’s read. And she’s willing to lose the court case to try and do this.”
In addition to Amazon’s intention to acquire One Medical, Miller said interest in large-scale deals could have a downstream impact on smaller companies.
“Whenever there is antitrust enforcement action, I would say it has an external impact on the market,” Miller said. “For every deal that is Amazon and One Medical, you have many smaller deals that are still under antitrust review.”
According to Miller, big deals are unlikely to be derailed by the cost of protecting them. The benefits of a smaller merger can be consumed by legal fees, especially those that require multiple stages.
“Anyone looking at one of those smaller deals can take that into account, so I wonder if it will reduce capital inflows into healthcare or if it will have any impact,” Miller said. any negative impact on healthcare transactions”. .
