The competition watchdog has warned that a proposed merger between two healthcare technology specialists would lead to higher costs and “worse outcomes for the NHS and ultimately patients and UK taxpayers”. The Competition and Markets Authority (CMA) found the £1.2bn deal for the US firm UnitedHealth to buy British rival EMIS could reduce competition to develop and supply digital and data analytics products to the health service. The NHS has embarked on a drive to digitise more of its systems and improve delivery of healthcare using sophisticated software. EMIS, which is headquartered in Leeds, is a large supplier of data management systems to the NHS, including the electronic patient record system used by the majority of NHS GPs in the UK. UnitedHealth owns Optum, which currently supplies software used by GPs when prescribing medicines as well as providing data analytics and advisory services used by the NHS to improve the provision of healthcare to patients. UnitedHealth announced the deal last June and the CMA began an initial investigation in January. Its investigation examined how the deal could affect competition to develop and supply analytics for the NHS. It found competition could be “substantially reduced” around analytics as well as software that enables the safe and effective use of medicines. The CMA noted that Optum and its competitors rely on connections to data held by EMIS and links into its electronic patient records. It said the merger could limit these connections and undermine competitors, in turn reducing the options for the NHS, pushing up prices and lowering the quality of products. Sorcha O’Carroll, a senior mergers director at the CMA, said: “The NHS and the millions of patients under its care depend on critical behind-the-scenes technology to ensure people are looked after and receive the treatment needed to get better. “This deal could see the NHS lose out on the benefits of competition, including innovation in these products and services and getting better value for money. UnitedHealth has the opportunity to address our concerns, otherwise it will progress to a more in-depth investigation.” The companies have five working days to tackle the watchdog’s concerns with legally binding proposals. The CMA would then have a further five days to consider whether it accepts these remedies or decides to refer the deal to a deeper phase 2 investigation. EMIS said it “now intends to engage with the CMA with the objective of agreeing suitable undertakings in lieu of a phase 2 reference”. A spokesperson for Optum UK said: “We note the announcement today by the CMA following the conclusion of their initial review of our proposed acquisition of EMIS plc. With the full support of EMIS, we look forward to working with the CMA to agree upon suitable undertakings in lieu of reference to phase 2 and obtaining the clearance necessary to successfully close our acquisition of EMIS. A further update is expected to be provided on or around 31 March 2023.” The merger comes against the backdrop of significant strains on the NHS and rolling strikes involving thousands of NHS workers including nurses, ambulance staff and physiotherapists. On Thursday, health unions hailed a victory after the government made a significant new pay offer aimed at ending NHS strikes in England.