As merger-and-acquisition professionals gear up for more activity in the health-care sector, they also expect the Obama administration will make good on campaign promises to intensify the government's antitrust scrutiny of deals.

M&A insiders for months have predicted that passage of health-care overhaul legislation would lift uncertainty and relieve pent-up deal demand. At the same time, some antitrust attorneys already see signs the Obama administration is more closely examining mergers--even done deals--than the previous administration did.

"The Obama administration, even before Obama was elected president, indicated that antitrust enforcement was going to be significantly increased, and one area that Obama mentioned specifically was mergers among health plans," said Jeff Miles, health-care antitrust expert and principal at the Ober Kaler Grimes & Shriver law firm.

"I think probably there is more pressure on the [Justice Department's] antitrust division to examine and challenge these mergers than in the past, so I think any health-plan merger with any significant horizontal overlap is going to be investigated," and there's a greater chance they'll be challenged, predicted Miles, a veteran of the Justice Department's antitrust division.

Earlier this month, a Blue Cross Blue Shield of Michigan subsidiary abandoned its attempt to acquire Physicians Health Plan of Mid-Michigan after the Justice Department said it would file an antitrust lawsuit to block the deal. The department said the merger would have given Blue Cross-Michigan control of nearly 90% of the Lansing, Mich., health-insurance market.

It was the first time in years the Justice Department had blocked a health-plan merger. The Bush administration challenged three health-plan mergers, ultimately allowing the transactions to proceed, with divestitures ordered, Miles said.

Some antitrust attorneys suggest the Bush administration might have given similar scrutiny to the Michigan merger, which they saw as a case with clear-cut anticompetitive problems. Nonetheless, it does indicate, Miles said, that "the [DOJ] antitrust division is very interested in health-plan mergers."

Fiona Schaeffer, antitrust partner with Weil Gotshal & Manges LLP, said the DOJ's action underscored the federal government's interest in preserving competition in health-care, even in local markets. And Steven Kaufmann, an antitrust specialist and chair of Morrison & Foerster's global litigation department, said the Michigan case appears to signal a more assertive Justice Department.

In the past, the government accepted the argument that mergers would lead to greater efficiencies and lower costs for consumers, when instead they have resulted in escalating profits and premiums, said David Balto of the Center for American Progress, a veteran of the Federal Trade Commission and the Justice Department's antitrust division.

"It's about time that the Justice Department said no to one of these mergers," Balto said.

Schaeffer also cited a trend in the government challenging consummated mergers. Last year, the FTC challenged as anticompetitive Carilion Clinic's acquisition of two outpatient clinics in Roanoke, Va., reaching a settlement requiring divestiture. And in early March, an FTC administrative law judge ordered Polypore International Inc. (PPO) to divest a battery separator manufacturer it had acquired.

"The message I think is the antitrust risk does not end when your deal has closed," Schaeffer said. That risk, while always there, seems greater in the current administration, she said.

The FTC last year informed CVS Caremark Corp. (CVS) that it was investigating business practices at the company, although it hasn't publicly elaborated. The ongoing probe followed complaints by competitors, consumers and lawmakers that the company--formed by the 2007 merger of drug-store chain CVS and pharmacy benefit manager Caremark Rx--was engaging in anticompetitive practices.

Attorney Miles said that, anecdotally, the FTC also seems to be more active in investigating hospital mergers, with a number of proposed deals currently being examined.

"The Obama administration has rattled a lot of sabers," Miles said, "but it's still early yet," with not many public enforcement actions. "A lot of us are waiting to see if the other shoe drops."

Nonetheless, the regulatory hurdles don't seem to be damping interest in mergers.

"There is an awful lot of interest in the health-care services sector," particularly in those companies that can help reduce costs, said Michael Neuberger, managing director and head of health-care investment banking at BMO Capital Markets.

-By Dinah Wisenberg Brin, Dow Jones Newswires, 215-656-8285; dinah.brin@dowjones.com