Legal, Health IT, Hospitals

Hospitals to DOJ: UnitedHealth’s purchase of Change Healthcare will curtail competition

The American Hospital Association is urging the Justice Department to thoroughly review UnitedHealth’s intended acquisition of Change Healthcare. The transaction would reduce competition in the health IT arena and result in higher prices and lower quality of care, the hospital group says.

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A multibillion-dollar acquisition involving an insurance giant and health technology company has the country’s most prominent hospital group very concerned.

The American Hospital Association sent a letter to the Department of Justice Wednesday, saying that Minnetonka, Minnesota-based UnitedHealth Group’s plans to purchase Change Healthcare through its subsidiary Optum is anticompetitive.

Optum plans to purchase Change Healthcare in a $13.5 billion all-cash transaction, adding the health technology company’s software, data analytics capabilities, research and revenue cycle management offerings to its roster. The deal, announced in January, is expected to close in the second half of the year. 

The hospital association — which includes nearly 5,000 members — is urging the Justice Department’s Antitrust Division to conduct a thorough review of the transaction, saying it may reduce competition in the sale of health IT products and services to providers.

Specifically, the acquisition could lower competition in the following areas, the group said in the letter:

  • Claims clearinghouse services
  • Payment accuracy services
  • Revenue cycle management services
  • Clinical decision support services

Change Healthcare, based in Nashville, Tennessee, serves as a “key independent competitor that is similar in size to Optum in these essential services,” which means the acquisition will result in higher prices for providers and lower quality of care for patients, the letter states.

While Optum did not directly comment on the letter, it appears to hold the opposite view.

The acquisition “will help healthcare providers and payers better serve patients by more effectively connecting and simplifying key clinical, administrative and payment processes to the benefit of the health system and the people we serve,” wrote an Optum spokesperson, who declined to be named, in an email.

The statement added that “Optum and Change Healthcare share a vision for better health outcomes and experiences for everyone, at lower cost.”

Change Healthcare did not respond to a request for comment.

Reducing competition in the sale of products and services is not the American Hospital Association’s only concern.

The acquisition would consolidate “competitively sensitive” healthcare data and shift it from Change Healthcare, a third-party, to Optum, a subsidiary of UnitedHealth Group, the hospital group said.

“Change’s independence from payers and its function as an ‘honest broker’ is another critical element of competition,” the association argued.

UnitedHealth Group’s ownership of UnitedHealthcare — the largest health insurer in the country by membership — adds to Change’s loss of independence.

Combining Change and Optum’s data sets “would impact (and likely distort) decisions about patient care and claims processing and denials to the detriment of consumers and healthcare providers, and further increase UHG’s already massive market power,” the letter states.

Optum has said that it will maintain an “informational firewall” between OptumInsight and UnitedHealth Group, but it has not demonstrated that the firewall is robust and will prevent information sharing, the group said.

This is the second time this year that the American Hospital Association has accused UnitedHealth of engaging in anticompetitive behavior.

In February, the hospital group sent letters to the Centers for Medicare & Medicaid Services and the Federal Trade Commission, asking the agencies to review two UnitedHealthcare policies that they claimed could block market competition and access to care.

Picture: mikdem, Getty Images