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AHA signals opposition to Optum, UnitedHealthGroup's acquisition of Change Healthcare

Optum would have competitive payers' data to inform its reimbursement rates, giving UHC more clout in negotiations.

Jeff Lagasse, Associate Editor

(Photo by Martin Barraud/Getty Images)(Photo by Martin Barraud/Getty Images)

Optum and Change Healthcare announced in January their intent to merge, uniting two of the nation's largest technology and service companies, but the move has now received pushback from the American Hospital Association, which said the proposed deal raises antitrust concerns.

In a letter sent Wednesday to Acting Assistant Attorney General Richard Powers of the U.S. Department of Justice's Antitrust Division, AHA General Counsel Melinda Reid Hatton said the deal threatens to reduce competition for the sale of healthcare information technology services to hospitals and other providers. That, in turn, would negatively impact patients and providers, she wrote.

"Indeed, the parties are well aware that the transaction presents substantial antitrust concerns because the transaction agreement provides that the parties will divest assets that generate hundreds of millions of dollars in revenue in order to obtain DOJ approval," wrote Hatton. 

She claimed the proposed action would result in a large-scale consolidation of "competitively sensitive" healthcare data, and shift the data from Change Healthcare, a neutral third party, to Optum. 

Optum is a subsidiary of UnitedHealth Group, which owns UnitedHealthcare, the largest health insurance company in the U.S. One of the big sticking points for the AHA is that the combination of data sets might distort decisions about patient care and claims processing and denials, to the alleged detriment of consumers and providers, while increasing UHG's already considerable market power.

In laying out the antitrust argument, the AHA pointed to Optum acquisitions that are either proposed or have already taken place. For instance, the company recently announced that it's acquiring the 715-physician group Atrius Health, the largest independent physician group in Massachusetts. Optum is also reportedly in talks to snag Landmark Health, a physician-led in-home medical group operating in 17 states.

"Unlike acquisitions by not-for-profit hospitals, Optum-acquired physicians are under no obligation to serve Medicare, Medicaid or destitute patients," wrote Hatton.

The transaction, according to the AHA, will reduce head-to-head competition for health IT services, including claims clearinghouse services, payment accuracy services, revenue cycle management services and clinical decision support services, which include evidence-based clinical decision support resources for determining admissibility, length-of-stay and discharge.

"In short, Change currently serves as a check on the integrity of Optum's data," Hatton wrote. "Without a neutral third-party competitor, Optum will have greater ability to use its data to support UHG initiatives that increase its market power and enhance its profits at the expense of meaningful improvements to patient care."

She added that, post-merger, Optum will have strong financial incentives to use competitive payers' data to inform its reimbursement rates and set its competitive clinical strategy, which will reduce competition among payers and harm hospitals and other providers.

For example, Optum could share pricing information from competitor claims that pass through its clearinghouse to help inform UnitedHealthcare's negotiations with providers. 

WHAT'S THE IMPACT?

In announcing the move in January, UHG said the two companies will more effectively connect and simplify core clinical, administrative and payment processes.

The acquisition is expected to be accretive to UnitedHealth Group's net and adjusted earnings per share in 2022, advancing strongly in subsequent years, Optum said.

This is inclusive of investments to accelerate technology, system and product integration, and development activities to deliver the value of this combination more quickly to all healthcare system stakeholders.

At the time, Optum touted its modern analytics, comprehensive clinical expertise, innovative technologies and experience in improving operational and clinical performance. Optum has an estimated 5,000 hospitals in its portfolio and about 300 health plans. Asked a few years ago how many insurers used its services, an Optum executive said, "All of them."

UnitedHealth Group's insurance arm, UnitedHealthcare, is considered the largest insurer in the nation. Its information and technology-enabled health services business, Optum delivers integrated solutions to improve population health

Change Healthcare focuses on accelerating the transformation of the healthcare system through data and analytics-driven solutions to improve clinical, financial, administrative and patient engagement outcomes.

Neither UHG nor Optum immediately returned requests for comment.

THE LARGER TREND

In 2017, Optum signaled its intent to acquire Advisory Board, paying $1.3 billion for its well-known healthcare operation.

Optum plays across a wide spectrum of healthcare, which meant merging with Advisory Board offered the former the opportunity to expand research and launch best practices programs – the kind Advisory Board already offers providers – into other segments, like life sciences and payers.

Optum's wealth of data and analytics was expected to filter into Advisory Board's research business to substantially enhance its work for providers.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com