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DOJ investigating UnitedHealth's $13B acquisition of Change

The extended review was prompted by a letter from the American Hospital Association raising possible antitrust concerns.

Jeff Lagasse, Associate Editor

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

The U.S. Department of Justice is pursuing an investigation of UnitedHealth Group's $13 billion acquisition of data analytics company Change Healthcare, spurred in part by a letter sent to regulators this month by the American Hospital Association raising antitrust concerns.

According to Change Healthcare in a Friday filing with the Securities and Exchange Commission, both it and UnitedHealth Group received a request for additional information from the DOJ in connection with the ongoing review of the merger, which pushed back the initial 30-day window of the investigation.

"The parties have been working cooperatively with the DOJ and will continue to do so," Change wrote in the filing.

To provide the DOJ with additional time for review, UnitedHealth Group voluntarily withdrew its premerger notification and report form effective February 18 and then refiled them on February 22. It received the request for information from the DOJ on March 24.


On March 17, the AHA wrote to Richard Powers, acting assistant attorney general of the DOJ's Antitrust Division, saying that the proposed merger threatens to reduce competition for the sale of healthcare information technology services to hospitals and other healthcare providers. That in turn could negatively impact consumers and health care providers, the AHA said.

"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," the letter stated.

Also at issue, wrote the AHA, is that the proposed transaction would produce a massive consolidation of competitively sensitive healthcare data and shift the data from Change, a neutral third party, to Optum, a subsidiary of UHG. 

Because Optum parent UHG also owns the largest health insurance company in the U.S. – UnitedHealthcare – the combination of the data sets would impact, and likely distort, decisions about patient care, claims processing and denials. AHA said this would be to the detriment of consumers and providers, and further increase UHG's 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.

The AHA said 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.

The merger was originally expected to close in the second half of this year, but the ongoing investigation could cause a delay.


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

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.

Twitter: @JELagasse
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