AHA Seeks Anti-Trust Probe of UHG's Change Healthcare Acquisition

The hospital association says the deal would squash competition and raise costs for consumers and providers.

The American Hospital Association has asked the Department of Justice to launch an anti-trust investigation of United Health Group's proposed $8 billion acquisition of software and data analytics provider Change Healthcare.

In a seven-page letter Thursday to Richard Powers, acting assistant attorney general at DOJ's Antitrust Division, AHA General Counsel Melinda Reid Hatton raised concerns that the deal "threatens to reduce competition for the sale of healthcare information technology services to hospitals and other health care providers, which could negatively impact consumers and health care providers."

Reid Hatton said UHG and Change are aware that the deal "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."

Under the proposed acquisition, announced in January, UnitedHealth Group's tech services subsidiary OptumInsight would buy Change Healthcare in a deal valued at around $8 billion.

In a joint press release at the time of the announcement, Eden Prairie, Minnesota-based UnitedHealth, and Nashville-based Change Healthcare said the combined company "will more effectively connect and simplify core clinical, administrative and payment processes - resulting in better health outcomes and experiences for everyone, at lower cost."

Optum issued a statement Thursday night that skirted the issues raised in the AHA letter.

“Optum and Change Healthcare share a vision for better health outcomes and experiences for everyone, at lower cost. With distinct and complementary capabilities, this combination 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,” the company said.

Reid Hatton said the deal would consolidate and shift away competitively sensitive healthcare data from Change Healthcare, now a neutral third-party, to UGH subsidiary Optum.

"Because Optum's parent, UHG, also owns the largest health insurance company – UnitedHealthcare – in the United States, the combination of the Parties' data sets would impact (and likely distort) decisions about patient care and claims processing and denials to the detriment of consumers and health care providers, and further increase UHG’s already massive market power," Reid Hatton said.

The letter noted that UHG generated more than $242 billion in 2019, and that subsidiary UnitedHealthcare is the largest health insurance company in the nation, with more than 70 million members, and commercial, Medicare and Medicaid insurance plans.

Reid Hatton said UnitedHealthcare also has the largest or second largest market share in 20 states, with a network that includes 1.4 million physicians and other clinicians, and more than 6,500 hospitals.

Optum and its OptumHealth, OptumRx, and OptumInsight businesses generate about 50% of UHG's earnings, Reid Hatton said, and are expected to continue to drive UHGs revenues over the next three years.

Reid Hatton cited UHG's company reports boasting that OptumInsight provider health care IT services to more than 5,000 (9 out of 10) hospitals and 100,000 physicians, and processes more than 5 billion pages of clinical documents and processes data covering 240 million people each year.

Change Healthcare reported a net loss of nearly $59 million in Q1 2021, attributed largely to the negative impact of the coronavirus disease 2019 (COVID-19) pandemic on the business model, according to the company's latest earnings results released Wednesday afternoon.

Change Healthcare LLC, a joint venture previously held by McKesson that Change purchased in early March, delivered a net income of nearly $72 million and an adjusted net income of $141.5 million.