AHA Expresses Antitrust Concerns About Change Healthcare Acquisition
The American Hospital Association (AHA) wrote a letter to the Antitrust Division of the U.S. Justice Department to express its concern with UnitedHealth Group’s (UHG) plan to purchase Change Healthcare and merge it with its Optum subsidiary.
In a deal valued at approximately $13 billion, UHG announced in January it had agreed to purchase healthcare technology company Change Healthcare in order to combine it with UnitedHealth’s OptumInsight analytics group.
UnitedHealth (NYSE: UNH) said Optum and Nashville-based Change Healthcare (NASDAQ: CHNG) complement each other well. Change Healthcare brings key technologies, connections and advanced clinical decision, administrative and financial support capabilities, enabling better workflow and transactional connectivity across the healthcare system. Eden Prairie, Minn.-based Optum brings analytics, comprehensive clinical expertise, innovative technologies and experience in improving operational and clinical performance.
The AHA, however, requested that the Antitrust Division conduct a thorough investigation of the proposed transaction because it claims the deal threatens to reduce competition for the sale of healthcare information technology services to hospitals and other healthcare providers, which could negatively impact consumers and healthcare providers.
“The proposed acquisition also would produce a massive consolidation of competitively sensitive healthcare data and shift such data from Change Healthcare, a neutral third party, to Optum, a subsidiary of UHG,” the letter stated. “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 healthcare providers, and further increase UHG’s already massive market power.”
The letter claims that the transaction would result in the loss of substantial head-to-head competition between Optum and Change for the following IT health services:
• Claims clearinghouse services, which include eligibility and enrollment verification, claims filing, and payer denial or payment processing.
• Payment accuracy services, which include coordinating benefits, pre-payment review and insight related to co-payments, coverage, other insurance, proper billing coding, payment auditing and recovery.
• Revenue cycle management services, which include eligibility and coverage, clinical triage including utilization, pre-authorization and proper billing codes, and using real-time data, analytics and algorithms to provide visibility into performance and financial outcomes and benchmarking against peers for industry averages.
• Clinical decision support services, which include evidence-based clinical decision support resources for determining admissibility, length-of-stay and discharge.
These types of services offered by OptumInsight and Change are a must have for healthcare providers to navigate byzantine insurance reimbursement and ensure accurate and timely payment, the AHA said.
In addition, without a neutral third-party competitor, the letter said, 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.
When the deal was announced, Neil de Crescenzo, president and CEO of Change Healthcare, issued a statement saying, “This opportunity is about advancing connectivity and accelerating innovations and efficiencies essential to a simpler, more intelligent and adaptive health system. We share with Optum a common mission and values and importantly, a sense of urgency to provide our customers and those they serve with the more robust capacities this union makes possible.” Upon the deal’s closing, he will serve as OptumInsight’s chief executive officer, leading the combined organization.
