AHA sent a letter to the Department of Justice’s Antitrust Division expressing its serious concern with the adequacy of any remedy to resolve the anticompetitive impact of UnitedHealth Group’s acquisition of Change Healthcare on August 4, 2021.
The letter stated that the American Hospital Association (AHA) that there is inadequacy of potential remedies to resolve the substantial competitive concerns raised by UnitedHealth Group’s (UHG) proposed acquisition of Change Healthcare.
AHA had previously wrote that UHG and Change are well aware that their transaction is likely to violate the antitrust laws because, under the terms of their merger, they are required, in order to obtain DOJ approval, to divest assets that generate hundreds of millions of dollars in revenue. "We respectively maintain that the massive divestiture provision to which the parties have agreed does not provide the pathway needed to remedy the transaction’s likely substantial illegalities; rather, it strongly indicates that the deal cannot be “fixed'”.
Change’s most recent 10-K states:
Our platform and comprehensive suite of software, analytics, technology enabled services and network solutions drive improved results in the complex workflows of healthcare system payers and providers by enhancing clinical decision making, simplifying billing, collection and payment processes, and enabling a better patient experience.
Second, Change’s own securities filing state that the company’s success depends to a significant degree on “the advantages of scale” which “makes us a preferred technology partner." The company represented that its “size, scale, expertise, and presence throughout the healthcare ecosystem…” are key factors in its success.
Change also believes that its scale is needed to service hospitals’ requirements, as employers shift costs to patients through high-deductible plans.
UHG’s securities filing and investor reports similarly reflect the benefits of scale in providing healthcare IT services. According to UHG, Optum is one of the largest providers of healthcare IT services. More than 5,000 (9 out of 10) hospitals rely on Optum’s data analytic services. Optum has one of the broadest networks of payer connections – more than 2,300 – including connections with the top five health insurance companies in the United States. In addition, OptumInsight processes more than 5 billion pages of clinical documents and processes data covering nearly 250 million people annually.
Third, a divestiture, even one that involves assets that generate hundreds of millions of dollars (as contemplated by the parties here), will do nothing to resolve the substantial anticompetitive conflicts of interests that will be produced by UHG acquiring Change’s proprietary dataset. These conflicts include (1) greater ability for UHG to favor UnitedHealthcare’s health plans over those of competitors; (2) the potential that UHG will modify Change’s InterQual clinical support algorithms to favor payors over patients; and (3) the increased risk that UHG will gain access to competitors’ pricing and other competitively sensitive information. Moreover, allowing UHG to acquire Change’s data sets, even if a divestiture buyer also acquires them, is precisely the type of incomplete remedy that the Antitrust Division has warned will “increase the risk [that] a remedy will not preserve competition.”
In short, given the integrated nature of Change’s large set of offerings, its substantial scale, and UHG’s ability to misuse Change’s datasets to favor its own lines of business, it is highly unlikely that any “extracted” partial divestiture of Change’s business could reliably replace the substantial competitive pressure that Change places on UHG today.