In word and deed, the Biden government has ushered in an aggressive new era of antitrust enforcement. Less than a year ago, the heads of government repealed previous antitrust directives, sometimes without express replacement, and stopped pending mergers. It is difficult to judge such far-reaching political change, but in at least one of the most recent cases the powerful new supporters of antitrust law appear to be fighting on the side of common sense.
The case in question concerns the $ 13 billion acquisition of Change Healthcare by Optum, the fast-growing subsidiary of the health and insurance monolith UnitedHealth Group. Citi says Change provides billing and payment processing services to more than 2,000 payers and 1 million vendors, making it the largest independent provider of healthcare IT services for insurance reimbursement and revenue cycle management.
The US Department of Justice (DOJ) put a roadblock in March over the possible anti-competitive nature of the merger and issued a data request, which the parties have just complied with, and agreed to a 120-day delay. For the parties involved, the reason for the merger is clear: Change’s data and analysis platform will strengthen Optum’s own data analysis capabilities and consolidate Optum’s dominance in this area. The combined company would be able to better serve vendors and payers by allowing them to integrate key processes, giving Optum a clear edge over existing competition in revenue cycle and payment management services.
The companies say that change brings “key technologies, connections and advanced clinical decision-making, administrative and financial support skills” while Optum offers complementary “advanced analytics, extensive clinical expertise, innovative technologies and extensive experience in improving operational and clinical performance.” ”The result of the combination would theoretically lead to“ better health outcomes and experiences for all at lower costs ”.
Like the DOJ, competitors, attorneys general, and other industry watchers are understandably not as enthusiastic. An association representing 21,000 independent pharmacies claimed the deal would “give an already dominant company an unfair competitive advantage”. The American Hospital Association previously indicated that the deal would give UnitedHealth Group a better opportunity to favor its own UnitedHealthcare plans over those of its competitors, increase prices for patients, and leverage Change’s sensitive records to attract competitors to suppress.
To be clear: Change’s customers are both payers and providers. In providing billing and payment management services, Change sees the tariffs that competing payers pay to provider organizations and the premiums they charge customers. This data and the software platforms developed by Change would give UnitedHealthcare an upper hand over competing payers in negotiations with provider organizations and at competitive prices for group and individual insurance.
If, despite external signs of collaboration, the DOJ files a lawsuit to block the merger, which wouldn’t surprise me, they will be able to build a strong case against the new anti-competitive company. This is, after all, the largest payer in the US looking to acquire the largest provider of billing and payment management services. combined with increased leverage for UnitedHealthcare in contract negotiations with hospitals, would cost consumers anything but more money.
“The massive divestiture provision that the parties have agreed,” added the AHA General Counsel, “does not provide the pathway necessary to resolve the likely material illegality of the transaction; Rather, it strongly suggests that the deal cannot be ‘locked in’. “
Although both parties say they have “materially complied” with the DOJ, the lawsuit against this merger is still strong enough to warrant serious consideration and perhaps even an injunction. In a tightening antitrust environment, Optum will probably have to be content with smaller acquisitions and at the same time organically develop all the additional capabilities it needs.
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