The DOJ has filed a lawsuit to block UHG from acquiring Change
DOJ proceeds with lawsuit seeking to block UHG-Change acquisition
March 01, 2022
by John R. Fischer, Senior Reporter
The U.S. Department of Justice is suing to block UnitedHealth Group from acquiring Change Healthcare for $13 billion.
Filed in the U.S. District Court for the District of Columbia, the agency claims in its civil suit that the deal would harm competition in commercial health insurance markets and in the sale of technology used by insurers to process claims and reduce healthcare costs.
Its position mirrors those of competitors of UHG and Change, who have long claimed that such a deal would hurt competition in claims clearinghouse, payment accuracy, revenue cycle management and clinical decision support services, and negatively impact healthcare IT sales to providers. They also say it would create a massive monopoly due to UGH’s ownership of UnitedHealthcare, the largest insurer in the country, and by giving it access to vast amounts of competitively sensitive information from rival insurers.
These consequences would lead to price hikes for hospitals and lower quality of care, said Attorney General Merrick B. Garland in a statement. “If America’s largest health insurer is permitted to acquire a major rival for critical healthcare claims technologies, it will undermine competition for health insurance and stifle innovation in the employer health insurance markets.”
In a statement, Change expressed its dissatisfaction with the Justice Department’s decision. “We are aware and disappointed that the DOJ has filed litigation to prevent Change Healthcare from closing our merger with UHG. As we previously disclosed, UHG extended our merger agreement through April 5, 2022. We will continue our support of UHG in working toward closing the merger as we comply with our obligations under the merger agreement.”
If allowed, the deal would combine Change Healthcare’s technology for integrating evidence-based clinical criteria directly into clinician workflow with Optum’s clinical analytics expertise and Individual Health Record. This, according to UHG, would help clinicians make faster and more informed decisions for quality care at affordable pricing.
Announcing their intent to merge in January 2021, the two also planned to integrate Optum’s advanced data analytics with Change Healthcare’s intelligent healthcare network. This would draw more insights from billions of claim transactions for faster and more accurate services. Additionally, they would combine Optum’s automated payment network with Change Healthcare’s payment capacities to simplify claims transactions, create more transparent payment systems in real time and enhance IT workflow across healthcare systems.
The Justice Department claims that allowing the deal to go through would put United in a position where it could use its rivals’ information to gain an unfair advantage in the health insurance market and process and deny claims. It also would eliminate United’s only major rival in first-pass claims editing technology, which is used to process health insurance claims to save insurers billions each year.
Additionally, Change provides electronic data interchange and clearinghouse services to a range of parties in the healthcare industry, including United’s major health insurance rivals. The DoJ says that acquiring it would allow United to control and manipulate the direction of innovation in the industry for the foreseeable future.
“The proposed transaction threatens an inflection point in the healthcare industry by giving United control of a critical data highway through which about half of all Americans’ health insurance claims pass each year,” said Principal Deputy Assistant Attorney General Doha Mekki of the Justice Department’s antitrust division. “Unless the deal is blocked, United stands to see and potentially use its health insurance rivals’ competitively sensitive information for its own business purposes and control these competitors’ access to innovations in vital health care technology.”
Along with UnitedHealthcare, UHG owns Optum Health, a large network of healthcare providers located throughout the country; OptumRx, a large pharmacy benefit manager; and OptumInsight, a healthcare technology business. Its revenues in 2021 were $288 billion, while Change’s were $3.4 billion.
Several challenges have been made over the past year in regard to their deal. Following the announcement of the transaction, the American Hospital Association called on the DoJ to launch an investigation, which it later extended.
The DoJ was also said to be considering a lawsuit to block the deal last summer, which prompted UHG and Change to strike an agreement with the agency to save their deal. The two pledged not to complete the merger for 120 days after they have complied with a request for information for further review of the potential deal. It also pushed back its desired closing date from the end of 2021 to April 2022.
Despite its efforts, news this week indicated that the DOJ was planning to file a suit against the deal, with sources familiar with the matter saying that it had not found any divestitures to assuage antitrust concerns about the deal, and that both companies were expected to meet with it for a “last rites” meeting. Shares for Change dropped by 3% following this news.
"Change Healthcare and Optum, together, can increase efficiency and reduce friction in health care, producing a better experience and lower costs. The department’s deeply flawed position is based on highly speculative theories that do not reflect the realities of the healthcare system. We will defend our case vigorously,” said UHG in a statement.
Filed in the U.S. District Court for the District of Columbia, the agency claims in its civil suit that the deal would harm competition in commercial health insurance markets and in the sale of technology used by insurers to process claims and reduce healthcare costs.
Its position mirrors those of competitors of UHG and Change, who have long claimed that such a deal would hurt competition in claims clearinghouse, payment accuracy, revenue cycle management and clinical decision support services, and negatively impact healthcare IT sales to providers. They also say it would create a massive monopoly due to UGH’s ownership of UnitedHealthcare, the largest insurer in the country, and by giving it access to vast amounts of competitively sensitive information from rival insurers.
These consequences would lead to price hikes for hospitals and lower quality of care, said Attorney General Merrick B. Garland in a statement. “If America’s largest health insurer is permitted to acquire a major rival for critical healthcare claims technologies, it will undermine competition for health insurance and stifle innovation in the employer health insurance markets.”
In a statement, Change expressed its dissatisfaction with the Justice Department’s decision. “We are aware and disappointed that the DOJ has filed litigation to prevent Change Healthcare from closing our merger with UHG. As we previously disclosed, UHG extended our merger agreement through April 5, 2022. We will continue our support of UHG in working toward closing the merger as we comply with our obligations under the merger agreement.”
If allowed, the deal would combine Change Healthcare’s technology for integrating evidence-based clinical criteria directly into clinician workflow with Optum’s clinical analytics expertise and Individual Health Record. This, according to UHG, would help clinicians make faster and more informed decisions for quality care at affordable pricing.
Announcing their intent to merge in January 2021, the two also planned to integrate Optum’s advanced data analytics with Change Healthcare’s intelligent healthcare network. This would draw more insights from billions of claim transactions for faster and more accurate services. Additionally, they would combine Optum’s automated payment network with Change Healthcare’s payment capacities to simplify claims transactions, create more transparent payment systems in real time and enhance IT workflow across healthcare systems.
The Justice Department claims that allowing the deal to go through would put United in a position where it could use its rivals’ information to gain an unfair advantage in the health insurance market and process and deny claims. It also would eliminate United’s only major rival in first-pass claims editing technology, which is used to process health insurance claims to save insurers billions each year.
Additionally, Change provides electronic data interchange and clearinghouse services to a range of parties in the healthcare industry, including United’s major health insurance rivals. The DoJ says that acquiring it would allow United to control and manipulate the direction of innovation in the industry for the foreseeable future.
“The proposed transaction threatens an inflection point in the healthcare industry by giving United control of a critical data highway through which about half of all Americans’ health insurance claims pass each year,” said Principal Deputy Assistant Attorney General Doha Mekki of the Justice Department’s antitrust division. “Unless the deal is blocked, United stands to see and potentially use its health insurance rivals’ competitively sensitive information for its own business purposes and control these competitors’ access to innovations in vital health care technology.”
Along with UnitedHealthcare, UHG owns Optum Health, a large network of healthcare providers located throughout the country; OptumRx, a large pharmacy benefit manager; and OptumInsight, a healthcare technology business. Its revenues in 2021 were $288 billion, while Change’s were $3.4 billion.
Several challenges have been made over the past year in regard to their deal. Following the announcement of the transaction, the American Hospital Association called on the DoJ to launch an investigation, which it later extended.
The DoJ was also said to be considering a lawsuit to block the deal last summer, which prompted UHG and Change to strike an agreement with the agency to save their deal. The two pledged not to complete the merger for 120 days after they have complied with a request for information for further review of the potential deal. It also pushed back its desired closing date from the end of 2021 to April 2022.
Despite its efforts, news this week indicated that the DOJ was planning to file a suit against the deal, with sources familiar with the matter saying that it had not found any divestitures to assuage antitrust concerns about the deal, and that both companies were expected to meet with it for a “last rites” meeting. Shares for Change dropped by 3% following this news.
"Change Healthcare and Optum, together, can increase efficiency and reduce friction in health care, producing a better experience and lower costs. The department’s deeply flawed position is based on highly speculative theories that do not reflect the realities of the healthcare system. We will defend our case vigorously,” said UHG in a statement.