UnitedHealth Group isn’t giving up. Last Thursday (17 March) UHG filed with the US District Court in Washington, DC, responding to the US Department of Justice’s (DOJ) suit to stop their acquisition of Change Healthcare and folding into its Optum unit. Essentially, their argument in their public statement is that the acquisition would have multiple consumer benefits and big savings as the ‘healthcare system of the future’, including:
- We can increase efficiency and reduce friction in health care, producing a better experience and lower costs
- Helping health care providers and payers better serve patients by more effectively connecting and simplifying key clinical, administrative and payment processes
- Improve the quality of health care delivery, automate claims transactions, and accelerate payment between provider and payer
- Patients get a simplified consumer experience, lower costs, and get better point-of-care delivery due to improved adherence to best clinical evidence
In their view, it would be ‘economic suicide’ for Optum to be anti-competitive. UHG states that Optum’s business model is dependent upon their external customers, and if their competitively sensitive information is misused, they would stop using Optum’s services and turn to competitors.
The DOJ does not agree, of course. As to competition, they contend that Change is the only significant competitor to Optum in claims processing. The merger would be anti-competitive in other ways as well:
- Change is “United’s only major rival for first-pass claims editing technology — a critical product used to efficiently process health insurance claims and save health insurers billions of dollars each year — and give United a monopoly share in the market.” It would also give UHG the ability to raise competitors’ costs for that technology.
- Hospital data accounts for about half of all insurance claims. UHG with Change would have effective control of that ‘highway’.
- Change is also a major EDI clearinghouse, which facilitates the transfer of electronic transactions between payers and physicians, health care professionals, or facilities. UHG would have control of the EDI clearinghouse market.
It moves to the District Court and Judge Carl J. Nichols on 1 August. The trial will be 12 days–seven for DOJ, five for UHG/Change. With the delay, analyst Jailendra Singh of Credit Suisse expects Change to press UHG to sweeten the deal, such as a termination fee, versus an increase in purchase price. It’ll be an interesting summer for a bevy of lawyers! Forbes, Credit Suisse note
This Editor holds to her previous opinion that this merger is ‘one for the books–the ones marked ‘Nice Try, But No Dice’. No matter what, Change will have to change.