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DOJ proceeds with lawsuit seeking to block UHG-Change acquisition

by John R. Fischer, Senior Reporter | March 01, 2022
Business Affairs

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.

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