UnitedHealth Group, the largest health insurance company in the U.S., wants to acquire Change Healthcare, one of the largest managers of electronic healthcare data in the U.S., for $13 billion. However, the Department of Justice (DoJ) has halted the deal. President Biden’s DoJ, which has been hesitant to approve major M&A deals of late, claims that the Minnetonka, MN-based UnitedHealth Group is already a behemoth and that it would gain too much power if it were to acquire the Tennessee-based Change Healthcare. UnitedHealth Group claims that the deal would be a win for all stakeholders and that the DoJ has little basis for its argument.
UnitedHealth Group posits that its acquisition of Change Healthcare could allow it to deliver healthcare services in a more efficient manner. Change Healthcare operates the largest electronic data interchange (EDI) clearinghouse in the U.S. Healthcare providers submit claims for payment and insurers provide remittances via the EDI. The EDI is part of a unit for data and technology called Optum. UnitedHealth Group argues that it can make the administrative process more efficient and “frictionless” by acquiring Change Healthcare and gaining access to Optum, according to the Star Tribune. UnitedHealth Group states that the administrative friction in the system costs stakeholders $267 billion annually.
The DoJ argues that allowing UnitedHealth Group to acquire Change Healthcare’s technology would be anticompetitive and that it could lower the quality of health insurance while making health insurance more expensive for millions of people. Furthermore, the DoJ states that UnitedHealth Group would simply gain too much power by having access to the world of electronic data, including information about other health insurers and their plans, that Optum would provide.
UnitedHealth Group states that it will fortify and extend existing firewalls in the Optum system so that it will not be able to acquire information that would give it a competitive advantage over other insurers. The insurer also claims that it will divest itself from the divisions of Change Healthcare that would give it “claims-editing” technology, or technology that insurers use in real time to ensure that millions of payment claims submitted by health care companies are eligible for reimbursement.
Despite UnitedHealth Group’s willingness to compromise, the DoJ is operating under an antitrust mandate and is not convinced that this deal would be best for patients.