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Will mega-corporations trump Medicare for All?

April 7, 2021

Topics: Quote of the Day

The merger between a subsidiary of UnitedHealth and Change Healthcare would create a vertically integrated, all-seeing giant.

By Krista Brown, Olivia Webb
The American Prospect, April 5, 2021

It’s not often that the American Hospital Association — known for fun lobbying tricks like hiring consultants to create studies showing the benefits of hospital mergers — directly goes after another consolidation in the industry.

But when the AHA caught wind of UnitedHealth Group subsidiary Optum’s plans, announced in January 2021, to acquire data analytics firm Change Healthcare, they offered up some fiery language in a letter to the Justice Department. “The acquisition… will concentrate an immense volume of competitively sensitive data in the hands of the most powerful health insurance company in the United States, with substantial clinical provider and health insurance assets, and ultimately removes a neutral intermediary.”

If permitted to go through, Optum’s acquisition of Change would fundamentally alter both the health data landscape and the balance of power in American health care. UnitedHealth, the largest health care corporation in the U.S., would have access to all of its competitors’ business secrets. It would be able to self-preference its own doctors. It would be able to discriminate, racially and geographically, against different groups seeking insurance. None of this will improve public health; all of it will improve the profits of Optum and its corporate parent.

UnitedHealth is the largest health care entity in the U.S., using several metrics. United Healthcare (the insurance arm) is the largest health insurer in the United States, with over 70 million members, 6,500 hospitals, and 1.4 million physicians and other providers. Optum, a separate subsidiary, provides data analytics and infrastructure, a pharmacy benefit manager called OptumRx, a bank providing patient loans called Optum Bank, and more. Through Optum, UnitedHealth also controls more than 50,000 affiliated physicians, the largest collection of physicians in the country.

Acquisitions of entities as varied as DaVita’s dialysis physicians, MedExpress urgent care, and Advisory Board Company’s consultants have already changed the health care landscape. As Optum gobbles up competitors, customers, and suppliers, it has turned into UnitedHealth’s cash cow, bringing in more than 50 percent of the entity’s annual revenue.

On a recent podcast, Chas Roades and Dr. Lisa Bielamowicz of Gist Healthcare described Optum in a way that sounds eerily similar to a single-payer health care system. “If you think about what Optum is assembling, they are pulling together now the nation’s largest employers of docs, owners of one of the country’s largest ambulatory surgery center chains, the nation’s largest operator of urgent care clinics,” said Bielamowicz. With 98 million customers in 2020, OptumHealth, just one branch of Optum’s services, had eyes on roughly 30 percent of the U.S. population.

Change Healthcare has access to all of the data that flows between physicians and insurers and between pharmacies and insurers—both of which give insurers leverage when negotiating contracts. Insurers often send additional suggestions to Change as well; essentially their commercial secrets on how the insurer is uniquely saving money. Acquiring Change could allow Optum to see all of this.

If the acquisition proceeds and Change is owned by UnitedHealth, the largest health care corporation in the U.S. will own the ability to peek into the book of business for every insurer in the country.

The most obvious potential outcome of the merger is that the flow of data will allow Optum/UnitedHealth to preference their own entities and physicians above others. This means that doctors (and someday, perhaps, hospitals) owned by the corporation will get better rates, funded by increased premiums on patients. Optum drugs might seem cheaper, Optum care better covered. Meanwhile, health care costs will continue to rise as UnitedHealth fuels executive salaries and stock buybacks.

Optum’s acquisition of Change heralds the end of that status quo and the emergence of a new “Big Tech” of health care. With the Change data, Optum/UnitedHealth will own the data, providers, and the network through which people receive care.

There are signs that the DOJ knows that to approve this acquisition is to approve a new era of vertical integration. In a document filed on March 24, Change informed the SEC that the DOJ had requested more information and extended its initial 30-day review period. But the stakes are high. If the acquisition is approved, we face a future in which UnitedHealth/Optum is undoubtedly “the thing that ate American health care.”

https://prospect.org…


Comment:

By Don McCanne, M.D.

UnitedHealth/Optum is BIG – the largest health care entity in the U.S. – representing that medical-industrial complex that Arnold Relman warned us about so many years ago. Well, it’s here. And it is structured to make money – a lot of it – and patients just happen to be an essential element in their equation, but patient care is an expense. So much of what they do is to create administrative functions that are designed to reduce spending on patients, and, further, to increase revenues by selling those administrative services. By gaining control of much of the industry – hospitals, doctors, pharmacies, insurance functions – they are in a position to dictate the business terms for health care.

So what will happen should we ever be able to enact and implement a single payer Medicare for All program? The model calls for negotiating rates with physicians, global budgets for hospitals and bulk purchasing of pharmaceuticals. How do you do that with a mega-corporation like UnitedHealth/Optum? Do you really think that they will accept government negotiations for payment rates for health care entities such as doctors, hospitals and pharmacies while not being paid for their large infrastructure that has been designed to increase revenues? Change Healthcare is a data analytics firm that is used to leverage higher revenues (profits, executive salaries, stock dividends and buybacks); it is not for the purpose of providing quality and value in patient care. Again, the entire corporation is structured to make money with patient services being a necessary expense that is to be minimized as much as possible.

Will Medicare for All legislation be written in a way that we can remove passive corporate investors and excess executive salaries from the equation, thus essentially destroying the for-profit corporate structure? Would our conservative courts even uphold such limitations?

Health care should be guided by a patient service ethic rather than a business ethic. Can we rein in the medical-industrial complex, or is it too late? The transition to Medicare for all will certainly cross paths with this corporate monster, and something will have to give.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

About the Commentator, Don McCanne

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Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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