Federal Trade Commission (FTC) probing large anesthesia group

https://mailchi.mp/b1e0aa55afe5/the-weekly-gist-october-7-2022?e=d1e747d2d8

The FTC is investigating US Anesthesia Providers (USAP), a private equity (PE)-backed group with 4.5K physicians working in nine states, over concerns of monopoly power in certain markets. The inquiry is focused on USAP’s acquisition history, which has followed the PE “playbook” of rolling up small anesthesiology groups into a single entity large enough to exert leverage in contract negotiations. USAP’s presence in Texas and Colorado is likely to be of particular interest, as it controls at least 30 percent of the anesthesiology market in both states. 

The Gist: Like many other PE-backed physician groups, USAP achieved market power mostly through myriad acquisitions too small to warrant regulatory attention on their own. The probe is in line with recent government scrutiny of private equity influence in the healthcare sector, and will no doubt be closely watched by investors and PE-backed groups.

If USAP is forced to divest from certain markets, the precedent could prove especially damaging to other rapidly growing investor-backed physician groups, particularly those staffing hospital functions, who are already being rocked by ramifications of the No Surprises Act

The Fed’s big mistake

The Federal Reserve just raised interest rates by three-quarters of a percentage point, the biggest single increase in interest rates since 1994. It’s another move in the Fed’s effort to tackle the fastest inflation in four decades.

I understand the Fed’s urgency, but it has entered dangerous territory. If the Fed continues down this path – as it has signaled it will – the economy will be plunged into a recession. Every time over the last half century the Fed has raised interest rates this much and this quickly, it has caused a recession.

Besides, interest rate increases will not remedy the major causes of the current inflation – huge pent-up worldwide demand from two years of pandemic, shortages of goods and services responding to that demand, Putin’s war in Ukraine, and big profitable corporations with enough pricing power to use inflation as a cover for pushing up prices even further.

The Fed assumes that price increases are being driven by wage increases — so-called “wage-price inflation.” That’s incorrect. Wages are lagging behind inflation. A more accurate description of what we’re now seeing might be called “profit-price inflation” — prices driven upward by corporations seeking increased profits. (See chart below, from the Economic Policy Institute.)

A recession will be especially harmful to people who are most vulnerable to downturns in the economy — who are the first to be fired (and last to be hired again when the economy turns upward): lower-wage workers, disproportionately women and people of color.  

The Fed is making a big mistake.

Charlotte, NC-based Atrium Health and Illinois- and Wisconsin-based Advocate Aurora Health announce plans to merge

The combined health system will become the sixth largest nationwide, with $27B in revenue and 67 hospitals across six Midwest and Southeast states. The system will be based in Charlotte, and known as Advocate Health, though Atrium will continue to use its name in its markets.

Atrium CEO Gene Woods is slated to ultimately lead the combined entity, after an 18-month co-CEO arrangement with Advocate Aurora CEO Jim Skogsbergh. While the cross-market merger is unlikely to create antitrust concerns about increased pricing leverage, the Biden administration has been making noises about applying stricter scrutiny to the impact of health system consolidation on labor market competition.  

The Gist: Earlier this year, Utah-based Intermountain Healthcare and Colorado-based SCL Health combined to create a 33-hospital, $14B health system, which became the 11th largest nationwide. While these mega-mergers of regional systems can realize cost savings from back-office synergies, there is a significant opportunity to create larger “platforms” of care to win consumer loyalty, deploy digital capabilities, attract talent, and become more desirable partners for nontraditional players like Amazon, Walmart, and One Medical.

It will be critical to watch whether the governance and cultural challenges that often hinder health system mergers come into play here. Advocate Aurora has had two prospective mergers fall apart in recent years, the first with Chicago-based NorthShore University HealthSystem, and the second with Michigan-based Beaumont Health (who subsequently finalized a merger with Spectrum Health earlier this year). 

But the combination with Atrium is structured as a joint operating agreement, essentially creating a new superstructure atop the two legacy systems. This may allow the combined entity more flexibility in local decision-making, but the ultimate question will be how the combined entity will create value for consumers. Time will tell.

Higher prices correlated with lower mortality in competitive hospital markets

https://mailchi.mp/f6328d2acfe2/the-weekly-gist-the-grizzly-bear-conflict-manager-edition?e=d1e747d2d8

A National Bureau of Economic Research working paper found that higher-priced hospitals in competitive markets were associated with lower patient mortality—flying in the face of the common policy narrative that higher-priced care is not higher quality. However, in more concentrated, less-competitive healthcare markets (in which over two-thirds of the nation’s hospitals are located), the study found no correlation between price and quality. Authors of the study analyzed patient outcomes from more than 200K admissions among commercially insured patients, transported by ambulance to about 1,800 hospitals between 2007 and 2014.   

The Gist: As hospitals have consolidated, prices have risen by about 30 percent between 2015 to 2019, leading policy experts and regulators to search for ways to rein in price inflation. 

While there continues to be widespread consensus that industry consolidation has resulted in unsustainable cost growth, the new study’s findings bring a bit of welcome nuance around impact on quality and outcomes to an otherwise one-sided, price-centric policy narrative.

Can the F.T.C. Spur Healthcare Reform?

“Follow the money,” was the advice of Deep Throat to the Watergate journalists. But now, new Federal Trade Commission Chair Lina Khan says that’s not enough when analyzing monopolies in both healthcare and rest of the economy. Follow the algorithms and follow the power, too, not just the money.

We all know how monopolies harm consumers with higher prices. But monopolies and powerful corporations cause harm in other ways. Some examples:

Not all of these examples are linked directly to potentially illegal anticompetitive activities. But all are linked to the exercise of insufficiently checked corporate power. Commissioner Khan has signaled that she will consider such harms when analyzing mergers and other potentially anticompetitive activities.

This expanded view of anticompetitive harm is a departure from Robert Bork’s more narrow approach to antitrust enforcement taken by the F.T.C. since publication of Bork’s 1978 book The Antitrust Paradox. Bork noted that in many cases, mergers resulted in economies of scale that lowered prices for consumers. By his standard, such mergers were permissible as benefiting the consumer.

But now Commissioner Khan – and others like-minded theorists called neo-Brandeisians – point to the other harmful effects beyond the seeming benefit of lower prices. For example, the flip-side of a monopoly’s position as seller is its monopsony as a purchaser of labor. If there is only one big potential employer, workers do not have a competitive labor market, depressing their bargaining power and wages. In the digital economy there is also potential jeopardy to data privacy and security, and coercion to use certain digital products. Think the teenage girls on Instagram.

Employees of a single powerful employer are also inhibited from rocking the boat with innovations, critiques, or whistleblowing. This enervates a truly competitive marketplace.

Commissioner Khan views the antitrust issue not as being one of bigness but rather of power, power that reduces true competition. Beyond merely looking at prices, she seeks to identify and quantify the other elements of power and competition.

This blog has implicated healthcare monopolies as one direct cause of relentless increases in spending. It has also embraced the view of Steven Brill that “over the last five decades a new ‘best and brightest’ meritocracy rigged not only healthcare, but also the entire American financial, legal, and political system to build ‘moats’ of protection to perpetuate their wealth and power.

Commissioner Khan is now highlighting a key mechanism – anticompetitive political and financial power — by which healthcare corporations rig healthcare and by which other corporations have blocked reform in pursuit of short-sighted profits. She summarizes the remedy:

If you allow unfettered monopoly power to concentrate, its power can rival that of the state., right? And historically, the antitrust laws have a rich tradition and rich history, and a key goal was to ensure that our commercial sphere was characterized by the same types of checks and balances and protections against concentration of economic power that we had set up in our political and governance sphere. And so the desire to kind of check those types of concentrations of power, I think, is deep in the American tradition.

This blog thinks she is on the right track. Because healthcare reform is in the public interest and must be pursued even in the face of powerful special interests.

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FTC sues to block Rhode Island’s largest health systems from merging

Dive Brief:

  • The Federal Trade Commission is suing to block Rhode Island’s two largest health systems from merging, alleging the tie-up between Lifespan and Care New England would increase prices and diminish the quality of care.
  • In the state’s own review, Rhode Island’s attorney general said the union would result in “extraordinary market power” and denied the merger application under state law that requires a review of such tie-ups. Rhode Island’s attorney general will join FTC’s federal lawsuit seeking to block the deal.
  • The FTC alleges that, together, Lifespan and Care New England would control at least 70% of Rhode Island’s market for inpatient hospital services and also reduce competition in several nearby Massachusetts communities.

Dive Insight:

The union between Lifespan, the state’s largest health system, and Care New England, the second largest, quickly raised alarms in Rhode Island.

A 25-page report from the state’s insurance department found that the merger would “significantly alter” the state’s healthcare market, which currently enjoys a “relatively competitive” market. State regulators were also concerned about the control the new system would have over physician services. Given these risks, the state insurance commissioner proposed a set of conditions on the deal including price caps. Health system executives were open to working under certain conditions.

However, executives seemed surprise by Thursday’s announcement that the deal to create an integrated academic medical system with Brown University at the forefront would be blocked.

“On four separate occasions in prior years, the FTC reviewed the same proposed merger and allowed it to proceed,” a joint statement released Thursday said. The management teams said they offered up 30 conditions to regulators to satisfy antitrust concerns about the merger, “but neither the FTC or the AG ever discussed these conditions or others with the two systems prior to today’s decisions,” according to the statement.

After flirting with the idea of combining the systems for years, Lifespan and Care New England inked a deal to merge last February after the coronavirus pandemic revived talks.

The two touted the deal as a way to create an integrated academic health system with Brown University’s medical school in a central role. Brown University committed $125 million to the creation of the new system.

However, FTC commissioners voted unanimously to block the union over concerns it would extinguish competition between the two.

And although regulators have long leaned on the argument that hospital mergers lead to higher prices, a joint letter from FTC Chair Lina Khan and Commissioner Rebecca Kelly Slaughter points to the harmful effects consolidation has on labor markets, an argument growing in importance within the agency

“Just as we want firms to compete with each other to sell goods and services to their customers, we want employers to compete with each other to attract and retain workers,” the letter states. “Indeed, there is a growing body of empirical research about the potential for competitive harm to labor markets from consolidation and concentration.”

The news follows reports that the Department of Justice is preparing to sue to stop UnitedHealth Group’s blockbuster acquisition of Change Healthcare, a healthcare technology firm. Concerned about the “massive consolidation” of healthcare data, the American Hospital Association urged antitrust regulators to thoroughly examine the proposed transaction in a letter sent to DOJ last spring.

After taking office, President Joe Biden has signaled his administration would take an aggressive antitrust stance, including getting tough on hospital mergers. Last summer, the president issued an executive order that called on antitrust regulators to “review and revise” merger guidelines to ensure patients are not harmed by proposed deals.

Biden specifically called out the healthcare industry, rife with consolidation and accompanying research that shows hospital unions lead to higher prices.

“Thanks to unchecked mergers, the ten largest healthcare systems now control a quarter of the market,” the release from the White House said.

Still, the FTC has become overwhelmed by the sheer number of proposed transactions. In August, the agency said it was hit by a “tidal wave” of merger filings and warned applicants it may not vet all submissions before the applicable deadlines. But in letters sent to merging companies, the FTC warned the delay should not be interpreted as a green light for any deal.

“Companies that choose to proceed with transactions that have not been fully investigated are doing so at their own risk,” the regulator said in a statement.

AMA report: U.S. has “highly concentrated” payer markets that stifle competition  

https://medcitynews.com/2021/10/ama-report-u-s-has-highly-concentrated-payer-markets-that-stifle-competition/?utm_campaign=MCN%20Daily%20Top%20Stories&utm_medium=email&hsmi=166812730&_hsenc=p2ANqtz–Z_7y9-ZOPkhC7HI4RXSwuM5xDzd2B0uZi9sApeW1J89hQBktG-rqujxpBFiXmxEEnaK77vlq-7vHhr-qK8mxRgBmwA&utm_content=166812730&utm_source=hs_email

About 73% of health insurance markets are highly concentrated, and in 46% of markets, one insurer had a share of 50% or more, a new report from the American Medical Association shows. The report comes a few months after President Joe Biden directed federal agencies to ramp up oversight of healthcare consolidation.

The majority of health insurance markets in the U.S. are highly concentrated, curbing competition, according to a report released by the American Medical Association.

For the report, researchers reviewed market share and market concentration data for the 50 states and District of Columbia, and each of the 384 metropolitan statistical areas in the country.

They found that 73% of the metropolitan statistical area-level payer markets were highly concentrated in 2020. In 91% of markets, at least one insurer had a market share of 30%, and in 46% of markets, one insurer had a share of 50% or more.

Further, the share of markets that are highly concentrated rose from 71% in 2014 to 73% last year. Of those markets that were not highly concentrated in 2014, 26% experienced an increase large enough to enter the category by 2020.

In terms of national-level market shares of the 10 largest U.S. health insurers, UnitedHealth Group comes out on top with the largest market share in both 2014 and 2020, reporting 16% and 15% market share, respectively. Anthem comes in second with shares of 13% in 2014 and 12% in 2020.

But the picture looks different when it comes to the market share of health insurers participating in the Affordable Care Act individual exchanges. In 2014, Anthem held the largest market share among the top 10 insurers on the exchanges, with a share of 14%. By 2020, Centene had taken the top spot, with a share of 18%, while Anthem had slipped to fifth place, with a share of just 4%.

Another key entrant into the top 10 list in 2020 was insurance technology company Oscar Health, with 3% of the market share in the exchanges at the national level.

“These [concentrated] markets are ripe for the exercise of health insurer market power, which harms consumers and providers of care,” the report authors wrote. “Our findings should prompt federal and state antitrust authorities to vigorously examine the competitive effects of proposed mergers involving health insurers.”

The payer industry hit back. In a statement provided to MedCity News, America’s Health Insurance Plans, a national payer association, said that Americans have many affordable choices for their coverage, pointing to the fact that CMS announced average premiums for Medicare Advantage plans will drop to $19 per month in 2022 from $21.22 this year.

“Health insurance providers are an advocate for Americans, fighting for lower prices and more choices for them,” said Kristine Grow, senior vice president of communications at America’s Health Insurance Plans, in an email. “We negotiate lower prices with doctors, hospitals and drug companies, and consumers benefit from lower premiums as a result.”

Further, the report does not mention the provider consolidation that also contributes to higher healthcare prices. Mergers and acquisitions among hospitals and health systems have continued steadily over the past decade, remaining relatively impervious to even the Covid-19 pandemic.

Scrutiny around consolidation in the healthcare industry may grow. In July, President Joe Biden issued an executive order urging federal agencies to review and revise their merger guidelines through the lens of preventing patient harm.

The Federal Trade Commission has already said that healthcare businesses will be one of its priority targets for antitrust enforcement actions.

Hospital mergers and acquisitions are a bad deal for patients. Why aren’t they being stopped?

Contrary to what health care executives advertise, hospital mergers and acquisitions aren’t good for patients. They rarely improve access to health care or its quality, and they don’t reduce prices. But the system in place to stop them is often more bark than bite.

During 2019 and 2020, hospitals acquired an additional 3,200 medical practices and 18,600 physicians. By January 2021, almost half of all U.S. physicians were employed by a hospital or health system.

In 2018, the last year for which complete data are available, 72% of hospitals and more than 90% of hospital beds were affiliated with a health care system. Mergers and acquisitions are increasing the number of health care systems while decreasing the number of independently operated hospitals.

When hospitals buy provider practices, it leads to more unnecessary care and more expensive care, which increases overall spending. The same thing happens when hospitals merge or acquire other hospitals. These deals often increase prices and they don’t improve care quality; patients simply pay more for the same or worse care.

Mergers and acquisitions can negatively affect clinician morale as well. Some argue they lead to providers’ loss of autonomy and increase the emphasis on financial targets rather than patient care. They can also contribute to burnout and feeling unsupported.

Considerable machinery is in place at both the federal and state levels to stop “anticompetitive” mergers before they happen. But that machinery is limited by a lack of follow through.

The Federal Trade Commission (FTC) and the U.S. Department of Justice have always had broad authority over mergers. By law, one or both of these entities must review for any antitrust concerns proposed deals of a certain size before the deals are finalized. After a preliminary review, if no competition issues are identified, the merger or acquisition is allowed to proceed. This is what happens in most cases. If concerns are raised, however, the involved parties must submit additional information and undergo a second evaluation.

Some health care organizations seem willing to challenge this process. Leaders involved in a pending merger between Lifespan and Care New England in Rhode Island — which would leave 80% of the state’s inpatient market under one company’s umbrella — are preparing to move forward even if the FTC deems the deal anticompetitive. The companies will simply ask the state to approve the merger despite the FTC’s concerns.

The reality is that the FTC’s reach is limited when it comes to nonprofits, which most hospitals are. While the FTC can oppose anticompetitive mergers involving nonprofits, it cannot enforce action against them for anticompetitive behavior. So if a merger goes through, the FTC has limited authority to ensure the new entity plays fairly.

What’s more, the FTC has acknowledged it can’t keep up with its workload this year. It modified its antitrust review process to accommodate an increasing number of requests and its stagnant capacity. In July, the Biden administration issued an executive order about economic competition that explicitly acknowledges the negative impact of health care consolidation on U.S. communities. This is encouraging, signaling that the government is taking mergers seriously. Yet it’s unclear if the executive order will give the FTC more capacity, which is essential if it is to actually enforce antitrust laws.

At the state level, most of the antitrust power lies with the attorney general, who ultimately approves or challenges all mergers. Despite this authority, questionable mergers still go through.

In 2018, for example, two competing hospital systems in rural Tennessee merged to become Ballad Health and the only source of care for about 1.2 million residents. The deal was opposed by the FTC, which deemed it to be a monopoly. Despite the concerns, the state attorney general and Department of Health overrode the FTC’s ruling and approved the merger. (This is the same mechanism the Rhode Island hospitals hope to employ should the FTC oppose their merger.) As expected, Ballad Health then consolidated the services offered at its facilities and increased the fees on patient bills.

It’s clear that mechanisms exist to curb potentially harmful mergers and promote industry competition. It’s also clear they aren’t being used to the fullest extent. Unless these checks and balances lead to mergers being denied, their power over the market is limited.

Experts have been raising the alarm on health care consolidation for years. Mergers rarely lead to better care quality, access, or prices. Proposed mergers must be assessed and approved based on evidence, not industry pressure. If nothing changes, the consequences will be felt for years to come.

The Big Tech of Health Care

https://prospect.org/health/big-tech-of-health-care-united-optum-change-merger/

Optum, a subsidiary of UnitedHealth, provides data analytics and infrastructure, a pharmacy benefit manager called OptumRx, a bank providing patient loans called Optum Bank, and more.

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.

Despite the high stakes, Optum has been successful in keeping this acquisition out of the public eye. Part of this PR success is because few health care players want to openly oppose an entity as large and powerful as UnitedHealth. But perhaps an even larger part is that few fully understand what this acquisition will mean for doctors, patients, and the health care system at large.

If regulators allow the acquisition to take place, Optum will suddenly have access to some of the most secret data in health care.

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.

While UnitedHealth as a whole has earned a reputation for throwing its weight around the industry, Optum has emerged in recent years as UnitedHealth’s aggressive acquisition arm. 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. Optum is, Roades noted, “increasingly the thing that ate American health care.”

Optum has not been shy about its desire to eventually assemble all aspects of a single-payer system under its own roof. “The reason it’s been so hard to make health care and the health-care system work better in the United States is because it’s rare to have patients, providers—especially doctors—payers, and data, all brought together under an organization,” OptumHealth CEO Wyatt Decker told Bloomberg. “That’s the rare combination that we offer. That’s truly a differentiator in the marketplace.” The CEO of UnitedHealth, Andrew Witty, has also expressed the corporation’s goal of “wir[ing] together” all of UnitedHealth’s assets.

Controlling Change Healthcare would get UnitedHealth one step closer to creating their private single-payer system. That’s why UnitedHealth is offering up $13 billion, a 41 percent premium on the public valuation of Change. But here’s why that premium may be worth every penny.

Change Healthcare is Optum’s leading competitor in pre-payment claims integrity; functionally, a middleman service that allows insurers to process provider claims (the receipts from each patient visit) and address any mistakes. To clarify what that looks like in practice, imagine a patient goes to an in-network doctor for an appointment. The doctor performs necessary procedures and uses standardized codes to denote each when filing a claim for reimbursement from the patient’s insurance coverage. The insurer then hires a reviewing service—this is where Change comes in—to check these codes for accuracy. If errors are found in the coded claims, such as accidental duplications or more deliberate up-coding (when a doctor intentionally makes a patient seem sicker than they are), Change will flag them, saving the insurer money.

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.

To accurately review the coded claims, Change’s technicians have access to all of their clients’ coverage information, provider claims data, and the negotiated rates that each insurer pays.

Change also provides other services, including handling the actual payments from insurers to physicians, reimbursing for services rendered. In this role, Change 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.

Change’s scale (and its independence from payers) has been a selling point; just in the last few months of 2020, the corporation signed multiple contracts with the largest payers in the country.

Optum is not an independent entity; as mentioned above, it’s owned by the largest insurer in the U.S. So, when insurers are choosing between the only two claims editors that can perform at scale and in real time, there is a clear incentive to use Change, the independent reviewer, over Optum, a direct competitor.

If regulators allow the acquisition to take place, Optum will suddenly have access to some of the most secret data in health care. In other words, 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.

Although UnitedHealth and Optum claim to be separate entities with firewalls that safeguard against anti-competitive information sharing, the porosity of the firewall is an open question. As the AHA pointed out in their letter to the DOJ, “[UnitedHealth] has never demonstrated that the firewalls are sufficiently robust to prevent sensitive and strategic information sharing.”

In some cases, this “firewall” would mean asking Optum employees to forget their work for UnitedHealth’s competitors when they turn to work on implementing changes for UnitedHealth. It is unlikely to work. And that is almost certainly Optum’s intention.

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.

UnitedHealth has already been accused of self-preferencing. A large group of anesthesiologists filed suit in two states last week, accusing the company of using perks to steer surgeons into using service providers within its networks.

Even if UnitedHealth doesn’t purposely use data to discriminate, the corporation has been unable to correct for racially biased data in the past.

Beyond this obvious risk, the data alterations caused by the Change acquisition could worsen existing discrimination and medical racism. Prior to the acquisition, Change launched a geo-demographic analytics unit. Now, UnitedHealth will have access to that data, even as it sells insurance to different demographic categories and geographic areas.

Even if UnitedHealth doesn’t purposely use data to discriminate, the corporation has been unable to correct for racially biased data in the past, and there’s no reason to expect it to do so in the future. A study published in 2019 found that Optum used a racially biased algorithm that could have led to undertreating Black patients. This is a problem for all algorithms. As data scientist Cathy O’Neil told 52 Insights, “if you have a historically biased data set and you trained a new algorithm to use that data set, it would just pick up the patterns.” But Optum’s size and centrality in American health care would give any racially biased algorithms an outsized impact. And antitrust lawyer Maurice Stucke noted in an interview that using racially biased data could be financially lucrative. “With this data, you can get people to buy things they wouldn’t otherwise purchase at the highest price they are willing to pay … when there are often fewer options in their community, the poor are often charged a higher price.”

The fragmentation of American health care has kept Big Data from being fully harnessed as it is in other industries, like online commerce. But 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. It’s not a stretch to see an analogy to Amazon, and how that corporation uses data from its platform to undercut third parties while keeping all its consumers in a panopticon of data.

The next step is up to the Department of Justice, which has jurisdiction over the acquisition (through an informal agreement, the DOJ monitors health insurance and other industries, while the FTC handles hospital mergers, pharmaceuticals, and more). The longer the review takes, the more likely it is that the public starts to realize that, as Dartmouth health policy professor Dr. Elliott Fisher said, “the harms are likely to outweigh the benefits.”

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.”