Insurers are opening up a new vertically integrated provider model
But that can change.
In late February, the Justice Department filed a lawsuit to block UnitedHealth Group’s $13 billion acquisition of data brokerage and clearinghouse Change Healthcare, arguing “that either they don’t believe in this firewall, or that, by itself, it cannot be used as an antitrust defense,” Taylor said.
If the merger goes through, UnitedHealth would control more than 75% of the claims clearing house market, giving the company unparalleled insight into how rivals run their networks and leaving other insurers unable to avoid stranglehold. from the healthcare giant, senior justice officials said.
UnitedHealth is contesting the lawsuit and disagreeing with the allegations.
New look, new rules
Federal regulators are reworking their merger guidelines to broaden the scope of their oversight.
Generally, vertical integration is assumed to be pro-competitive, although this consensus may be changing.
Market definitions should be adjusted as insurers, providers, pharmacies and others continue to join forces, regulators said. Separating vertical and horizontal guidelines can be a good start, Assistant Attorney General Jonathan Kanter said, noting that bifurcation may have limited oversight.
“The Antitrust Division shares the FTC’s substantive concerns about the vertical merger guidelines. These guidelines overestimate the potential effectiveness of vertical mergers and fail to identify important relevant theories of harm,” he said in a statement linked to the FTC and Department of Justice’s request for public comment. Justice on Antitrust Reform.
The FTC is looking closely at labor market impacts, looking at factors other than wages, salaries, and financial compensation that could measure anticompetitive effects.
Health systems, private equity firms, payers and pharmacy chains could reduce labor market concentration as they compete for doctors and other clinicians, said Susan Manning, senior managing director of FTI Consulting. That could sway regulators, she said.
“The key, however, has to do with exclusivity in circumstances where there are market power issues,” Manning said, adding that regulators would look closely at contracts that limit referrals from healthcare professionals. outside the operations of their employers.
As a general rule, antitrust laws work best in concentrated markets. But the regulatory framework for vertical mergers does not lend itself to overseeing more fragmented markets, said Dickinson Wright’s attorney Gary. UnitedHealthcare held 15% of the overall insurance market in 2020, according to the latest market research by the American Medical Association.
“It’s not a concentrated market,” Gary said. “Antitrust law is a brutal instrument to solve this problem. I am not convinced that the government will do a good job. They are trying to fix a problem that, to a large extent, does not exist.
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Vendor Owned Payers
Providers have long operated paying arms, with the promise of reducing administrative friction around billing, boosting population health initiatives, taking more risks and adapting in times of crisis. Their model can serve as a blueprint for the growing number of insurers developing their clinician arms through acquisitions and partnerships.
When a patient insured by HealthPartners fills a prescription, for example, the insurance arm of the integrated health system receives a claim. If the patient does not pick it up, the HealthPartners care delivery side is notified and intervenes, identifying the disconnect and working to connect the patient to their medication.
“Being an integrated health system allows us to connect the dots for the consumer and link care and coverage together to deliver better outcomes at a more affordable price,” said Andrea Walsh, president and CEO of the organization based in Bloomington, Minnesota. “We need the combination of EHR and claims data to complete the picture and know what patterns exist beyond our care delivery system.”
Being an integrated system has also made it easier to switch to telehealth at Sanford Health, based in Sioux Falls, South Dakota, said Matt Hocks, the health system’s chief operating officer. While moving low-acuity care from the emergency department or urgent care has hurt clinical-side revenue, it has saved patients, employers and the Sanford Health Plan money, said Hocks.
“At first, there was a lot of trepidation about how much care we would move to virtual and whether we could shift costs as quickly as revenues would shrink. As an integrated system, we weren’t seeing a hemorrhage of revenue out of the system, it was more of a trickle,” he said. “We philosophically agree that we shouldn’t do what’s good for us at the expense of the patient.”
San Diego-based Sharp HealthCare has been isolated from intermittent non-emergency service outages, in part thanks to its integrated model, CEO Chris Howard said.
“When you consider that half of the Sharp Health Plan is managed care revenue, you had not just insulation but protection from within if you will,” he said, noting that about 35% 40% of health system revenues are fully funded. “This ensures that you are treating the entire population to reduce the cost of care.”