This month, two committees in Congress hosted Andrew Witty, CEO of UnitedHealth Group, to discuss the recent cyberattack on Change Healthcare, a subsidiary of the health conglomerate.
That attack crippled claims processing across the country for weeks. The head of the American Hospital Association declared it "the most significant and consequential incident of its kind against the U.S. healthcare system."
Mr. Witty has much to answer for. It starts with lax cybersecurity. But it extends to the market-power induced exclusivity agreements between Change Healthcare and insurers, which prevented hospitals and other providers from developing workarounds in the immediate aftermath of the attack.
As Congress continues to investigate Change and UnitedHealth, members should take the damage wrought by those exclusivity agreements as an opening to inquire more deeply into UnitedHealth's troubling and tightening grip over healthcare. In fact, there are enough shady dealings amongst the vast web of interlocking entities that form UnitedHealth Group to keep lawmakers busy for the rest of the term. The vast scope of its enterprises has long since passed the point of harming patient welfare.
For decades, UnitedHealth has crept through the U.S. healthcare system as a monopolizing force. The group emerged under the name Charter Medical in 1974, a time when U.S. lawmakers sought a new health care model amidst public demand to tame the rising costs of care.
UnitedHealth, and other "health maintenance organizations" were the middlemen who would take advantage of this new model, vertically integrating within it. By the turn of the century, the group had acquired 19 other major insurance, management, and consulting companies -- and these acquisitions grew exponentially in the early 2000's.
Since then, UnitedHealth's reach has spiraled increasingly out of control. From 2010 to 2022, the conglomerate, including its pharmacy benefit manager (PBM) subsidiary, OptumRx, acquired more than 40 different companies on all levels -- insurers, pharmacies, provider networks -- culminating in the group's ownership of 90,000 physician practices, about 10% of the total throughout the United States.
The increasing control over doctor's offices, in particular, is concerning.
In recent decades, the majority of U.S. physicians have transitioned from working in doctor-owned practices to being employees in a larger system, where they inescapably face pressure from administrators who are concerned more about profits than patients. This profit-directed transformation of the medical profession frequently conflicts with the Hippocratic oath -- and is one of the forces driving the exodus of physicians and nurses from the medical profession in many states.
Everyone knows market dominance at this scale invites abuse. In health care, however, such vertical integration can be deadly -- significantly worsening patient health outcomes with every single merger and acquisition.
According to a 2023 study by researchers from Harvard University, Massachusetts General Hospital, and University College London, excessive vertical integration within health care inflates costs and leads to adverse health effects for patients.
The study, which analyzed more than 2.6 million patient visits, found that after integrating with larger companies, doctors change the way they approach patient care, resulting in significant increases in post-procedure complications.
Monopolistic healthcare practices also heighten the influence of pharmacy benefit managers within the complicated supply chain, further inflating costs for providers and patients.
While prices for health care remain unreasonable for most American patients, PBM profits continue to skyrocket, estimated to have doubled from $3.8 billion in 2018 to almost $8 billion in 2022. PBMs pocket the difference of drug discounts and other transactions behind the scenes, taking advantage of the complex system and costing patients millions of dollars.
United Health's OptumRx, for example, now accounts for 22% of the PBM market. Its corporate superior, Optum, continues to buy out independent practices and providers across the country. And despite claims from the company that they do not give preferential treatment to UnitedHealth provider plans, vertical integration certainly allows them to do exactly that.
In other words, the more healthcare companies consolidate, the more patients suffer. And for decades, UnitedHealth has been the biggest perpetrator.
The U.S. government shouldn't buy efforts to portray cyberattacks like the one on Change Healthcare as standalone mistakes. They open a window to the danger of consolidation.
Too much power in our healthcare system is now in the hands of too few. The UHG conglomerate is the most egregious example of vertical integration and consolidation. But it's hardly the only one where patient interests now come a distant second to maximizing profits.
Dr. Wolfgang Klietmann is a former clinical pathologist and medical microbiologist at Harvard Medical School.
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