Optum Acquisitions Linked to Double-Digit Price Hikes at Ambulatory Surgery Centers
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A new study reveals that prices at ambulatory surgery centers (ASCs) increased by 11% after being acquired by Optum, raising concerns about the impact of vertical integration on healthcare costs and consumer affordability. The research, published Monday in Health Affairs, suggests the price increases stem from Optum’s enhanced negotiating power with insurers.
The price surge translates to an estimated $10.1 million in additional annual spending for just seven common procedures across the two dozen ASC markets analyzed. Extrapolating these findings to encompass all ASC services, the total financial impact could exceed $67 million each year, according to the study. This cost burden is largely borne by insurers—many of whom compete with Optum’s sister company, UnitedHealthcare—and is ultimately passed on to consumers through higher premiums and out-of-pocket expenses.
Growing Scrutiny of Healthcare Consolidation
A spotlight is intensifying on market concentration within the healthcare industry, with lawmakers from both sides of the aisle expressing increasing criticism of large conglomerates amid escalating healthcare prices. UnitedHealth, Optum’s parent company, has become a focal point of this scrutiny.
UnitedHealth operates as a dual entity: Optum, the nation’s largest employer of physicians with nearly 90,000 owned or affiliated practitioners, and UnitedHealthcare, the largest private insurer in the U.S. While not the sole example of vertically integrated healthcare companies—CVS, Elevance, and Humana also own provider assets—UnitedHealth is the largest, reporting almost $450 billion in revenue last year. This scale has drawn significant attention from lawmakers and antitrust regulators concerned about potential market manipulation and profit inflation.
Cornell Study Details Price Increases
Researchers at Cornell University investigated whether Optum’s acquisitions of ASCs influenced the prices charged to competing insurers. Optum has been aggressively expanding its network of surgery centers, notably through its 2017 acquisition of Surgical Care Affiliates, a leading ASC operator at the time.
The study analyzed commercial claims data from 24 ASCs between 2015 and 2018, comparing price trends before and after Optum’s acquisition to a control group. Researchers found a price increase of $239.24—an 11% rise over pre-acquisition averages—emerging two quarters after the acquisition and remaining stable thereafter.
The increase in costs was observed across both procedures performed by Optum-employed doctors and independent practitioners, with the largest portion driven by inflated professional fees. Furthermore, price increases were most pronounced in markets where Optum held a dominant market share, including ownership of other ASCs or physician practices.
“These findings suggest that the price increases stemmed from the newly acquired ASCs’ stronger negotiating power,” researchers wrote, “given they became part of Optum’s large integrated network of physicians and facilities.”
Broader Implications of Vertical Integration
This study builds upon existing research indicating that UnitedHealth’s vertical integration may contribute to increased healthcare spending. A separate study published in November revealed that UnitedHealthcare pays Optum doctors more than their unaffiliated counterparts.
However, the issue extends beyond UnitedHealth and insurer ownership. The trend of vertical integration has accelerated as independent physicians increasingly join health insurers, hospitals, and private equity companies. Research suggests this consolidation leads to anticompetitive ripple effects, including price inflation and patient steering.
The Cornell research also uncovered some evidence of Optum doctor’s offices referring more patients to affiliated ASCs in markets with a strong Optum presence. This practice allows Optum to capture revenue that might otherwise go to competitors and potentially reduces costs for insurers—including UnitedHealthcare—by shifting care from more expensive hospital outpatient departments to lower-cost ASCs.
Interestingly, the study found that Optum’s acquisitions had limited impact on overall physician referral patterns. Instead, Optum appears to prioritize acquiring physician practices that already demonstrate a preference for referring patients to ASCs over hospital outpatient departments.
UnitedHealth did not respond to a request for comment regarding the study’s findings.
Policy Implications and Future Outlook
“Our findings suggest that policy makers and antitrust agencies should look beyond traditional horizontal concentration metrics because vertical integration can raise prices for competing insurers and, ultimately, consumers,” researchers concluded.
Historically, challenging vertical deals has proven difficult for antitrust agencies. However, the Biden administration updated merger review guidelines in 2023, equipping the Federal Trade Commission and the Department of Justice with greater authority to scrutinize vertical mergers, including insurer acquisitions of medical practices. The Trump administration maintained these updated guidelines.
Moreover, Congress is showing increased willingness to address the issue of vertically integrated healthcare monoliths, responding to public demand for improved healthcare affordability. However, any attempts to break up these large organizations would likely face significant legal and political obstacles.
