Optum's deal to buy Steward should be scrutinized, senators say
UHG can use its leverage to force doctors to limit networks, cut services and see more patients per day to pad its profits, say senators.
Photo: Courtesy of UnitedHealth Group
Massachusetts senators are asking the Department of Justice and the Federal Trade Commission to scrutinize the proposed sale of Steward Health Care's physician group to Optum over concerns of UnitedHealth Group's market dominance.
"Optum already has a stranglehold on the healthcare system as the largest employer of physicians in the country, counting more than 90,000 doctors in its network," said the letter from the senators to the FTC and DOJ. "In 2023 alone, UnitedHealth reported over $22 billion in profit, making it the largest and most profitable healthcare conglomerate in the United States."
UnitedHealth can use its leverage to force doctors to limit networks, cut services and see more patients per day to pad its profits, said the letter from Senators Elizabeth Warren (D-Mass.), Edward J. Markey (D-Mass.) and the Massachusetts congressional delegation.
UnitedHealth's control of physicians would be expanded by this merger, they said.
"Indeed, UnitedHealth has made a business of acquiring distressed physician groups to expand their monopoly power. This merger would only expand their consolidation of the market and set the stage for more of this behavior," the letter said.
WHY THIS MATTERS
The letter calls for the FTC and DOJ to closely scrutinize the deal and oppose it if it would drive up healthcare costs or violate antitrust law.
The financially troubled Steward is located in Massachusetts and operates 31 hospitals in eight states, including Massachusetts, Ohio, Florida, Texas, Pennsylvania, Louisiana, Arkansas and Arizona.
"In recent months, Steward has faced 'a deep cash crunch' as a result of mismanagement by company executives and massive debts imposed by its private equity parent company," the senators wrote in the letter dated April 5. "Steward has been unable to pay its rent and is deep in debt to a consortium of lenders, while conditions in the company's hospitals have deteriorated."
Optum currently has a deal to buy the physician group but the merger doesn't guarantee that Steward-owned hospitals would remain open long-term, the senators said.
"In Massachusetts specifically, nine of Steward's hospitals are at risk of closure, which would have a devastating impact on communities across eastern Massachusetts," the senators said.
Steward's financial troubles are the result of mismanagement by company executives and by its former owner, private equity company Cerberus Capital Management, the senators wrote. As a result, Steward has been unable to pay its vendors and is deep in debt, threatening hospitals in communities across eastern Massachusetts, they said.
In 2020, Cerberus reportedly transferred its controlling interest to a group of Steward physicians led by the company's CEO and founder, Dr. Ralph de la Torre. The physicians own 90% of Steward, while Medical Properties owns 10%.
THE LARGER TREND
In 2022, the federal government settled a whistleblower False Claims Act lawsuit against Steward for allegedly submitting false claims to Medicare and Medicaid. Steward agreed to pay $4.7 million but publicly denied the claim.
In 2023, the federal government filed a complaint against St. Elizabeth's Medical Center, which is owned by Steward, the Steward Medical Group and Steward Health Care System, alleging they violated the physician referral law.
Email the writer: SMorse@himss.org
