Strategic Selection And Pricing Power: Optum's Acquisitions Of Ambulatory Surgery Centers And Physician Practices

Vertical integration between insurers and providers is rapidly reshaping US health care, with acquisitions by UnitedHealth Group's Optum division playing a significant role. This study examined two dimensions of Optum's strategy: whether the physician practices it acquired shifted patients from hospital outpatient departments to less expensive ambulatory surgery centers (ASCs), and whether its ASC acquisitions affected prices charged to competing insurers. Analyzing 2013-21 Medicare claims, we found that acquisitions were not followed by a significant shift in ASC referral share. Our analysis of twenty-one acquired physician practices instead revealed a pattern consistent with strategic selection: Optum preferentially acquired practices that already had high rates of ASC use, a finding that held after we accounted for patient characteristics. Separately, using 2015-18 commercial claims, we found that Optum's acquisition of twenty-four ASCs was associated with an 11.0 percent price increase, an effect that comprised both a broad increase in facility fees and a rise in professional fees that occurred only among Optum-employed physicians. These findings highlight important issues for market competition and costs.