DOJ Launches Antitrust Investigation of UnitedHealth's Vertical Integration Strategy and Optum Physician Acquisitions

On February 27, 2024, the Wall Street Journal reported that the Department of Justice launched a major antitrust investigation into UnitedHealth Group, focusing on whether the company’s vertical integration strategy—particularly Optum’s acquisition of physician practices—creates anticompetitive conditions that harm rival insurers, independent physicians, and patients. With Optum now employing or contracting with approximately 90,000 physicians (one in ten doctors nationwide), the investigation examines whether UnitedHealthcare shows preferential treatment to Optum providers, uses market power to exclude competitors, and exploits information asymmetries to dominate healthcare markets. This represents the Biden administration’s most significant antitrust challenge to healthcare consolidation and vertical integration.

Optum’s Physician Practice Empire

Optum, UnitedHealth Group’s health services division, has quietly built the largest physician employment network in American history:

90,000 Physicians: As of late 2024, Optum owns or is affiliated with approximately 90,000 physicians—representing one in ten doctors practicing in the United States. This unprecedented consolidation gives UnitedHealth control over vast swaths of American healthcare delivery.

Acquisition Strategy: Rather than organic growth, Optum has aggressively acquired existing physician practices, medical groups, and healthcare systems. This “buy out the competition” strategy eliminates independent physician practices and consolidates market power.

Geographic Concentration: In some markets, Optum controls the majority of primary care physicians and specialists, creating local monopolies where patients have limited choices for non-Optum providers.

Multiple Practice Brands: Optum operates physician practices under various brands including OptumCare, Surgical Care Affiliates, and acquired groups that retain their original names, obscuring the extent of UnitedHealth’s market dominance.

Valuation and Scale: Optum’s revenue exceeds $200 billion annually, making it larger than most standalone healthcare companies. This scale gives UnitedHealth enormous market power and political influence.

Vertical Integration: Insurance + Providers + PBM

UnitedHealth’s vertical integration spans the entire healthcare value chain:

UnitedHealthcare (Insurance): The largest health insurer in the U.S., covering approximately 49 million people through employer plans, individual market plans, Medicare Advantage, and Medicaid managed care.

Optum (Providers): Owns physician practices, surgical centers, urgent care clinics, behavioral health services, and home health agencies—controlling healthcare delivery at multiple points.

Optum Rx (Pharmacy Benefit Manager): One of the three largest PBMs in the country, controlling which drugs are covered, at what prices, and through which pharmacies—creating conflicts of interest where UnitedHealth profits from both insurance premiums and drug pricing spread.

OptumInsight (Data and Technology): Provides technology, analytics, and consulting services to healthcare organizations including UnitedHealth’s competitors, creating information asymmetries where UnitedHealth gains competitive intelligence about rivals’ operations.

This vertical integration allows UnitedHealth to profit at every stage of healthcare delivery while creating systematic conflicts of interest where the company controls coverage decisions, medical care, drug access, and competitive intelligence.

Antitrust Concerns: Preferential Treatment

The DOJ investigation focuses on whether UnitedHealthcare shows preferential treatment to Optum-owned providers:

Contracting Bias: Investigators are examining whether UnitedHealthcare offered more favorable contract terms to Optum physician groups compared to independent providers, giving Optum financial advantages that drive independent practices out of business.

Payment Arrangement Exclusions: The investigation examines allegations that UnitedHealthcare prevented rival (non-Optum) physicians from participating in certain value-based payment arrangements, steering patients to Optum providers by making alternative providers financially nonviable.

Network Steering: UnitedHealthcare’s plan designs may steer patients to Optum providers through lower copays, reduced prior authorization requirements, or preferential network placement, disadvantaging independent physicians.

Prior Authorization Disparities: Evidence suggests UnitedHealthcare may impose more burdensome prior authorization requirements on independent providers than on Optum-employed physicians, making it easier for Optum doctors to deliver care and retain patients.

Narrow Networks: UnitedHealthcare increasingly offers “narrow network” plans that include primarily Optum providers, forcing patients to choose between limited provider options or paying much higher out-of-network costs.

Information Asymmetries and Competitive Advantages

Vertical integration creates information asymmetries that harm competition:

Claims Data Access: UnitedHealthcare’s insurance operations provide detailed claims data about patients seeing non-Optum providers. Optum can use this data to target acquisition of successful independent practices or recruit high-value patients.

Competitor Intelligence: OptumInsight serves many healthcare providers and insurers, giving UnitedHealth access to competitors’ strategic plans, cost structures, and operational data that can be exploited for competitive advantage.

Predictive Analytics: Combining insurance, medical, and pharmacy data allows UnitedHealth to identify high-value patients and steer them to Optum providers, while identifying high-cost patients and making it harder for them to access care.

Market Power in Negotiations: When negotiating with hospitals and health systems, UnitedHealth can threaten to exclude them from UnitedHealthcare networks while simultaneously recruiting their employed physicians to Optum, creating coercive bargaining dynamics.

Harm to Independent Physicians

Optum’s consolidation of physician practices threatens independent medical practice:

Financial Pressure: When Optum acquires practices in a market, it can afford to operate at a loss temporarily (subsidized by UnitedHealth’s insurance profits) to undercut independent physicians’ prices and drive them out of business.

Acquisition Pressure: Physicians face pressure to sell their practices to Optum or other large systems because competing as independent providers becomes economically nonviable when insurers favor employed physicians.

Clinical Autonomy Loss: Physicians employed by Optum face corporate pressure to minimize care costs, maximize revenues, and follow treatment protocols that prioritize UnitedHealth’s profits over patient welfare—eroding medical professional autonomy.

Reduced Competition: As independent practices disappear, healthcare markets become less competitive, leading to higher prices, reduced innovation, and worse patient outcomes.

Employment Concentration: With one in ten physicians employed by Optum, doctors face monopsony power where UnitedHealth can dictate compensation, working conditions, and clinical requirements because alternative employment options are limited.

Harm to Patients

Patients suffer multiple harms from UnitedHealth’s vertical integration:

Reduced Choice: In markets where Optum dominates, patients have fewer independent physician options and must accept Optum-employed doctors or pay significantly higher out-of-network costs.

Higher Costs: Despite claims that integration improves efficiency, studies show vertical integration in healthcare typically leads to higher prices as consolidated entities exercise market power.

Conflicts of Interest: When the same company both insures patients and employs their physicians, doctors face pressure to minimize care to reduce insurance costs—creating conflicts where corporate profits override patient welfare.

Care Coordination Barriers: Patients who see non-Optum specialists may face difficulties with referrals, prior authorizations, and care coordination when their insurer prefers keeping care within its own provider network.

Quality Concerns: Vertical integration can reduce quality when physicians face production quotas, encounter limits on consultation time, or must follow corporate protocols that prioritize efficiency over thoroughness.

Previous DOJ Challenge: Change Healthcare Acquisition

The UnitedHealth antitrust investigation follows DOJ’s unsuccessful 2022 attempt to block Optum’s acquisition of Change Healthcare:

DOJ Lawsuit: The Justice Department sued to prevent Optum’s acquisition of Change Healthcare, a major healthcare technology company that processes insurance claims and provides data analytics to UnitedHealth’s competitors.

Antitrust Theory: DOJ argued the acquisition would give UnitedHealth access to sensitive competitive information about rival insurers’ operations, costs, and strategies, creating unfair competitive advantages.

Court Ruling: A federal judge rejected DOJ’s challenge, allowing the acquisition to proceed. The ruling was a significant defeat for antitrust enforcement in healthcare.

Continued Integration: Following this victory, UnitedHealth accelerated physician practice acquisitions through Optum, apparently confident that antitrust enforcers could not stop continued consolidation.

New Investigation: The 2024 antitrust investigation represents DOJ’s renewed attempt to constrain UnitedHealth’s expansion, focusing on physician practice acquisitions rather than technology company acquisitions.

Industry-Wide Vertical Integration Trend

UnitedHealth’s strategy has inspired industry-wide vertical integration:

CVS/Aetna: CVS Health acquired Aetna and owns MinuteClinic, creating similar vertical integration across insurance, pharmacies, PBM, and clinics.

Cigna/Express Scripts: Cigna merged with pharmacy benefit manager Express Scripts, integrating insurance with drug pricing control.

Anthem (Elevance): Invested heavily in acquiring physician practices and building provider networks to compete with UnitedHealth’s model.

Private Equity: Private equity firms have aggressively acquired physician practices, emergency room staffing companies, and other providers, pursuing similar vertical integration strategies.

Industry Defense: Healthcare companies argue vertical integration improves care coordination and reduces costs—claims that academic research largely contradicts, showing integration typically raises prices without improving quality.

Regulatory Capture and Enforcement Challenges

The antitrust investigation reveals regulatory capture dynamics:

Delayed Investigation: UnitedHealth has been aggressively acquiring physician practices since at least 2015, but the DOJ investigation only began in 2024—nine years of unchecked consolidation that created enormous market power before regulators acted.

Change Healthcare Failure: DOJ’s failed challenge to the Change Healthcare acquisition demonstrated antitrust enforcers’ difficulty winning healthcare cases, emboldening further consolidation.

Limited Resources: DOJ’s Antitrust Division has limited resources to investigate and challenge the thousands of healthcare acquisitions occurring annually, allowing most consolidation to proceed without scrutiny.

Political Pressure: Healthcare industry lobbying and campaign contributions create political pressure on enforcement agencies to avoid aggressive antitrust enforcement that threatens major corporate interests.

Judicial Hostility: Federal courts have become increasingly skeptical of antitrust enforcement, requiring high burdens of proof that favor defendants in consolidation cases.

Biden Administration Antitrust Enforcement

The investigation represents the Biden administration’s more aggressive approach to healthcare antitrust:

Executive Order: President Biden’s July 2021 executive order on competition specifically called for addressing healthcare consolidation and protecting independent medical practices.

FTC/DOJ Leadership: Appointments of Lina Khan (FTC) and Jonathan Kanter (DOJ Antitrust) signaled renewed willingness to challenge corporate consolidation across industries including healthcare.

Vertical Integration Skepticism: The Biden antitrust enforcers expressed skepticism about vertical integration’s claimed benefits, arguing it often harms competition rather than improving efficiency.

Healthcare Focus: The administration identified healthcare consolidation as a priority area, recognizing that provider and insurer mergers contribute to rising costs and reduced access.

However, the investigation began in February 2024, late in Biden’s term, suggesting either delayed prioritization or the time required to gather evidence against a powerful corporation.

Potential Remedies and Outcomes

If DOJ finds antitrust violations, potential remedies include:

Breakup: Most dramatically, DOJ could seek to break up UnitedHealth, separating insurance (UnitedHealthcare) from provider services (Optum) and pharmacy benefit management (Optum Rx). This would be the most significant healthcare antitrust action in decades.

Behavioral Restrictions: Less drastically, DOJ could impose behavioral restrictions requiring UnitedHealthcare to treat Optum and non-Optum providers equally in contracting, payment, and prior authorization.

Acquisition Ban: DOJ could prohibit or restrict Optum from acquiring additional physician practices, preventing further consolidation even if existing ownership is allowed to continue.

Information Barriers: Remedies could require information barriers preventing UnitedHealthcare insurance operations from sharing competitive data with Optum provider operations.

Consent Decree: Most likely, the investigation will result in a negotiated consent decree with limited restrictions that allow UnitedHealth’s basic structure to continue—demonstrating regulatory capture where powerful corporations avoid meaningful accountability.

Congressional Interest and Staff Reductions

Congressional Pressure: Representative Pat Ryan and other members of Congress have called for aggressive DOJ action against UnitedHealth’s monopolistic practices, recognizing the harm to competition and patients.

Staff Reduction Delays: Reports indicate DOJ staff reductions during the transition to the Trump administration in late 2025 have delayed the investigation, potentially preventing a monopolization suit from being filed until late 2025 or 2026—allowing continued consolidation during the delay.

Political Vulnerability: The investigation’s fate depends heavily on which administration controls DOJ, creating political uncertainty about whether antitrust enforcement will continue or be abandoned to protect corporate interests.

Academic and Medical Community Concerns

Healthcare economists and medical professionals have raised serious concerns about consolidation:

Price Increases: Academic studies consistently show vertical integration in healthcare raises prices without corresponding quality improvements, contradicting industry claims of efficiency gains.

Market Power: The American Medical Association and other physician organizations have warned that consolidation threatens independent practice and places physicians under corporate control that prioritizes profits over patient care.

Care Quality: Research suggests employed physicians face pressure to see more patients in less time, potentially reducing quality of care compared to independent practices where physicians control their own schedules.

Innovation Concerns: Consolidation may reduce innovation in care delivery as corporate owners impose standardized protocols rather than allowing physician experimentation and local adaptation.

UnitedHealth’s Playbook: Acquire, Integrate, Extract

The antitrust investigation exposes UnitedHealth’s systematic business model:

Step 1 - Acquire: Identify and purchase successful physician practices, medical groups, and healthcare providers, using insurance profits to outbid other acquirers.

Step 2 - Integrate: Incorporate acquired providers into Optum’s network, implementing corporate management systems, electronic health records, and billing practices that feed data to UnitedHealthcare.

Step 3 - Steer: Use UnitedHealthcare plan designs, prior authorization, and contracting to steer patients toward Optum providers and away from independent physicians.

Step 4 - Extract: Profit at multiple stages—insurance premiums, provider revenues, pharmacy benefit management spread, and data analytics sales—while reducing competition and increasing market power.

Step 5 - Repeat: Use increased profits to acquire more physician practices, expanding the cycle of consolidation.

This strategy has proven highly profitable for UnitedHealth while raising fundamental questions about whether it serves patient interests or merely enriches shareholders through market power.

Trump Administration and Investigation Future

The investigation’s timing creates political uncertainty:

Biden Investigation: Launched in February 2024 under Biden’s appointees who prioritized antitrust enforcement against healthcare consolidation.

Trump DOJ: Following Trump’s return to office in January 2025, his DOJ leadership may deprioritize or abandon the investigation, particularly given healthcare industry support for Republican candidates.

Staff Reductions: Reports indicate Trump administration staff reductions at DOJ’s Antitrust Division have already delayed the investigation, suggesting declining enforcement priority.

Industry Confidence: UnitedHealth’s continued physician practice acquisitions during the investigation suggest corporate confidence that political changes will prevent serious antitrust consequences.

Systematic Corruption and Regulatory Capture

The UnitedHealth antitrust case exemplifies systematic corruption in healthcare:

Unchecked Consolidation: Nearly a decade of aggressive physician practice acquisitions proceeded before antitrust investigation, demonstrating regulatory agencies’ failure to prevent monopolization in real-time.

Market Power to Political Power: UnitedHealth’s enormous revenue and employment of one in ten physicians translates into political power that protects the company from serious regulatory consequences.

Revolving Door: Healthcare industry executives, lobbyists, and attorneys move between corporate positions and government regulatory roles, creating regulatory capture where enforcers protect industry interests.

Complexity as Shield: The complexity of healthcare markets and vertical integration arrangements makes antitrust cases difficult to prove, allowing consolidation to proceed while enforcers struggle to demonstrate competitive harm.

Too Big to Break Up: UnitedHealth has become so large that breaking up the company would disrupt healthcare delivery for millions of Americans, creating a “too big to fail” situation where regulators hesitate to impose meaningful remedies.

The investigation reveals that UnitedHealth has built a healthcare empire that controls insurance, medical care, pharmacy benefits, and competitive data—exercising market power that harms patients, physicians, and competitors while regulatory capture ensures minimal consequences for systematic anticompetitive conduct.