Vertical Integration: Fighting Monopoly

In "Vertical Integration – How United Health Group Consolidated Power" (see the March, 2026, Retiree Advocate), I described how vertical integration in health care enables a company, such as UnitedHealth Group (UHG), to own interrelated goods and services pertaining to the business of medical care. One unit of the company can charge another unit of the company whatever it wants, with few exceptions. For example, an acute care facility might buy expensive diagnostic equipment from another entity owned by UHG.

Vertical integration eliminates incentives to trim costs or evaluate product quality. Increasing market share brings with it leverage in negotiations with profound consequences for smaller players. UHG’s breadth is staggering, including, for example, medical financing, data processing and information management.

The year 2010 marked a major strategic shift for health insurance companies that hastened the pace of vertical integration in health care. What changed? The Sunlight Report, a deep dive into UnitedHealth Group’s acquisition strategies, identified two factors. First, consolidation of the health insurance industry had been so robust that there were few players left and few opportunities to pick up underperforming companies to grow market share and profitability.

Second, 2010 is when the Affordable Care Act (ACA) became law. The ACA required that 80% - 85% of health insurance premiums be spent on health care. Any excess would have to be returned to customers. However, this provision didn’t apply to delivery of health care services. Buying physicians’ practices and clinics provided opportunities to both inflate the percentage of insurance premiums spent on health care delivery, and channel UHG’s nearly 50 million insurance customers into receiving care through those medical practices.

But physicians also had to be receptive to buy-outs. The American Hospital Association’s Physician Practice Acquisitions: What Drives Them and Implications for Consumers and Payers, cites the overwhelming administrative burden and lack of bargaining power in negotiating rates as key factors in small medical practices throwing in the towel. UHG now employs more than 10 percent of physicians in the United States. Even larger practices can’t break even. The late Polyclinic, a 101-year old, 210-member, physician-owned practice in Seattle, sold to UHG in 2018. Poly-clinic, now doing business as Optum Care, is where I receive my medical care. At the time of the transition, I asked each of my doctors why they sold. My doctors – those who remained, that is – described defeat; they could not grow the scope of the practice, such as palliative care, to be comprehensive, current, and competitive without resources they didn’t have. According to the Seattle Times, whereas 38 percent of Washington’s physicians were in solo practice in 1996, less than 4 percent maintained independent practices as of 2018.

The attractiveness of acquiring physicians’ practices doesn’t just apply to publicly traded companies such as UHG. In its research study, the Association of Private Equity Acquisition of Physician Practices With Changes in Health Care Spending and Utilization, the Journal of the American Medical Association (JAMA) found that the acquisition of physicians’ practices was associated with increased spending on health care, such as allowed billables and more frequent visits per patient.

The dismantling of the Department of Justice is taking its toll on addressing these issues. As online news service Disruption Banking’s Richardson Chinonyerem notes, “The deeper risk isn’t that United Health is guilty of fraud; it’s that America’s institutional ability to hold such power accountable is evaporating. "Numerous criminal and civil suits are stalled, delaying addressing UHG’s infrastructure, its practices and their impact on service quality, cost, and inability of non-affiliated service providers to compete.

What to do in the absence of action on the executive side? Senators Josh Hawley (R-MO) and Elizabeth Warren (D-MA) have introduced the Break Up Big Medicine Act (S3822) to force an end to consolidation of medical goods and services, financing, data management, and market positioning. “There’s no question that massive health care companies have created layers of complexity to jack up the price of everything from prescription drugs to a visit to the doctor. The only way to make health care more affordable is to break up these health care conglomerates,” said Senator Warren. “Our bill would be a monumental step towards ending the stranglehold that corporate giants

have on our broken health care system.” Congressmember Jayapal expects a companion bill to be introduced in the House. This legislation is modeled after the Glass-Spiegel Act, passed in 1933, which separated investment and commercial banking activities in response to involvement in stock market investment.

While the legislation won’t pass before the mid-terms, its prospects might improve thereafter. Still, we can anticipate that the staggering profits of the health care industry behemoths will be channeled into massive resistance to efforts to break them up.

At the state level, in Washington State, most efforts to rein in vertical integration in healthcare have been defeated by industry lobbying. In the 2026 legislative session, SB 5387, died. It sought to limit corporate involvement in the practice of medicine. Another bill, HB 2548, that did pass, gives the state more oversight over mergers and acquisitions related to healthcare. Washington State’s health advocates are working overtime to overcome the power of the insurance and hospital lobbyists, but it's been an uphill climb.

The PSARA Education Fund will work to integrate into our educational forums and written materials information about the dangers of vertical integration and the need to pass the Break Up Big Medicine Act. PSARA will join with local allies to advocate that our WA Senators and Representatives cosponsor the legislation and work with national allies to position the legislation for passage after the 2028 election. Additionally, PSARA will work with state legislators and allies to reverse corporate control of medicine at the state level.