Vertical Integration: How UnitedHealth Group Consolidated Market Power

In last month’s article on vertical integration, I described how significant shifts in healthcare were taking root around 1984. Vertical integration was falling into place. This is when a company owns all the goods and services needed to carry out its business. So, for example, in 1984, a health care company might buy psychiatric hospitals, rehabilitation centers, nursing homes, and acute care centers, along with manufacturers of hospital equipment, such as diagnostic machines, hospital beds, lifts, wheelchairs, and linens. With these acquisitions, one unit of the company could charge another unit of the company whatever it wanted. Vertical integration eliminates incentives to trim costs or evaluate product quality.

In 2026, vertically integrated companies are buying much more than goods and services; they’re reshaping infrastructure. Physicians’ practices and health insurance companies are being purchased. Websites that appear to be independent sources of information about health and health insurance are being acquired. Our health information, from the moment we sign up for insurance to the present moment, becomes a cache of saleable information.

What enabled companies like Unit-edHealth Group (UHG) to become vertically integrated behemoths? By 1984, at least two forces were converging: Reagan’s push toward privatization, and a model of integrated service delivery called continuum of care (CoC).

Here’s how the Office of Management and Budget (OMB) described privatization under Reagan:

”A strategy to shift the production of goods and services from the Government to the private sector in order to reduce Government expenditures and to take advantage of the efficiencies that normally result when services are provided through the competitive marketplace."

Note the striking assumption that efficiencies will “normally result.” I didn’t believe it for a second; once services were privatized, they became much harder to monitor. That difficulty in monitoring has been key in spurring the growth of vertically integrated companies.

The move toward a model of service delivery called continuum of care (CoC) was a second important force. A CoC’s goal is to provide a seamless, integrated suite of health, mental health, and social services, oriented around the client. Here’s a definition rolled out at the 1984 annual meeting of the American Hospital Association:

[A] client-oriented system of care composed of both services and integrating mechanisms that guides and tracks clients over time through a comprehensive array of health, mental health, and social services spanning all levels of intensity of care."

In the 1980s, numerous studies documented the success of CoC in providing long-term improvement in clients’ social and economic well-being. I was a research assistant for a federal resource center at that time. CoC made complete sense to us as a model of service delivery, and we embraced it.

By 1994, the US Department of Housing and Urban Development (HUD) had integrated CoCs into its requests-for-proposals (RFP) for services. The move to CoCs was greeted with excitement and relief by local governments and other funders, service providers and clients. It was a hugely complex undertaking as clients’ needs spanned healthcare, housing, and employment. Tracking clients over time posed a significant logistical challenge, as did working across multiple agencies.

The US Government sought proposals from the private and nonprofit sectors for services with seamless integration, tailored to individual needs. The preconditions for rapid growth by companies like UnitedHealth Group were in place.

By 2024, for example, UHG had invested more than $1 billion in housing, specifically framing its investment in housing stability as key to promoting health equity. UHG leadership's paper, Investing in Housing and Health, Stewards of Aflordable Housing for the Future, asserts that UHG’s housing investments reflect its commitment to health equity:

"Investments in affordable housing are part of UnitedHealth Group’s commitment to advance health equity and promote community environments that enable people to live their healthiest lives."

But UHG’s embrace of health equity, anchored by housing stability, is sharply at odds with actions by other UHG subsidiaries. This past August, Senators Warren (D-MA) and Wyden (D-OR) called for an investigation into “alarming reports of United Health Group (UHG) padding revenues through cost-cutting programs” for patients in skilled nursing facilities, dually eligible for Medicaid and Medicare whose care was administered by UHG subsidiary Optum, through institutional special needs plans (I-SNPs). Optum has offered “heavy incentives” to nursing homes that delayed patients’ hospitalization to meet certain company targets. This increased negative health outcomes such as stroke. Senators Warren and Wyden also asserted that UHG strongly encouraged nursing home patients to sign Do Not Resuscitate (DNR) and Do Not Intubate (DNI) orders to reduce costs.

The two Senators sent a second letter on August 27, 2025, referencing “abusive tactics” following a ransomware attack on Change Healthcare, a tech subsidiary of Optum that processes a staggering 45% of U.S. healthcare transactions. During the attack, healthcare providers were unable to determine eligibility, seek approval for treatment or bill for reimbursement, with huge financial consequences for those providers. The senators said:

"These reports…underscore the extraordinary market power of United’s massive, vertically-integrated conglomerate: the problem was caused by a breach of United’s payment clearinghouse, Changes [Change Healthcare]; the loans were offered by United’s industrial bank, Optum Financial; and now the company is using its insurance arm as a collection tool."

In next month’s look at vertical integration, we’ll explore how and why UHG is changing service delivery through its purchases of physicians’ practices and insurance companies. If you are a medical practitioner who experienced the transition to UHG ownership, or if you are a patient of a practice that made the transition, please email if you’re willing to share your observations: organizer@psara.org.