Stop me if you’ve heard this: One of the largest cyberattacks in U.S. history hit a major healthcare company recently and the disruption for patients, doctors, and providers is incalculable.
This story has received precious little coverage outside of trade publications.
On February 21, 2024, Change Healthcare, a subsidiary of UnitedHealthcare, announced it was experiencing a cyberattack by ALPHV Blackcat. The attack was so serious that it forced Change Healthcare to take all of its computer systems that handle insurance claims and electronic payments offline.
This decision stopped billions of dollars from flowing to providers and patients, interrupting crucial healthcare decisions and procedures and creating financial distress for thousands of Americans.
But how did one cyberattack cause almost the US healthcare financial system to halt? The answer is simple.
In January 2021, when UnitedHealthcare purchased Change Healthcare, it created an unstable monopoly that has now proved it threatens the safety and health of American patients.
Change Healthcare is the largest claims processing servicer in the country, administering one million physicians, 6,000 hospitals, and 2,400 payer connections (as of 2020).
Put another way, they handle 1 in 3 American patient records and process 15 billion healthcare transactions worth $1.5 trillion per year.
At that scale, when a cyberattack hits them, it effectively cripples the entire U.S. healthcare industry.
According to the U.S. Department of Justice, in 2020 before the merger, Change Healthcare handled 50 percent of all medical claims.
UnitedHealthcare is the largest health insurer in the country, or more precisely they are the largest healthcare conglomerate in the United States. Based on market cap and revenue, it is even bigger than JPMorgan Chase, the nation’s largest bank.
In November 2023, UnitedHealth Group (UHC) said it would make over $400 billion in revenue in 2024.
Reasonable people can look at these facts and conclude that UHC and Change Healthcare should not have been able to vertically integrate. American hospitals, physicians, care providers, and most importantly, American patients should have been protected against this massive merger.
According to CNN, a woman in Colorado had to pay $1,600 of her own money for Paxlovid because her insurer couldn’t be billed. And across the country, hospitals, cancer-treatment facilities, emergency departments, and doctors’ offices are worried about closing their doors and leaving their patients without care because there is absolutely no flow of money from insurers.
It is now over a month later, and providers and patients are still suffering, while insurance companies are sitting on billions of dollars.
In a letter from Senate Majority Leader Chuck Schumer(D-N.Y.) to the Centers for Medicare & Medicaid Services (CMS), he warns, “Hospitals are struggling to process claims, bill patients, and receive electronic payments, leaving them financially vulnerable. Many hospitals are approaching a financial cliff where they will no longer be able to rely on their cash on hand.”
This outage is costing health providers as much as $1 billion a day and will most likely depress their first-quarter earnings.
Perhaps the most indefensible consequence of this is that UnitedHealth and other insurance companies might see a bump in their investment income in Q1 from the interest they are accumulating from not paying their claims.
Under these extremely trying conditions, hospitals and healthcare providers continue to uphold their oath to treat and care for their patients. They haven’t turned them away or withheld services, but the longer that insurers withhold payments, the more difficult it will become. Doctors can’t perform surgeries, and hospitals can’t give patients a warm bed to sleep in if they can’t afford to keep the lights on and the doors open.
Meanwhile, groups like Power to the Patients, funded by billionaire Cynthia Fisher, host out-of-touch parties and concerts featuring celebrities, including NASCAR legend Richard Perry, the Foo Fighters, Fat Joe, and Susan Sarandon for Members of Congress and their staff with the purpose of demonizing hospitals.
According to US officials, the full financial impact of this hack is still unknown, and that likely will be the case for a while. It is unfortunate that this monopoly was allowed to be created to the detriment of patients’ safety and our overall healthcare system’s economy.
Where is Congress? Where are the regulators?
Patients and providers need someone to take an interest here before more damage is done to our already frail domestic healthcare industry.
Matt Mackowiak is the president of Potomac Strategy Group, served in the Bush administration at the U.S. Department of Homeland Security, on the Bush-Cheney re-election campaign, and was a senior communications aide to two U.S. Senators and a Governor.