A top executive at UnitedHealth revealed how the company's work in 4 states is key to building its next $100 billion business

Lydia Ramsey

Oct 17, 2019, 00:15 IST

A top executive at UnitedHealth revealed how the company's work in 4 states is key to building its next $100 billion business

Reuters

Optum CEO Andrew Witty

UnitedHealth Group expects its healthcare-delivery business, OptumCare, generate $100 billion a year in revenue by 2028.
In the company's third-quarter 2019 earnings call, Optum CEO Andrew Witty spelled out some examples of what the business now looks like as it aims for that goal.
OptumCare employs or works with 45,000 doctors, and in 2018 the unit made roughly $16 billion in revenue.
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We just got a clearer picture of how UnitedHealth Group plans to make going to the doctor its next $100 billion business.

Based in Minnetonka, Minnesota, UnitedHealth is already a massive business. It owns the biggest US health insurer, with about 50 million members. It also has a huge hand in the prescription-drug business through its OptumRx unit.

And increasingly, UnitedHealth is playing a bigger role in the business of getting medical care, too. Already, the company's OptumCare business employs or works with 45,000 doctors, from surgeons to primary-care providers. UnitedHealth wants OptumCare to reach $100 billion a year in revenue by 2028, up from roughly $16 billion last year.

It's part of a push by healthcare companies to gain more control over how healthcare gets paid for and provided to patients. CVS Health in 2018 closed its $70 billion deal with the health insurer Aetna, which combined a retail pharmacy and an insurer with the hope of being more involved in Americans' healthcare.

UnitedHealth's goal to hit $100 billion in revenue by 2028 at OptumCare is ambitious. HCA Healthcare, the largest for-profit health system in the US, operates 185 hospitals and 119 freestanding surgery centers around the US and the UK. In 2018, it had operating revenue of $46.7 billion.

During UnitedHealth's third-quarter earnings call on Tuesday, Optum CEO Andrew Witty spelled out some examples of what the business unit looks like as UnitedHealth aims to expand it.

How OptumCare fits into UnitedHealth Group

The decision to build up the healthcare-delivery business at UnitedHealth was set in motion about a decade ago, starting with primary care. UnitedHealth later expanded into surgical services that could be done outside hospitals.

Today, the business operates urgent-care centers like MedExpress, surgery centers through Surgical Care Affiliates, and primary-care practices. UnitedHealth in June closed a $4 billion deal with DaVita Medical Group, which added significantly to its footprint.

OptumCare is separate from UnitedHealth's insurance operation and provides medical care to people with many different types of health insurance. It is in network with 80 insurers, UnitedHealth has said.

Witty called OptumCare the largest part of OptumHealth, a unit within Optum. Other businesses at OptumHealth include Optum Bank, which stores funds that people use to pay for their medical care.

Four examples of Optum's $100 billion ambitions

In Southern Nevada - Optum's most developed region - OptumCare's presence is through Southwest Medical, which operates primary care, urgent care, pediatric clinics, women's health centers, a cancer center and senior care. Witty said Tuesday that there, Optum serves 300,000 people, 85% of whom are getting their care paid for through value-based arrangements. Witty said that's leading to a more than 10% lower costs to take care of patients compared to competitors.
In Southern California, Optum's building its reach through an "accountable care platform" with 1.5 million people on it. It's working with 30 insurers on a network that pulls together 100 clinics and roughly 30 surgery centers. In combination with UnitedHealth's health insurance arm , Optum created a product named Harmony. Witty described the product as providing "a seamless experience by uniting care and coverage, achieving 20% savings for people as compared to UnitedHealthcare's comparable coverage offerings."
In Texas, OptumCare expanded from San Antonio to Dallas, Austin and Houston. In 2020, the plan is to work with more than half a million people through value-based arrangements. That's up from 200,000 in 2016, Witty said.
Witty characterized New Jersey as a "newer-stage region." There, Optum has a presence through MedExpress urgent care centers, surgery centers, and Riverside Medical Group. For now, he said, the region is focused on pulling those pieces together.

Ultimately, it'll be key for all of the pieces of Optum beyond the medical practices to come together, Witty said.

"We will further expand and deepen our local presence, aligning and integrating our capabilities across OptumCare as well as Optum more broadly in areas, including specialty pharmacy, behavioral health services and community-based pharmacy dispensaries," Witty said.