Jessica Kourkounis/Associated Press
UnitedHealth Group has big plans to expand its medical-care business, which is called OptumCare.
- UnitedHealth Group expects its healthcare delivery business OptumCare to be a $100 billion-a-year business by 2028.
- The OptumCare business already employs or works with 38,000 doctors.
- At the Bernstein Strategic Decisions Conference, analyst Lance Wilkes asked UnitedHealth Group executives how the company plans to get there. The executives said the plan includes building upon the footprint the company established over the last decade.
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UnitedHealth Group is a healthcare giant, and it's only getting bigger.
Based in Minnetonka, Minnesota, UnitedHealth owns the biggest health insurer, with about 50 million members. It also has a huge hand in the prescription-drug business through its OptumRx unit.
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 38,000 doctors, ranging 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 health insurer Aetna, which combined a retail pharmacy and insurer with the hope of being more involved in Americans' healthcare.
Read more: Take a look inside CVS's new health hubs that are a key part of its plan to change how Americans get healthcare
At the Bernstein Strategic Decisions Conference, analyst Lance Wilkes asked UnitedHealth CEO David Wichmann and Chief Financial Officer John Rex how the company plans to expand OptumCare. They said that'll include building upon the geographic footprint the company's established over the last decade through buying up urgent care practices, surgical centers, and primary care offices and capturing more of the money spent on receiving medical care.
It's an ambitious goal. 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.
Building a healthcare delivery titan
The decision to build up the healthcare-delivery business at UnitedHealth was set in motion about a decade ago.
"When we started in OptumCare, we started with local care delivery businesses," Rex said. That meant a lot of experiments with different primary care models. Eventually, UnitedHealth expanded into surgical services that could be done outside of hospitals.
Today, the business operates urgent care centers like MedExpress, surgery centers through Surgical Care Affiliates, and primary care practices. UnitedHealth is still working to close a $4 billion deal with DaVita Medical Group, which would grow its footprint even more.
OptumCare is separate from UnitedHealth's insurance operation, and provides medical care to people with many different types of health insurance.
OptumCare is part of UnitedHealth's OptumHealth unit. Other businesses at OptumHealth include Optum Bank, which stores funds that people use to pay for their medical care.
Rex said UnitedHealth wants to expand the entire OptumHealth unit by catering more to older individuals, particularly those with Medicare Advantage plans, which are private health plans for the elderly. Those individuals tend to spend more on medical care than younger people, and the market is growing as the US population ages.
"Certainly that represents a tremendous multi-decade growth opportunity for that business," Rex said, referring to OptumHealth as a whole.
OptumCare has a presence in 35 markets, and plans to expand into more regions over time. Typically, OptumCare plans to offer services such as primary care, urgent care, and outpatient surgery in each market. Not every market will shape up the same way, with the same services or same models, UnitedHealth said.
"You acquire foundational market presence with good leading market resources and then you build them from there," Wichmann said.
He pointed to the company's presence in Las Vegas through Southwest Medical, which operates primary care, urgent care, pediatric clinics, women's health centers, and senior care. More recently, OptumCare has built a cancer center, which Wichmann said has been successful in the Vegas area.
Two things Wichmann said the organization won't own: inpatient care, when patients have to be admitted to a hospital, or post-acute care, when patients are recovering from surgery. That is, OptumCare will be growing to a $100 billion business without building hospitals.
Instead, Wichmann said, he sees the company partner with health systems to handle hospital-based services.
"Those will occur in markets where there is maybe less assets for us to accumulate and build from," Wichmann said.
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