The rapid growth of UnitedHealth Group’s Optum
health care services unit will contribute more than 50% of the company’s
earnings in 2020, executives disclosed Tuesday.
UnitedHealth chief executive David Wichmann
vowed at the start of the company’s annual investor day to continue the
momentum and growth of the nation’s largest health insurer at a cumulative
annual earnings growth rate of 13% to 16%. This means that the Optum unit will
contribute more than 50% of total company earnings.
Optum will generate $112 billion in revenues
in 2020, Wichmann said. UnitedHealth Group’s revenues will surpass $260 billion
next year, the company has said.
“With more than 50% of our earnings coming
from Optum in 2020, it’s a good time to reflect on the accelerating impact
diversification has had on the capacities of UnitedHealth Group, now a
broad-based, health care company still in its formative stages of development,”
Wichmann told the investor day attendees.
While UnitedHealth continues to be the
nation’s largest health insurance company, selling commercial, Medicaid and
Medicare Advantage plans, its finding growth on the medical care provider side
of the healthcare system. Optum owns one of the nation’s largest pharmacy
benefit managers in OptumRx as well as an array of medical care provider
businesses, including doctor practices, surgery centers and urgent care sites
across the country.
“We believe in supporting the whole person
throughout their care journey,” Andrew Witty, who is CEO of Optum and was
recently promoted to president of UnitedHealth Group, told analysts and
investors at the company’s annual investor day in New York.
Witty cited examples in certain markets where
Optum is reducing costs, which helps the company’s overall financial growth. In
New Jersey, for example, Witty said the company’s OptumCare doctor practices
are “seeing 37%” fewer emergency room visits among Medicaid patients.
Meanwhile, UnitedHealth Group and its Optum
medical care provider business are rolling out a combined package of medical
care and health insurance as insurers meld health benefits with the provision
of healthcare services. In southern California, for example, the company has
unveiled a new Harmony health plan where UnitedHealth and Optum have created an
“accountable care platform” that now serves 1.5 million people through value
based arrangements.
Value-based models put doctors and hospitals
under an umbrella that is paid based on health outcomes and performance. The
goal is to make sure patients are getting the right care at the right time and
in the right amount. That is contrary to the fee-for-service approach of
insurance payment to doctors that is based on volume of care delivered.
On Tuesday morning, Witty said the company is
working to bring Harmony to more markets including Seattle and Texas
“initially.”
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