Optum

Last updated

Optum, Inc.
Company type Subsidiary
Industry Healthcare
Founded2011;14 years ago (2011)
Headquarters
Eden Prairie, Minnesota
,
U.S.
Key people
Heather Cianfrocco (CEO)
Andrew Witty (CEO of parent company, UHG)
Services Pharmacy benefit manager
Health care provider
Revenue US$ 226.6 billion (2023) [1]
Parent UnitedHealth Group
Website www.optum.com/en/

Optum, Inc. is an American healthcare company that provides technology services, pharmacy care services (including a pharmacy benefit manager) and various direct healthcare services.

Optum was formed as a subsidiary of UnitedHealth Group in 2011 by merging UnitedHealth Group’s existing pharmacy and care delivery services into the single Optum brand, comprising three main businesses: OptumHealth, OptumInsight and OptumRx. [2] In 2017, Optum accounted for 44 percent of UnitedHealth Group's profits. [3] In 2019, Optum's revenues surpassed $100 billion for the first time, growing by 11.1% year over year, making it UnitedHealth’s fastest-growing unit at the time. [4] [5]

In early 2019, Optum gained significant media attention regarding a trade secrets lawsuit that the company filed against former executive David William Smith, after Smith left Optum to join Haven, the joint healthcare venture of Amazon, JPMorgan Chase, and Berkshire Hathaway. [6]

History

Organization

Optum's three businesses, OptumRx, OptumHealth and OptumInsight focus on five core capabilities: data and analytics, pharmacy care services, population health, healthcare delivery and healthcare operations. [3] Optum serves employers, government agencies, health plans, life science companies, care providers and individuals and families offering products in data and analytics, pharmacy care services, health care operations and delivery, population health management and advisory services. [7] The Optum Serve division provides health-related services to U.S. government agencies. [8]

Major acquisitions

Since Optum's founding in 2011, the company has acquired various healthcare technology services to build out its pharmacy benefit manager and care services offerings.

This Optum-UnitedHealth model of vertical integration [20] is pointed to as having sparked a pattern of acquisition activity in the healthcare industry; most notably, mega-mergers between CVS-Aetna, Cigna-Express Scripts and Humana-Kindred. [21] "Optum's been the leader in showing how a managed care organization with an ambulatory care delivery platform and a pharmacy benefit manager all in house can lower or maintain and bend cost trend and then drive better market share gains in their health insurance business. I think they have been the impetus in the large space for the Aetna-CVS deal," Ana Gupte, managing director of healthcare services at Leerink, said in an interview with Healthcare Dive. [3]

"Vertical integration" has met with considerable pushback and claims of antitrust law violations. The Federal Trade Commission (FTC) has accused major pharmacy benefit managers (PBMs), including CVS Caremark and OptumRx, of engaging in anticompetitive practices that harm competition and raise drug prices, citing conflicts of interest and exclusivity provisions. [22] [23] Similarly, the American Medical Association (AMA) has criticized the CVS-Aetna merger, arguing it undermines competition in pharmacy benefit management services, health insurance, and retail pharmacy markets, leading to higher consumer costs and fewer choices. [24]

Leadership

Controversies

Haven lawsuit

In early 2019, UnitedHealth Group filed a lawsuit asking a U.S. District Judge Mark Wolf to stop former Optum executive, David William Smith, from working at Haven (the Amazon, JP Morgan and Berkshire-Hathaway joint-healthcare venture). [29] Optum argued that Haven is in direct competition with its business and as such, Smith's employment would be in violation of a noncompete agreement that he signed while with Optum. [30] Smith, meanwhile, asked the judge to send the parties into closed-door arbitration. Wolf rejected Optum's request and allowed Smith's, putting court proceedings on hold until the arbitration process is complete. [31]

The case garnered media attention as setting a precedent in trade secret litigation ahead of an anticipated wave of vertical integration in the healthcare industry [32] and for uncovering previously unknown details about Haven. The case has also been referred to as having shed light on the threat that pharmacy benefit managers feel to bottom lines amid mounting bipartisan pressure to control rising healthcare costs. Testimony brought by Haven chief operating officer Jack Stoddard was unsealed after a motion brought by the parent companies of Stat News and The Wall Street Journal. [33]

Alleged racial bias

A 2019 study published in Science , alleges the "algorithm used to manage the healthcare of millions of Americans shows dramatic biases against black patients". Said algorithm, applied to over 200 million individuals yearly, "significantly underestimates the amount of care black patients need compared with white patients". In fact, "less money is spent on black patients with the same level of need as white patients, causing the algorithm to conclude that black patients were less sick". Optum claims "its system helps 'clinicians provide more effective patient care every day'". [34] [35]

See also

References

  1. ↑ "UnitedHealth Group 2023 Annual Report (Form 10-K)". sec.gov. U.S. Securities and Exchange Commission. January 2024. Retrieved April 6, 2024.
  2. ↑ "UnitedHealth Group Announces "Optum" Master Brand for its Health Services Businesses - UnitedHealth Group". United Health Group. Archived from the original on April 10, 2021. Retrieved February 15, 2019.
  3. 1 2 3 4 5 "Optum a step ahead in vertical integration frenzy". Healthcare Dive. Retrieved January 22, 2019.
  4. ↑ "UnitedHealth's Optum revenues surpass $100B for 1st time". Beckers Hospital Review. January 15, 2019. Retrieved April 21, 2020.
  5. ↑ Japsen, Bruce. "UnitedHealth's Optum Sales Hit $100B For First Time". Forbes. Retrieved March 11, 2019.
  6. ↑ Coombs, Bertha (January 23, 2019). "UnitedHealth sues ex-executive for taking trade secrets to Amazon health venture". www.cnbc.com. Retrieved March 11, 2019.
  7. ↑ "Optum Products & Services". United Health Group. Archived from the original on August 7, 2023. Retrieved March 11, 2019.
  8. ↑ "About Optum Serve". www.optum.com. Retrieved December 24, 2023.
  9. ↑ Herman, Bob (April 9, 2015). "Optum acquires urgent-care company MedExpress". Modern Healthcare. Crain Communications, Inc. Retrieved September 20, 2024.
  10. ↑ "Secret weapon: UnitedHealth's Optum business is laying waste to old notions about how payers make money". Healthcare Finance News. Retrieved March 11, 2019.
  11. ↑ Japsen, Bruce (March 7, 2019). "Anthem Won't Mimic UnitedHealth's Doctor Buying Binge". Forbes .
  12. ↑ Snowbeck, Christopher (September 13, 2019). "UnitedHealth Group acquires 'payment integrity' firm". StarTribune .
  13. ↑ "Change Healthcare acquired for $13 billion by UnitedHealth Group's OptumInsight".
  14. ↑ "Solutran joins Optum and is now a part of the UnitedHealth Group family of companies".
  15. ↑ "News & Media | Atrius Health Joins Optum". www.atriushealth.org. Archived from the original on August 20, 2022. Retrieved July 2, 2024.
  16. ↑ "UnitedHealth Unit to Buy UK Health-Tech Firm EMIS for $1.5 Billion". Bloomberg. June 17, 2022. Retrieved June 17, 2022.
  17. ↑ "Welcome to Optum Medical Care"./
  18. ↑ Barbarino, Al (June 26, 2023). "Optum To Buy Amedisys For $3.3B, Derailing Option Care Deal" . Law360 .
  19. ↑ Sego, Alyxandra (June 26, 2023). "Amedisys dumps Option Care for UnitedHealth's Optum" . American City Business Journals.
  20. ↑ "UnitedHealth to buy Chile's Banmedica for $2.8 billion". Reuters. December 22, 2017. Retrieved February 15, 2019.
  21. ↑ Japsen, Bruce. "Buoyed By Optum, UnitedHealth Group Remains on a Roll". Forbes. Retrieved January 22, 2019.
  22. ↑ ""Middlemen have outsized influence on US drug prices due to market consolidation, FTC says"". Reuters. July 9, 2024. Retrieved December 5, 2024.
  23. ↑ ""Feds poised to sue pharmacy gatekeepers over high insulin prices as part of broader probe into drug costs"". Politico. July 10, 2024. Retrieved December 5, 2024.
  24. ↑ ""CVS-Aetna merger would reduce competition, AMA says"". American Medical Association. 2018. Retrieved December 5, 2024.
  25. ↑ "Larry Renfro Named CEO of Optum". www.businesswire.com. July 6, 2011. Retrieved March 16, 2023.
  26. 1 2 "UnitedHealth Group Announces Leadership Actions". www.businesswire.com. March 13, 2018. Retrieved March 16, 2023.
  27. ↑ "UnitedHealth Group Announces Executive Leadership Actions". www.businesswire.com. February 4, 2021. Retrieved March 16, 2023.
  28. ↑ "UnitedHealth Group Executive Management Team". UnitedHealth Group . Retrieved July 3, 2024.
  29. ↑ "Amazon-Backed Healthcare Venture Gets Much-Needed Name: Haven | HealthLeaders Media". Health Leaders. Retrieved March 11, 2019.
  30. ↑ Abelson, Reed (February 1, 2019). "Clash of Giants: UnitedHealth Takes On Amazon, Berkshire Hathaway and JPMorgan Chase". The New York Times. ISSN   0362-4331 . Retrieved March 11, 2019.
  31. ↑ "Judge Allows Ex-Optum Exec to Work for Amazon Healthcare Venture | HealthLeaders Media". Health Leaders. Retrieved March 11, 2019.
  32. ↑ Japsen, Bruce. "Buying Binge For UnitedHealth's Optum Is Only Just Beginning". Forbes. Archived from the original on April 18, 2018. Retrieved March 11, 2019.
  33. ↑ Ramsey, Lydia. "A lawsuit is giving us the first hints of how Amazon, Berkshire Hathaway, and JPMorgan are planning to upend the US healthcare system". Business Insider. Retrieved March 11, 2019.(access to article is restricted)
  34. ↑ Paul, Kari (October 25, 2019). "Healthcare algorithm used across America has dramatic racial biases". The Guardian. Retrieved October 29, 2019.
  35. ↑ Obermeyer, Ziad; Powers, Brian; Vogeli, Christine; Mullainathan, Sendhil (2019). "Dissecting racial bias in an algorithm used to manage the health of populations". Science. 366 (6464): 447–453. Bibcode:2019Sci...366..447O. doi: 10.1126/science.aax2342 . ISSN   0036-8075. PMID   31649194. S2CID   204881868.
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