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Optum, Inc.
Company typeSubsidiary
IndustryHealthcare
Founded2011;13 years ago(2011)
Headquarters
Eden Prairie, Minnesota
,
U.S.
Key people
Heather Cianfrocco (CEO)
Andrew Witty(CEO of parent company, UHG)
ServicesPharmacy benefit manager
Health care provider
RevenueUS$226.6 billion (2023)[1]
ParentUnitedHealth Group
Websitewww.optum/en/

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

Optum was formed as asubsidiaryofUnitedHealth Groupin 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 joinHaven,the joint healthcare venture ofAmazon,JPMorgan Chase,andBerkshire Hathaway.[6]

History

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Organization

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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

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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.

  • April 2011:UnitedHealth Group announces Optum master brand, bringing together pharmacy services, data & analytics tools, and care delivery services under one roof.
  • Jan. 2013:Partnering withMayo Clinic,Optum unveils OptumLabs, a health data initiative.
  • Oct. 2013:Optum, partnering with Dignity Health, launches Optum360, a revenue cycle management venture.
  • Feb. 2014:Optum purchases a majority stake in Audax Health Solutions, a patient engagement[clarification needed]company. Audax is later rebranded asRally Health.
  • April 2015:Optum acquires MedExpress, an urgent care and preventative services company.
  • July 2015:Catamaran, a pharmacy benefit manager, joins OptumRx.[3]
  • Jan. 2017:Optum acquiresSurgical Care Affiliates,an ambulatory surgery center and surgical hospital provider.[9]
  • Aug. 2017:Optum announces it will acquire Advisory Board Company's healthcare business.[3]
  • Dec. 2017:Optum announces acquisition of DaVita Medical Group fromDaVita Inc.[10]
  • Sept. 2019:UnitedHealth Group announces acquisition of Equian, LLC for $3.2 billion.[11]A Payment Integrity Institution that has joined the Optum family.
  • Jan 2021:UnitedHealth Group announces acquisition ofChange Healthcare LLC,evaluated to worth $8 billion, in addition to paying off its $5 billion debt for a total of $13 billion.[12]It is said to be merged with OptumInsight.
  • Aug 2021:UnitedHealth Group announces acquisition of Solutran LLC.[13]
  • May 2022:Optum acquiresAtrius Health,an independent physician-led healthcare organization.[14]
  • June 2022:Bordeaux UK Holdings II Limited, an affiliate of Optum business acquiresEMIS Healthfor a 49% premium on its closing share price.[15]
  • July 2022:Optum acquires Caremount Medical, Inc., of southeastern New York State, Riverside Medical Care of New Jersey, and ProHealth Medical Group of Western Connecticut, three midsized physician-led independent medical groups. In its announcement to the public and patients of the acquisitions, insurance company UnitedHealth Group is not mentioned, casting the transaction as a merger of three midsize physician-led companies into a new company rather than three acquisitions by an existing much larger Fortune 500 corporation with multiple types of health-related acquisitions, as described above.[16]
  • June 2023:Optum agreed to acquireAmedisysfor $3.3 billion. As part of the agreement, Amedisys rejected a prior buyout offer from Option Care that it initially agreed to the previous month.[17][18]

This Optum-UnitedHealth model of vertical integration[19]is pointed to as having sparked a pattern of acquisition activity in the healthcare industry; most notably, mega-mergers betweenCVS-Aetna,Cigna-Express ScriptsandHumana-Kindred.[20]"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 withHealthcare Dive.[3]

Leadership

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  • Jul. 2011:Larry Renfro named as Optum CEO[21]
  • Mar. 2018:Optum announces Larry Renfro to step down as Optum CEO[22]
  • Jul. 2018:Sir Andrew Wittystarts as CEO of Optum[22]
  • Feb 2021:Sir Andrew Wittyappointed as CEO ofUnitedHealth Group(Optum's parent company). No successor to the Optum CEO role is named.[23]
  • Apr. 2024:Heather Cianfrocco named CEO of Optum.[24]

Controversies

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Haven lawsuit

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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).[25]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.[26]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.[27]

The case garnered media attention as setting a precedent intrade secretlitigation ahead of an anticipated wave ofvertical integrationin the healthcare industry[28]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 ofStat NewsandThe Wall Street Journal.[29]

Alleged racial bias

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A 2019 study published inScience,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'".[30][31]

See also

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References

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  1. ^"UnitedHealth Group 2023 Annual Report (Form 10-K)".sec.gov.U.S. Securities and Exchange Commission.January 2024.RetrievedApril 6,2024.
  2. ^"UnitedHealth Group Announces" Optum "Master Brand for its Health Services Businesses - UnitedHealth Group".United Health Group.RetrievedFebruary 15,2019.
  3. ^abcde"Optum a step ahead in vertical integration frenzy".Healthcare Dive.RetrievedJanuary 22,2019.
  4. ^"UnitedHealth's Optum revenues surpass $100B for 1st time".Beckers Hospital Review.January 15, 2019.RetrievedApril 21,2020.
  5. ^Japsen, Bruce."UnitedHealth's Optum Sales Hit $100B For First Time".Forbes.RetrievedMarch 11,2019.
  6. ^Coombs, Bertha (January 23, 2019)."UnitedHealth sues ex-executive for taking trade secrets to Amazon health venture".cnbc.RetrievedMarch 11,2019.
  7. ^"Optum Products & Services".United Health Group.RetrievedMarch 11,2019.
  8. ^"About Optum Serve".optum.RetrievedDecember 24,2023.
  9. ^"Secret weapon: UnitedHealth's Optum business is laying waste to old notions about how payers make money".Healthcare Finance News.RetrievedMarch 11,2019.
  10. ^Japsen, Bruce (March 7, 2019)."Anthem Won't Mimic UnitedHealth's Doctor Buying Binge".Forbes.
  11. ^Snowbeck, Christopher (September 13, 2019)."UnitedHealth Group acquires 'payment integrity' firm".StarTribune.
  12. ^"Change Healthcare acquired for $13 billion by UnitedHealth Group's OptumInsight".
  13. ^"Solutran joins Optum and is now a part of the UnitedHealth Group family of companies".
  14. ^"News & Media | Atrius Health Joins Optum".atriushealth.org.Archived fromthe originalon August 20, 2022.RetrievedJuly 2,2024.
  15. ^"UnitedHealth Unit to Buy UK Health-Tech Firm EMIS for $1.5 Billion".Bloomberg. June 17, 2022.RetrievedJune 17,2022.
  16. ^"Welcome to Optum Medical Care"./
  17. ^Barbarino, Al (June 26, 2023)."Optum To Buy Amedisys For $3.3B, Derailing Option Care Deal".Law360.
  18. ^Sego, Alyxandra (June 26, 2023)."Amedisys dumps Option Care for UnitedHealth's Optum".American City Business Journals.
  19. ^"UnitedHealth to buy Chile's Banmedica for $2.8 billion".Reuters.December 22, 2017.RetrievedFebruary 15,2019.
  20. ^Japsen, Bruce."Buoyed By Optum, UnitedHealth Group Remains on a Roll".Forbes.RetrievedJanuary 22,2019.
  21. ^"Larry Renfro Named CEO of Optum".businesswire.July 6, 2011.RetrievedMarch 16,2023.
  22. ^ab"UnitedHealth Group Announces Leadership Actions".businesswire.March 13, 2018.RetrievedMarch 16,2023.
  23. ^"UnitedHealth Group Announces Executive Leadership Actions".businesswire.February 4, 2021.RetrievedMarch 16,2023.
  24. ^"UnitedHealth Group Executive Management Team".UnitedHealth Group.RetrievedJuly 3,2024.
  25. ^"Amazon-Backed Healthcare Venture Gets Much-Needed Name: Haven | HealthLeaders Media".Health Leaders.RetrievedMarch 11,2019.
  26. ^Abelson, Reed (February 1, 2019)."Clash of Giants: UnitedHealth Takes On Amazon, Berkshire Hathaway and JPMorgan Chase".The New York Times.ISSN0362-4331.RetrievedMarch 11,2019.
  27. ^"Judge Allows Ex-Optum Exec to Work for Amazon Healthcare Venture | HealthLeaders Media".Health Leaders.RetrievedMarch 11,2019.
  28. ^Japsen, Bruce."Buying Binge For UnitedHealth's Optum Is Only Just Beginning".Forbes.Archived fromthe originalon April 18, 2018.RetrievedMarch 11,2019.
  29. ^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.RetrievedMarch 11,2019.(access to article is restricted)
  30. ^Paul, Kari (October 25, 2019)."Healthcare algorithm used across America has dramatic racial biases".The Guardian.RetrievedOctober 29,2019.
  31. ^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.ISSN0036-8075.PMID31649194.S2CID204881868.
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