It’s all in the math and how business intelligence savvy insurance companies work the numbers and find areas where bigger profits can be seen and to cut down in other areas to where certain areas might not be as profitable. As was mentioned earlier this year, the Optum group, which is where their technology purchases lay are listed as contributing factors to the overall bottom line. The corporate structure I can say is getting more complicated to keep on top of who owns who these days for the average consumer as we have these “daisy chain” structures with all the mergers and acquisitions. In January the company reported over all profits and how subsidiaries added to the bottom line – I call this “subsidiary watch” here at the Quack.
UnitedHealth Group Reports Record Profits for 2010 of $1.80 Billion-Algorithm Revenues Up with Subsidiary Groups Too
The company has a bank with HAS savings funds that has over a billion on deposit as well as some interest outside the US, such as this one.
UnitedHealth subsidiary (Ingenix Subsidiary I3) Acquires ChinaGate – Working to Sell Chinese Products Globally
Medical Loss Ratios were mentioned as they are a shade over the required percentage of 80% being required. The Optum division, which has all the technology, the bank and several other entities showed a 19% increase in sales. I don’t they made any acquisitions this quarter but in the past several quarters there have been quite a few to include all the investments in HIE interchange systems that basically allow software to communicate and have both doctors and hospitals to be able to exchange and communicate with medical records. United is not alone here as Aetna has jumped in pretty big with the same types of acquisitions. In addition we are also seeing insurers buying out HMOs and IPAs. One in particular was here in southern California which I happened to know from years back and it was a big one so the next move appears to be buying out physician’s groups. So one has to ask is this the next move in almost “owning the doctors” next?
OptumHealth (Subsidiary of United Healthcare) Takes Over Memorial IPA in California-Subsidiary Watch
Having patents in one’s portfolio also can help bring in additional revenues and if you read today this is a heated topic as how many “algos” can be patented I ask as it does provide for more value and perhaps a higher selling cost overall.
QualityMetric/Ingenix (United HealthCare) Receives Patent for Patient Health Survey Algorithms-Subsidiary Watch
In addition the use of business intelligence algorithms also helps find cheaper or less expensive locations and gives the analytics for moving or changing locations, such as one from last year in southern California with one of the last areas of combining the old PacifiCare HMO, which they bought years ago. When decisions as such are made as in this case, a bus took all the employees to a hotel to where they were given their walking papers, not a real warm way to do this in my opinion. Analytics can be tough today and the interpretations people make are what drives the decision making processes.
UnitedHealthcare Lays Off 180 Employees In Orange County-Initial Notification Sent By Instant Message to Those Affected
In addition other acquisitions include companies that manage employer wellness programs such as PPC which I believe falls somewhere along the daisy chain area under Optum. Some of these subsidiaries are pursuing the use of biometric monitoring for employees. Some of this stuff is good, but how it gets implemented is the key and the option should always be there without a monetary penalty.
Even the VA finds themselves in business today with United with the Picis subsidiary as some of their business was already in place before United purchased them. Ingenix also has a big business of selling data for various uses across the US, mainly prescription data that is used for underwriting and is crunched for use with Walgreens Pay for Performance programs to where the pharmacists there can earn money for consumers who participate in various programs from United.
Some of these links go back to the former name of Ingenix which has now been changed to Optum .
Ingenix Consulting Adds New Consulting Gig–Strategic Technology Solutions–Focus on Health IT Executives On How to Invest and Implement Algorithmic Performance Strategies
Here’s one more “analytics” company that was purchased in the area of risk assessment so numbers they are not short on for decision making processes.
Ingenix (Subsidiary of United Health Care) Buys QualityMetric – More Algorithmic Formulas To Choose From To Identify Future Risk and Cost
So if you are not a believer in how math works today, this should drive that point home as that is how they function and all decisions are based on analytics and they sell a ton of analytics too as well as patient and doctor data and these all come into play with profits as well as the premiums paid. The company is suing Tri-Care for the military health insurance business as well and the grounds for all of this are not quite clear to me other than the fact that they must somehow be convinced that they deserve the business or need the mixture to bring down the MLR maybe as this would add more consumers to spread the costing analysis process? Go figure.
UnitedHealth Loses Tri-Care Protest Again With Contract Awarded to Humana in the South-Now Protesting Contracts Awarded In Both the South and the Western States
All insurers too are backing off on what they pay insurance agents too and again when those “algos” show a potential profit area identified, companies go for it and ethics and the idea that humans lose income and jobs, doesn’t seem to mean a thing and that’s why markets are blazing and main street is not recovering. Nurses have tried and so have many other areas of healthcare to get attention but the profits just keep on moving up for insurers with effective use of those algos as hospitals continue to close, file bankruptcy and private practices take in their shingles. BD
“It is a technological arms race in financial markets and the regulators are a bit caught unaware of how quickly the technology has evolved”
UnitedHealth Group Inc.'s second-quarter earnings rose 13% behind stronger revenue, rising membership and continued sluggish trends in patients using health care, leading the managed-care company to once again boost its outlook for the year.
The Minnetonka, Minn., company raised its 2011 per-share earnings forecast by 20 cents, the year's second increase following a guidance jump in April, while sharpening its sales outlook. Like its peers, the industry bellwether has seen its results buoyed in recent quarters by consumers' light use of health-care services
"We expect a return toward somewhat more normal utilization trends in the second half of this year and into 2012," company Chief Executive Stephen Hemsley said on a conference call, where he also stressed that rising costs for health care remain the most important cost driver. But he said the company has a positive outlook for 2012.
UnitedHealth's medical-loss ratio, or MLR—an important statistic that reflects the portion of insurance premiums used for patient care—edged down to 81.4% in the second quarter from 81.5% a year earlier and was unchanged from the first quarter. Health insurers have to meet new minimum MLR requirements this year or provide rebates for falling short, which could potentially limit margins, although United Health doesn't break out rebates.