How United grew into a healthcare industry behemoth

Several strategic business decisions, including a restructuring that capitalized on a growing healthcare market, transformed UnitedHealth Group from a small healthcare IT company to the largest insurer in the country with nearly $160 billion in revenue, according to the Minneapolis Star Tribune.

Experts point to the growth and eventual sale of UnitedHealth's pharmacy benefits management (PBM) business in the 1990s as a turning point that catapulted the company as a major player in the healthcare industry. UnitedHealth sold its PBM in 1994 for $1.65 billion, which provided the capital buy up regional insurers and emerge as a national payer.

Four years after the company sold the PBM, UnitedHealth split into five units that focused on small to midsize employers; national employers; Medicare; technology; and health and wellness services. From there, UnitedHealth became more involved in administering government health plans and was an early adopter of high-deductible plans that are supplemented by health savings accounts, while aggressively expanding Optum, its healthcare services arm.

"They grew their way through organic growth, but more importantly they made very particular strategic acquisitions and divestitures," Sheryl Skolnick, an analyst with Mizuho Securities USA, told the newspaper. "And they always had from very early on an understanding of the need for data and analytics and technology."

UnitedHealth's growth has also led other insuers to follow its lead, particularly in terms of embracing a shift to a value-based payment system. However, it has not been all smooth sailing for the company, as continued losses on its Affordable Care Act plans led it to exit 27 public marketplaces so far for 2017.

To learn more:
- read the Star Tribune article

Related Articles:
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