Thu. Dec 1st, 2022

UnitedHealth Group will spend $100 million to integrate technology company Change Healthcare, executives said Friday.

UnitedHealth is working to add Change Healthcare’s claims processing to its OptumInsight revenue cycle management division. The healthcare giant completed its $13 billion acquisition of Change Healthcare this month, after a federal judge tossed the Justice Department’s antitrust challenge. UnitedHealth paid $7.8 billion for the technology company and assumed $5 billion of its debt.

Change Healthcare will add an estimated $800 million in revenue to OptumInsight and boost UnitedHealth’s earnings next year, Chief Financial Officer John Rex said during UnitedHealth’s third-quarter earnings call.

“We will look, to the extent possible, to do any acceleration and other important integration work to bring potential benefits to Change and OptumInsight,” Rex said.

So far this year, UnitedHealth has spent approximately $20 billion on several mergers and acquisitions, up from the $4.8 billion it spent on such deals last year. UnitedHealth has announced acquisitions of Refresh Mental Health of Jacksonville Beach, Florida, Kelsey-Seybold Clinic in Houston, Irving-based Healthcare Associates of Texas and more in 2022, but has not disclosed what it paid for many of these organizations.

“There’s a diverse pipeline of opportunities we see, probably the most diverse pipeline in years,” UnitedHealth CEO Andrew Witty said during the call. “We see a number of key growth platforms. The market is beginning to be very discriminating in terms of value. You have to expect that to be a tailwind for us next year.”

UnitedHealth has roughly $21 billion in adjusted cash flows from operations that it could use for other transactions.

UnitedHealth’s net income grew 28.7% to $5.26 billion on revenues of $80.9 billion in the third quarter.. The company’s Optum healthcare services division was the fastest-growing segment of the business, with revenues growing 17% to $46.6 billion. Revenue per customer at OptumHealth grew 31%, which executives credited to expansion of the company’s value-based contracts and growth of its care delivery arm. Optum employs more than 65,000 physicians, making it the nation’s largest employer of doctors.

The company plans to expand its OptumHealth business into new markets, including the Pacific Northwest and Northeast. Fewer than 15% of the approximately 20 million lives that OptumHealth manages are in capitated arrangements where the provider accepts the full risk of the patient, Witty said.

“There’s a lot of runway there, that’s what really underpins our growth,” he said.

Optum has also expanded its behavioral health network 25% over the last couple of years, Witty said. The company is looking to expand its wholly-owned behavioral health practices and related digital health portfolio, he added.

On the health plan side of the business, UnitedHealth’s revenues grew 11% to $62 billion, which executives said reflected a lag in inpatient hospital visits and growth in Medicare Advantage.

UnitedHealthcare, which is the nation’s largest insurer and Medicare Advantage carrier, had 7 million members in its private Medicare plans as of Sept. 30. The company plans to grow its Medicare Advantage membership by up to 8% during open enrollment, which runs from Oct. 15 to Dec. 7.

“I like my chances to outperform the industry and have significant share gain and growth,” Tim Noel, CEO of UnitedHealthcare’s Medicare and retirement division, said during the call.

UnitedHealthcare is also broadening its exchange footprint ahead of Medicaid redeterminations.

The Centers for Medicare and Medicaid Services has suspended removing individuals from the public health program during the public health emergency. Once the emergency declaration is lifted, states will resume checking individuals’ Medicaid eligibility.

An estimated 15 million individuals are expected to lose coverage due to income, location or other life changes, and many are expected to transition to exchange plans. Congress in August extended the enhanced subsidies for exchange coverage to 2025.

UnitedHealthcare executives said they plan to partner with national retailers, pharmacy chains, state authorities, community organizations and employers to notify patients who no longer qualify for Medicaid about their coverage options. The company expanded its exchange plan to four new states this year.

“We see the exchanges really emerging as a place for broader coverage,” UnitedHealthcare CEO Brian Thompson said during the call.



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