Optum

Short description: American pharmacy benefit manager and healthcare company

OptumFile:Optum logo.svg

Type| Division
Industry| Healthcare
Headquarters|

Eden Prairie, Minnesota

United States

Key people

| Andrew Witty (CEO)
Brands|

* Optum Bank
* Optum360
* OptumCare
* OptumLabs
* OptumRx

Services|

* Data & analytics
* Pharmacy care services
* Health care operations
* Healthcare delivery
* Population health management
* Advisory services

Parent| UnitedHealth Group
Divisions|

* OptumInsight
* OptumRx
* OptumHealth

Website| optum.com

Optum, a part of UnitedHealth Group, is a pharmacy benefit manager and care services group operating across 150 countries in North America, South America, Europe, Asia Pacific and the Middle East. In 2011, UnitedHealth Group formed Optum by merging its existing pharmacy and care delivery services into the single Optum brand, comprising three main businesses: OptumHealth, OptumInsight and OptumRx.[1] In 2017, Optum accounted for 44 percent of UnitedHealth Group's profits[2] and as of 2019, Optum's revenues have surpassed $100 billion.[3] Also 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.[4] Optum's headquarters are located in Eden Prairie, Minnesota.

On January 15, 2019, Optum said that the revenue of the company has surpassed $100 billion for the first time, growing by 11.1% year over year to $101.3 billion.[5] This also means that Optum will contribute more than 50% of UnitedHealth's 2020 earnings,[6] making Optum UnitedHealth's fastest-growing unit.[5]

## Contents

* 1 Organizational structure and acquisition timeline
* 1.1 Organization
* 1.2 Major acquisitions
* 2 Haven lawsuit
* 3 Alleged racial bias
* 4 See also
* 5 References

## Organizational structure and acquisition timeline

### Organization

Optum's three businesses, OptumRx, OptumHealth and OptumInsight focuses on five core capabilities: data and analytics, pharmacy care services, population health, healthcare delivery and healthcare operations.[2] 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][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.

* 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 with Mayo 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 company. Audax is later rebranded as Rally Health.
* April 2015: Optum acquires MedExpress, an urgent care and preventative services company.
* July 2015: Catamaran, a pharmacy benefit manager, joins OptumRx.[2]
* Jan. 2017: Optum acquires Surgical Care Affiliates, an ambulatory surgery center and surgical hospital provider.[9]
* Aug. 2017: Optum announces it will acquire Advisory Board Company's healthcare business.[2]
* Dec. 2017: Optum announces acquisition of DaVita Medical Group from DaVita 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 of Change 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.

This Optum-UnitedHealth model of vertical integration[13] 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.[14] "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.[2]

## Haven lawsuit

In early 2019, UnitedHealth Group[15] 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).[16] 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.[17] 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.[18]

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[19] 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 .[20]

## 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'".[21][22]

## See also

* Andrew Witty
* Pharmacy benefit manager
* Haven (healthcare)

## References

1. ↑ "UnitedHealth Group Announces "Optum" Master Brand for its Health Services Businesses - UnitedHealth Group". https://www.unitedhealthgroup.com/newsroom/2011/0411optum.html.
2. ↑ 2.0 2.1 2.2 2.3 2.4 "Optum a step ahead in vertical integration frenzy" (in en-US). https://www.healthcaredive.com/news/optum-unitedhealth-vertical-integration-walmart/520410/.
3. ↑ Japsen, Bruce. "UnitedHealth's Optum Sales Hit $100B For First Time" (in en). https://www.forbes.com/sites/brucejapsen/2019/01/15/unitedhealths-optum-sales-hit-100b-for-first-time/.
4. ↑ Coombs, Bertha (2019-01-23). "UnitedHealth sues ex-executive for taking trade secrets to Amazon health venture". https://www.cnbc.com/2019/01/23/unitedhealth-sues-ex-executive-for-taking-trade-secrets-to-amazon-health-venture.html.
5. ↑ 5.0 5.1 "UnitedHealth's Optum revenues surpass $100B for 1st time". https://www.beckershospitalreview.com/payer-issues/unitedhealth-s-optum-revenues-surpass-100b-for-1st-time.html.
6. ↑ Japsen, Bruce. "Optum To Provide More Than Half Of UnitedHealth's 2020 Profits" (in en). https://www.forbes.com/sites/brucejapsen/2019/12/03/optum-to-provide-more-than-half-of-unitedhealths-2020-profits/.
7. ↑ "Optum Products & Services" (in en). https://www.unitedhealthgroup.com/businesses/optum.html.
8. ↑ "Optum Insurance for VA Drug and Alcohol Rehab" (in en-US). https://veteranaddiction.org/insurance-benefits/optum/.
9. ↑ "Secret weapon: UnitedHealth's Optum business is laying waste to old notions about how payers make money" (in en). https://www.healthcarefinancenews.com/news/secret-weapon-unitedhealths-optum-business-laying-waste-old-notions-about-how-payers-make-money.
10. ↑ Japsen, Bruce (March 7, 2019). "Anthem Won't Mimic UnitedHealth's Doctor Buying Binge". Forbes. https://www.forbes.com/sites/brucejapsen/2019/03/07/anthem-wont-mimic-unitedhealths-doctor-buying-binge/.
11. ↑ Snowbeck, Christopher (September 13, 2019). "UnitedHealth Group acquires 'payment integrity' firm". StarTribune. https://www.startribune.com/unitedhealth-group-acquires-payment-integrity-firm/560239052/.
12. ↑ https://www.dotmed.com/news/story/53597
13. ↑ "UnitedHealth to buy Chile's Banmedica for $2.8 billion" (in en). Reuters. 2017-12-22. https://www.reuters.com/article/us-banmedica-m-a-unitedhealth-idUSKBN1EG1MJ.
14. ↑ Japsen, Bruce. "Buoyed By Optum, UnitedHealth Group Remains on a Roll" (in en). https://www.forbes.com/sites/brucejapsen/2018/04/17/buoyed-by-optum-unitedhealth-group-remains-on-a-roll/.
15. ↑ Sarah Hardey (September 16, 2020). "United Healthcare Insurance Coverage for Drug & Alcohol Rehab Treatment". https://americanaddictioncenters.org/insurance-coverage/unitedhealth-group.
16. ↑ "Amazon-Backed Healthcare Venture Gets Much-Needed Name: Haven | HealthLeaders Media". https://www.healthleadersmedia.com/innovation/amazon-backed-healthcare-venture-gets-much-needed-name-haven.
17. ↑ Abelson, Reed (2019-02-01). "Clash of Giants: UnitedHealth Takes On Amazon, Berkshire Hathaway and JPMorgan Chase" (in en-US). The New York Times. ISSN 0362-4331. https://www.nytimes.com/2019/02/01/health/unitedhealth-amazon-chase.html.
18. ↑ "Judge Allows Ex-Optum Exec to Work for Amazon Healthcare Venture | HealthLeaders Media". https://www.healthleadersmedia.com/strategy/judge-allows-ex-optum-exec-work-amazon-healthcare-venture.
19. ↑ Japsen, Bruce. "Buying Binge For UnitedHealth's Optum Is Only Just Beginning" (in en). https://www.forbes.com/sites/brucejapsen/2018/04/18/the-buying-binge-of-unitedhealths-optum-is-only-just-beginning/.
20. ↑ 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". https://www.businessinsider.com/optum-unitedhealth-lawsuit-against-amazon-berkshire-hathaway-jpmorgan-healthcare-venture-hire-2019-2. (access to article is restricted)
21. ↑ Paul, Kari. "Healthcare algorithm used across America has dramatic racial biases". https://www.theguardian.com/society/2019/oct/25/healthcare-algorithm-racial-biases-optum.
22. ↑ 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. doi:10.1126/science.aax2342. ISSN 0036-8075. PMID 31649194. https://escholarship.org/uc/item/6h92v832.

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