UnitedHealth Group's Optum, parent company of Deerfield, Ill.-based ASC chain SCA Health, has seen massive growth in the last few years as other big healthcare networks face obstacles in reaching large-scale profitability.
Optum operates the largest physician network in the country, with more than 90,000 employed or affiliated and more than 40,000 advanced practice clinicians. It has 2,200 primary and specialty care offices in 16 states.
Walmart and other retail companies' efforts to use a big-box formula in healthcare have not seen the same success, The Wall Street Journal reported July 5. Walmart shuttered all 51 of its health center locations after failing to establish a sustainable business model despite positive patient feedback, according to the Journal.
Other players are also facing similar challenges. Following a series of clinic closures in multiple states, Walgreens Boots Alliance said in June it plans to reduce its stake in primary care provider VillageMD.
A key to Optum's success is its affiliation with a large insurance business. The Journal pointed to the "several financial incentives for an insurer to own a health provider, including that it pays itself."
UnitedHealth Group created health services arm Optum in 2011 as an autonomous business unit within the UHG corporation. By operating as a separate business, Optum created its own resources and profit formula separate from, but supported by, UHG's insurance arm.
Optum's scale and diversity sets it apart as a force across multiple healthcare markets. Optum is divided into three core divisions: Optum Health, Optum Insight and Optum Rx.
"Nobody's had anything like Optum before in the U.S. healthcare system," UHG CEO Andrew Witty said in 2021.
While insurance is UHG's original core business, Optum is now a critical driver of profits.
"The reason it's been so hard to make healthcare and the healthcare system work better in the United States is because it's rare to have patients, providers — especially doctors — payers, and data, all brought together under an organization," Optum Health CEO Wyatt Decker said last year. "That's the rare combination that we offer."
UnitedHealth Group posted $4.2 billion in net income during the second quarter of 2024, a 23% decline year over year. Despite the decline, it recorded the largest profit among major payers in the second quarter of 2024.
Optum's total revenues in Q2 were $62.9 billion, up 11.7% year over year. UnitedHealthcare saw revenues Q2 at $73.9 billion, up 5.3% year over year, and total earnings from operations were $4 billion.
Optum Health, the care delivery arm that spans primary, specialty, urgent and surgical care, saw revenue increase 13% over 2023, driven by growth in the number of value-based care patients and types of care offered.
The company's dominance over physician employment has spiked in recent years as the COVID-19 pandemic made it more difficult for independent practices to meet margins. More than 108,700 physicians left private practice for employment opportunities from 2019 to 2021, according to a report from Avalere.
"Efforts by Optum to dominate physician markets is a concern generally with consolidation of the insurance market. The two go hand-in-hand and it's got to be of some concern to consumers and patients," Chip Kahn, president and CEO of the Federation of American Hospitals, told Becker's last year. "From our standpoint, we think a lot of the criticism in terms of hospital consolidation is unfounded, but it's partly driven by the tremendous consolidation on the part of insurers."
And Optum keeps growing. The company spent $31 billion on acquisitions in the last two years, The Oregonian reported May 13.
This year, Optum received approval to bypass a state review of its planned purchase of physician-owned Corvallis (Ore.) Clinic.
In 2023, the group added 20,000 physicians. While still subject to regulatory approval, Optum has taken steps to acquire Baton Rouge, La.-based home healthcare provider Amedisys for $3.3 billion. It also acquired Middletown, N.Y.-based multispecialty physician group Crystal Run Healthcare in a private deal, and home health and hospice company LHC Group for $5.4 billion.
Optum is also partnering with health systems to provide administrative functions such as IT and revenue-cycle management rather than focusing on ownership of inpatient facilities. These deals add affiliated employees to Optum's ranks while it manages macro-level functions.
This wider-lens outlook correlates to the company's ASC strategy as well. Optum's ASC arm, SCA Health, has a portfolio of 320 ASCs.
Many leaders are concerned about Optum's effect on the physician workforce and the decline of autonomy as employed models become more popular.
"Due to declining reimbursements and increasing regulatory and non-clinical burdens, more and more physicians decide to become employees of large organizations," Vladimir Sinkov, MD, founder and CEO of Las Vegas-based Sinkov Spine Center, told Becker's. "Once they become employees, a significant amount of clinical and career autonomy is lost. The initial increases in salary eventually become diluted by ever-increasing 'production' requirements."
UnitedHealth Group is facing scrutiny regarding the Change Healthcare ransomware attack in February. The attack delayed payment and claims processing for healthcare providers around the country, as UnitedHealth subsidiary Change Healthcare handles an estimated one in three healthcare transactions.
In June, two U.S. senators — Sens. Margaret Wood Hassan and Marsha Blackburn —- accused UnitedHealthcare of violating HIPAA laws because the company has not sent out breach notifications for the Change Healthcare cyberattack. Additionally, 39 healthcare providers and the National Community Pharmacists Association are suing UnitedHealth Group over the Change Healthcare hack, claiming they have not financially recovered from the cyberattack.
The company's unparalleled growth is also drawing federal government scrutiny. In February, The Wall Street Journal reported UnitedHealth is the target of a Justice Department antitrust investigation, focusing on the company's ownership across sectors.
According to the report, the DOJ is questioning UnitedHealth about the relationship between Optum and UnitedHealthcare, and whether UnitedHealthcare favors Optum-owned physician practices, which could hurt competing practices.
Additionally, in November, Emanate Health filed an anticompetitive lawsuit against Optum, alleging the company steered patients away from physicians who left Optum to join the Covina, Calif.-based health system.
"Physician practices are being bought out or acquired in a trend that is sweeping across this nation with Optum," Udaya Bhaskar Padakandla, MD, president of the Texas Society of Anesthesiologists, told Becker's. "Two things about it bother me more than any other: This increasingly leads to loss of independence in the decision-making ability of physicians in patients' best interest, and second, government watchdogs are passive onlookers to this dominance of the physician workforce by a monopolizing entity."