UnitedHealth Group will spend $100 million to integrate technology company Change Healthcare, executives said Friday.
UnitedHealth is working to add Change Healthcare claims processing to its OptumInsight revenue cycle management division. The healthcare giant completed a $13 billion acquisition of Change Healthcare this month, after a federal judge raised the Justice Department’s antitrust challenge. UnitedHealth paid $7.8 billion for the tech company and was saddled with $5 billion in 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 Q3 earnings call.
“We will look, to the extent possible, to do any other significant acceleration and integration work to the potential benefit of Change and OptumInsight,” Rex said.
So far this year, UnitedHealth has spent about $20 billion on a number of mergers and acquisitions, up from the $4.8 billion it spent on such deals last year. UnitedHealth announced the acquisition of Refresh Mental Health of Jacksonville Beach, Florida, Kelsey-Seybold Clinic in Houston, Texas-based Irving Healthcare Association and more in 2022, but did not disclose the amount. they paid many of these organizations.
“There are so many opportunities that we see, perhaps the most diverse in years,” UnitedHealth CEO Andrew Witty said on the call. “We see some important growth platforms. The market is starting to discriminate on value. You have to expect that to be a favorable wind for us next year. “
UnitedHealth has about $21 billion in adjusted cash flow from operations that it could use for other transactions.
UnitedHealth’s net income grew 28.7% to $5.26 billion on revenue of $80.9 billion in the third quarter.. The company’s Optum healthcare services division was the fastest-growing division. of the business, with revenue growing 17% to $46.6 billion. Revenue per customer at OptumHealth grew 31%, which executives credit for expanding contracts based on the company’s value and the growth of its care delivery arm . Optum employs more than 65,000 doctors, making it the nation’s largest physician employer.
The company plans to expand its OptumHealth business into new markets, including the Pacific Northwest and the Northeast. Less than 15% of the roughly 20 million lives OptumHealth manages, says Witty, are in a bind when the provider accepts the patient’s full risk.
“There’s a lot of runways there, that’s what really underpins our growth,” he said.
Optum has also expanded its behavioral health network by 25% over the past few years, Witty said. The company is looking to expand its behavioral health practices and related digital health portfolio, he added.
On the business health plan front, UnitedHealth’s revenue grew 11% to $62 billion, which executives said reflects a lag in inpatient hospital visits and growth in Medicare Advantage.
UnitedHealthcare, the nation’s largest insurer and Medicare Advantage carrier, had 7 million members in its private Medicare plans as of September 30. The company plans to increase the number of Medicare members Advantage up to 8% during the open enrollment period, which runs from October. . December 15 to 7.
Tim Noel, CEO of UnitedHealthcare’s Medicare and Retirement Division, said on the call: “I love my opportunity to outperform the industry and drive significant growth and equity returns.
UnitedHealthcare is also expanding its outreach before redefining Medicaid.
The Centers for Medicare and Medicaid Services has suspended the removal of individuals from public health programs during a public health emergency. Once the emergency declaration is repealed, states will continue to check individuals’ Medicaid eligibility.
An estimated 15 million people will lose coverage due to income, location or other life changes, and many are expected to switch to exchange plans. Congress in August extended the enhanced subsidy for exchange coverage through 2025.
UnitedHealthcare executives said they plan to work with national retailers, pharmacy chains, state governments, community organizations and employers to notify patients who are no longer available. eligible for Medicaid on their coverage options. The company expanded its exchange plans to four new states this year.
“We see exchanges really emerging as a place for broader coverage,” UnitedHealthcare CEO Brian Thompson said on the call.
