Dive Brief:
- UnitedHealth Group and the University of California (UC) Health are partnering to establish an accountable care organization (ACO) that will be available to large self-funded employer groups in California, according to a UnitedHealth statement.
- The 10-year partnership will include two UnitedHealth Group divisions: United Healthcare, which offers and administers health plans, and Optum, which deploys health management and information and IT services.
- UC Health partnered with UnitedHealth Group partly because of its experience delivering information-processing and data-mining experience with Optum, according to Kaiser Health News.
Dive Insight:
UnitedHealth Group is expanding its business in California by entering the partnership with UC Health, which operates five academic medical centers throughout the state in addition to other medical groups and clinics. Meanwhile, UC Health presumably hopes it can leverage UnitedHealth Group’s experience in healthcare-specific professional services to reduce administrative costs.
UnitedHealth is making a push to expand its footprint in California, according to Kaiser Health News. Anthem controlled 37% of the self-funded market in California in 2014, which included 6.4 million patients, and Cigna controlled 24%. UnitedHealth Group and Blue Shield of California controlled 13% each.
The California Public Employees’ Retirement System recently announced it had given Optum a five-year contract to provide pharmacy benefit management services covering nearly 486,000 patients. This brought UnitedHealth group’s number of California customers to 3.5 million, according to Kaiser Health News. It is unclear how many patients will be covered through the partnership with UC Health.
An increasing number of provider organizations are outsourcing certain data-centric administrative services, such as pharmacy benefit management and revenue cycle services, to third-party vendors. News of the UC Health-UnitedHealth Group partnership was accompanied by an announcement that OptumLabs, an Optum-led partnership to collect health information, would expand its presence to the West coast.
The UC Health-UnitedHealth Group partnership means the nation’s two largest insurers will be involved in more than one-half of California’s self-funded market going forward. A partnership between UC Health and United Health Group shows how large provider organizations and payers are partnering or merging to consolidate control in different areas. It’s uncertain how these trends will affect healthcare quality and cost.