Thursday, April 18, 2013
United Health Care Corporation: Magnum Opus and Quiet Giant
Among physicians and hospitals in the Twin Cities, Richard Burke is admired, feared, and loathed. Burke, you see, is a man of vision and power. He believes that dominant health care plans will: (1) win market share by offering innovative health plans with low premiums, comprehensive benefits, and flexibility of product; (2) will narrow the list of hospitals with which they deal by guaranteeing large numbers of patients in exchange for discounts; (3) narrow the list of physicians by dealing only with those doctors who are most “cost-effective’ i.e, don’t burden the plan with expensive services for patients; and (4) cut the cost of physician expenses by redistributing income from high-cost specialists to less well-paid primary care physicians. This strategy is to take place in steps and will leave HMOs in control of the system, with the power to control hospitals and physicians.
Richard L. Reece, MD, And Who Shall Care for the Sick? The Corporate Transformation of Medicine in Minnesota, Media Medicus, Minneapolis, 1988
And so it came to pass. UnitedHealthcare Corporation became the most profitable company, healthcare and non-healthcare, in America, with revenues of $122 billion, profit margins of over 30%, and a ranking of 21 among the largest Fortune 500 companies.
How has United be able to achieve these lofty ratings in the 40 years or so of its existence?United has done it by through savvy management, leveraging its deep knowledge of business strengths and weaknesses of physicians and hospitals, knowing early on the enormous profit potential of health care using business rather than medical professional principles, and exploiting this know-how in a step-wise, quiet, understated fashion by being there “fustest with the moistest,” the strategy of a Civil War confederate general, who succeeded, he said, by “gitting thar fustest with the mostest.”
United’s “Fustest with the Mostest” Strategies
· Recognizing managed care as an unprecedented nation-wide business opportunity
· Taking advantage of a fragmented, leaderless, and distracted health care community
· Exploiting teachers and state employees’ unions and other large organizations as base for health premium business now serving 70 million Americans
· Seizing on the opportunity to provide AARP supplements for Medicare as way to ride on backs of Medicare as nation’s single biggest payer and prime setter of codes and fees for 550,000 physicians and 6400 hospitals.
· Anticipating Affordable Care Act as opportunity to add 30 million, perhaps 50 million, to premium rolls and to get into bed with government
· Consolidating with other national HIT organizations – Cisco, IBM, EMR, HP, Cleveland Clinic, Mayo and others – to take analytic lead in using claims and outcome data to rationalize care, improve care and outcomes, set premiums, gain customers, and maximize profit.
Tweet: United Healthcare has become a hugely profitable corporation by being “fustest with the mostest,” exploiting business opportunities.