United States Health Optum Signs Agreement With John Muir Health, To Reduce Costs

UnitedHealth Group has purchased thousands of medical practices nationwide through its Optum unit, which has helped its insurance networks control costs. Today, the health giant says he wants to focus on small hospitals, but not to buy them, to help them stay independent.

United, Optum, launches a new partnership with John Muir Health to help the small Northern California hospital operator become more competitive with its larger competitors in the San Francisco Bay Area.

"We do not really want to sell to a larger system or be acquired," said Chris Pbad, CFO of John Muir. "We know that we need to cut costs for employers and employees.We think it's one of the best options to achieve that."

Optum will take over the billing and billing functions of the hospital and hire more than 500 John Muir employees involved in this administrative work. Optum, which already provides badysis and advisory services to small insurers, says the new partnership offers an opportunity to expand its business with hospitals.

"Optum is not about owning and operating health systems … we view this type of partnership as a model," said Nick Howell, senior vice president of Optum. . "Many health systems are facing similar cost pressures and are trying to find ways to stay independent.We think it's a third option for them."

The expansion of Optum's Health Services, Pharmaceutical Benefits and Analysis unit into new areas of healthcare has made it an important revenue driver for the UnitedHealth Group . Optum accounted for more than 40% of net profits in the first quarter of this year.

United is expected to report earnings of $ 3.45 per share in the second quarter, up nearly 10% from the prior year, for a business turnover of $ 60.58 billion, according to consensus badyst estimates, developed by Refinitiv.

Last April, the company's shares plummeted as a result of its earnings call, after CEO David Wichmann criticized the "Medicare for All" ("Medicare for All") proposals. ) presented by Democratic presidential candidates, calling for the elimination of private insurers. But the political obstacles have now changed. This week, Democratic nominee Joe Biden, who leads in the polls, presented his proposal to develop Obamacare rather than eliminate private insurance.

"Investors now seem to appreciate better the low chances of a radical health reform (ie, Medicare for All) and understand the general support for managing care in all sectors, with the exception of the "extreme left," wrote badyst Matt Borsch of BMO Capital Markets in a research note to clients.

Investors will now monitor Optum's new efforts with health systems, but hospitals could monitor even more closely. The acquisition of medical groups by Optum has made Optum Care a formidable competitor for certain groups of health system providers. And some of the company's past alliances, such as its partnership with Surgical Care Associates, eventually led Optum to acquire all of the outpatient surgery center activities.

"In the San Francisco Bay Area – touch wood – Optum Care has not entered the market," Pbad said. "We think it's something … that can really be great for both parties if we perform."

The financial terms of the new partnership have not been disclosed.