What Is The Best Way to Make Money For UnitedHealth Group?

Jan 02, 2024 By Susan Kelly

The income for UnitedHealth Group comes from many sources, including premiums on risk-based plans, fees from different services, sales of healthcare items, and services and investments.

The Business Model Used By UnitedHealth Group

At the very least, from one angle, it seems that the purchaser of health insurance is getting a very good bargain. Health insurance gives one the peace of mind that they will be cared for if they are involved in an accident or get a major sickness. Health insurance firms like UnitedHealth Group often pay money for numerous procedures and treatments that cost tens of thousands of dollars. Therefore, how can this possibly be a profitable business? The reason for this is that the customers who are in good health are effectively footing the bill for the ones who are not.

Appendicitis is a good illustration of this point. Appendicitis will strike around five percent of the population at some time in their life, and most of those affected will need surgery to remove their appendix. Since the cost of surgery is closer to $17,000 than the average cost of health insurance for an individual in 2017, which was approximately $4,700, and since the cost of health insurance for an individual was approximately $4,700 in 2017, this means that the people who didn't need the surgery, which is the other 95 percent, cover the ones who do. The primary sources of income for UnitedHealth Group are:

  • The company's premiums.
  • The fees it charges for a variety of medical and consulting services.
  • The sales of medical goods and services.

Additionally, it brings in money from investments and several other income streams, which we won't discuss here.

Premiums, a Business Division of UnitedHealth Group

Co-payments are required for almost every insurer's interaction with a healthcare provider. However, UnitedHealth Group also generates significant revenue each year. The firm was responsible for billing Medicare and retirement premiums totaling around $68 billion in the previous year. Given the generally poor health of the senior population, it is not surprising that advanced-age care is the biggest segment of UnitedHealthcare's business. People who are still actively working have lower initial expenses than retirees, and their numbers much outweigh those of retirees. In 2018, premiums were responsible for over $178.1 billion in revenues for UnitedHealth Group, equivalent to roughly 79 percent of total sales.

The Products and Services Business Division

Other goods and services offered by UnitedHealth Group include healthcare-related instruments and equipment, consulting services, and other forms of technology, amongst a great many more. Wholesale agencies, direct sales consultants, or independent salespeople often sell these. In 2018, product sales brought in total revenue of $29.6 billion, while service sales brought in $17.2 billion.

Business Division of UnitedHealth Group

The principal source of revenue for UnitedHealth Group is insurance, but the Optum group is a quick and aggressive secondary company that more than makes up for its operating expenses. OptumHealth offers a variety of goods, including, but not limited to, care delivery, customer engagement, and health financial services. OptumInsight caters to significant players in the healthcare business by supplying them with specialized knowledge, cutting-edge technology, and a variety of additional services. OptumRx is a corporation that provides pharmaceutical care. OptumHealth was responsible for bringing in $24.1 billion in revenue in 2018, while OptumInsight brought in around $9 billion, and OptumRx claimed $69.5 billion.

Future Plans

According to the UnitedHealth Group's annual evaluation for 2018, the United States is now in the beginning phases of a significant re-envisioning of healthcare due to the emergence of new technologies, changes in regulatory policies, and other factors. The company's goal is to be in the vanguard of these emerging trends, and it has already begun to use emerging technologies like artificial intelligence (AI) to enhance the quality of care it provides to patients and the products it offers them. In particular, concerning its OptumRx platform, UnitedHealth Group intends to expand in tandem with the ongoing shifts in the e-commerce and retail environments.

Key Challenges

UnitedHealth Group always runs the risk of incorrectly assessing medical and administrative expenses since it is an insurance business and receives most of its revenue from policy premiums. UnitedHealth Group has a particular little margin for error in these estimates because 80–85 percent of premium revenues are used to pay for the expenses of healthcare supplied to the company's clients.

A Precarious Prospect for the Healthcare Industry

Another significant obstacle to overcome is the dynamic nature of the regulatory environment, which significantly influences healthcare organizations. UnitedHealth Group must position itself to alter its business model in the face of prospective changes in regulation since the Affordable Care Act is still a highly divisive political issue. The Affordable Care Act is still a highly contentious political issue.

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