Optum: The Biggest Healthcare Company that Nobody Knows About

If you’re a golfer, then you probably watched this past week’s Players Championship won by Rickie Fowler in an exciting playoff. And if you did, then you surely appreciated the lack of commercial interruption (45-minute swaths of time), courtesy of PwC and a brand new “Proud Partner” sponsor of the PGA named Optum, a division of United Health Group.

As a PGA tour official referred to it, “Optum may just be the biggest company that nobody knows about.” Well, thanks to its last-minute sponsorship deal with the PGA, that may no longer be the case, at least not among its targeted demographic (C-Suite executives – a large percentage of whom play and watch golf). The terms of its multi-year sponsorship agreement were not disclosed, but if history is a guide, then figure Optum is shelling out upwards of $12 million each year of the deal.

According to its website, Optum is in the pharmacy benefit management (PBM) business and manages prescription drug benefits of commercial and government health plans, including employers and unions. Its owner, United Health Group, is the largest health insurer in the U.S. – probably in that “too big to fail” category when you consider the numbers.

From the company's first-quarter earnings statement:

  • United Health's revenue increased by 13% to $35.8 billion. Revenue attributable to the company's Optum segment — which includes OptumHealth, OptumInsight and OptumRx — grew 15% year-over-year to $12.8 billion.
  • The company's net income grew to 1.4 billion, resulting in earnings per share climbing 33% year-over-year to $1.46 per share.
  • The company’s medical loss ratio — the amount the insurer spent on actual healthcare costs — fell to 81.1 %, down 1.4% from the first quarter of fiscal 2014.
  • Generally viewed as a lower cost competitor to other large payers, United Health expects its full-year revenue to be $143 billion, up from its original guidance of $141 billion. Its share price has risen 48% in the past 12 months.

But if you really want to know the rest of the story on Optum, know that the company may well be the one we look back on as most responsible for having officially charted healthcare's big data territory. Simply stated, Optum is all over the space, providing big data analytics solutions to employers, health plans, state and federal agencies and providers.

For example, Optum is in bed with the Mayo Clinic on a project that is currently analyzing millions of clinical records covering 15 years of medical treatment and claims data on 100 million patients going back 20 years. It’s the largest joint effort to analyze healthcare delivery to date, and should answer questions on best practices, better patient care and cost.

But back to golf: Optum inked its sponsorship deal, literally, at the eleventh hour. Tournament officials were actually changing signage on the golf course the week of the event. Was it worth it? Of all of golf's tournaments over the past year, only the Sunday rounds of this year's Masters and last year's PGA Championship exceeded this year's coverage of The Players. It was the undisputed break-out branding event for a healthcare company that is clearly on a roll.

Sources: PGA, Seeking Alpha

Share on Procurious