January 13, 2014 by Protect Our NHS
Optum is a subsidiary of UnitedHealth Group (UHG) which is also the parent of UnitedHealthcare (UHC), the largest single health insurer in the USA. It was created in 1977, as UnitedHealthCare Corporation (it was renamed in 1998). In 1979, it introduced the first network-based health plan for senior citizens. In 1984, it became a publicly traded company and like many of the other private health companies currently involved in the NHS free for all, it is scarily huge with a market capitalisation of almost $75 billion (£47 billion) and a price-to-earnings ratio of 14.09. UHG’s stock market performance was pretty much right on the nose in 2013 with its share price having a high of $75.88. Major analysts even have a buy rating on the stock.
In the mid 2000s it had its share of executive unworthiness like back dated stock options which resulted in an $895m settlement and the removal of that peculiarly American beast, the man who was both chairman and CEO. Their press release managed to be remarkably bullish on the subject.
William W. McGuire, M.D. will leave the company on or before December 1, 2006, and he stepped down today as Chairman of the Board and as a Director… The Board expressed its appreciation for the extraordinary contributions made by Dr. McGuire over the past 15 years. Under his leadership, UnitedHealth Group has had an enormous positive impact on the American health care system, making significant contributions in improving accessibility and making the health care system more affordable; the company became an industry leader with revenues growing from approximately $600 million to more than $70 billion. The stock price of UnitedHealth Group rose by almost 8500 percent, more than 30 times the growth of the S&P 500. The employees, shareholders and customers of UnitedHealth Group have all benefited from his leadership, energy and vision.
He not only made the American health care system more affordable, but his company hugely more profitable. He also made himself hugely wealthy in the process leading Elizabeth Edwards, the now deceased healthcare activist and wife of ex senator John Edwards), to speak on America’s The Daily Show, and site McGuire’s gigantic golden parachute (reputed to be over $1bn) in support of her argument for a public alternative to commercial insurance. She stressed the importance of restoring competition in health insurance markets noting that at one point, “the President of UnitedHealth made so much money, that one of every $700 that was spent in this country on health care went to pay him”.
And if I were a patient…
In 2009 UHG agreed to pay $350 million to settle class-action lawsuits brought by the American Medical Association and other groups on behalf of patients and doctors who claimed to be short changed for services provided ‘out of network’. In the USA when patients use “non-network” doctors, their insurance company agrees to pay 70-80% of the “reasonable and customary” charges for a given medical service in the same geographic area. If the doctor’s bill is higher than that rate, the patient must make up the difference or the doctor must settle for less.
And the rub, of course, comes in defining what is reasonable and customary. That calculation for most of the industry was made by a company called Ingenix, which conveniently is owned by UHG – an obvious conflict of interest. If Ingenix pegs the customary rates low, it keeps insurance reimbursements low and shifts more of the cost to the patient. Investigators for New York State’s attorney general Andrew Cuomo contended that UnitedHealth and Ingenix had been manipulating the data through a variety of stratagems to keep both the customary rate calculation, and the insurance payments low. Based on their own data collection and calculations, the investigators estimated that insurers have systematically underpaid New Yorkers for medical services by 10 percent to 28 percent, depending on where they lived. UHG neither admitted nor denied any wrongdoing, but the company did acknowledge the inherent conflict of interest and made substantial payments to put the issue to rest. As a result of the agreement, future reimbursements should be less subject to manipulation and a lot more transparent. A new organisation will be responsible for data collection and calculation methodologies and UHG will contribute $50 million to help get the new system operating.
In 2011 the Board of the Congress of Chiropractic State Associations (COCSA) voted to join a national ERISA Class Action. (ERISA is the federal law that protects patients and providers from improper denials and delays.) The action was on behalf of its State Association members against UnitedHealth Group to challenge what they termed “abusive overpayment recoupment” and claimed that UHG were “violating their ERISA obligations in order to recover funds that simply do not belong to them.” It was alleged that, as a means to maximize their profits, UHG used their post-payment audit and review process to make retroactive adverse benefit determinations whereby they demanded that providers repay funds.
Two years later in August 2013, UHG’s Overpayment Procedures were found to have violated three Specific ERISA Regulations, although a federal court denied the “class certification” in the overpayment ERISA class action.
But by 2010 UHG had already established a political action party or PAC to facilitate its contributions to political parties and candidates who supported its business line or showed interest in the health care business. As of the same year it had spent over $2m on these activities or lobbying in the markets to gain favourable comments and legislation verdicts on its side. And, according to the Center for Responsive Politics, UHG had by 2011 hired 7 firms engaged in lobbying activities on behalf of the company and its subsidiaries.
United Health / Optum in England
Like it or not, they’re already here – been here a while in fact although they seem to have used a variety of names.
“Through (FESC) Procurement, UnitedHealth UK [now re-named Optum] worked in partnership with NHS Northamptonshire to transform the way in which health services are commissioned for local people. This included helping the PCT to:
• Accurately assess the health needs of the local population and target care more effectively towards those with the greatest needs.
• Achieve value for money by ensuring that the PCT is using its resources most appropriately.
• Focus attention not just on treatment outcomes but on other aspects of the patient experience such as cleanliness, privacy and dignity and hospital food.
• Encourage healthy lifestyle choices, to invest in keeping people fit rather than simply treating patients when they become ill.”
And a lot more in similar vein… In fact they’re all over the world.
“PPC Worldwide is the leading global provider of Employee Assistance Programmes (EAP), work/life, wellbeing and personal development services. Providing services to over 3,500 organisations, covering 6 million employees in over 140 countries. “
The variety of names and subsidiaries for UHG has led one health blogger in the USA to call it the Daisy Chain effect.
“United Healthcare Subsidiary PPC Worldwide (Optum Health Subsidiary) to Acquire IPS Worldwide (Employer Healthcare Services) – Subsidiary Watch 2010. Here’s the daisy chain subsidiary watch… with Optum Health, a division of United buying IPS Worldwide.
Their web site says that:
‘Fostering a culture of health and wellness is especially challenging for employers that manage complex multinational workforces,’ said Dawn Owens, OptumHealth chief executive officer. ‘By adding PPC Worldwide, we expand our ability to serve those employers wherever they do business, and support their people wherever they live. This is a significant step for OptumHealth, as we continue to work with our customers overseas to enhance their employees’ health, well-being and productivity. The acquisition creates the leading global EAP provider, with offices and employees on five continents and a worldwide network of nearly 90,000 behavioral health providers.’
I just read in the news this weekend about those in Australia not doing effective cost comparisons for their health insurance so here we go – a subsidiary to enforce or should I say help those efforts. It looks like the daisy chain goes something like this, United Healthcare, Optum Health, PPC Worldwide and then IPS worldwide at the bottom of the chain. Behavioral health is also included here which includes extensive data analysis processes in most cases to predict behavior and the processes determined by algorithmic formulas to change for better care and of course to save money.
Collecting data by insurance companies is no longer just a focus in the US but is rather taking on a global focus and again it remains to be seen how data will be analyzed and pooled to accentuate the financial recommendations. Optum also has a bank with over a billion in deposits for health savings accounts so perhaps this is an effort to bring global accounts of HSAs into the fold?“
And So back to Optum in England:
What UHG/Optum Says About Optum International
We are part of Optum, a health services business dedicated to making the health system work better for everyone. We believe that health systems across the world face a set of common challenges – the rising burden of chronic disease, pressure to drive improvements in quality and value within financial constraints and the need for greater transparency – we apply our capabilities in data, technology, analytics and care management for employers, governments, healthcare professionals and individuals in all corners of the globe.
Our aim is to be the leading international provider of technology enabled health services, enabling organisations across the world to access the resources of Optum.
So how does this fit in with mental health re-commissioning in Bristol?
The Bid Partners:
Optum’s bid for the mental health re-commissioning is being made in partnership with Berkshire Healthcare NHS Foundation Trust, the Richmond Fellowship and Care UK.
Berkshire Healthcare NHS Foundation Trust
Of the 16 sites at which they operate, 12 have not been inspected by the Care Quality Commission and of the remaining four, one, Prospect Park Hospital in Tilehurst, failed on the counts of not treating people with respect and involving them in their care and not providing care, treatment and support that meets people’s needs. Prospect Park provides the following specialisms / services:
• Diagnostic and/or screening services
• Learning disabilities
• Mental health conditions
• Substance misuse problems
• Caring for adults under 65 yrs
• Caring for adults over 65 yrs
• Caring for people whose rights are restricted under the Mental Health Act
Compared with Optum, Richmond is a minnow. It states on its web site that it provides: “support across over 120 Services in England for people with mental health problems… now one of the biggest voluntary sector providers of mental health care in the country, offering a wide range of housing, care, employment and community support services. With almost 1,000 people delivering a diverse range of housing, care, employment and community support services to nearly 9,000 people.
See Protect our NHS dossier – https://protectournhs.wordpress.com/2013/05/28/the-link-between-the-111-service-vested-interests-and-private-equity-updated-28th-may-2013/#more-277
This partnership between an English NHS Foundation Trust, a mental health charity and a subsidiary of a giant US health insurance company points the way to the future. However little Optum might benefit from this contract, this looks as though it could be staking its claim to be part of the English health care system. And as this coalition government moves the country nearer and nearer to the waste and inequity of a US style insurance based health care system, this type of positioning by such corporations will become more and more evident. We can only hope that Richmond Fellowship’s obvious commitment to service and local knowledge will bring some benefit to this eccentric grouping of companies.