UnitedHealth's Lofty Ambition: $332 Billion in Healthcare Savings (UNH)

UnitedHealth Group, Inc. (NYSE: UNH) has listed a very lofty plan for how to reach the healthcare savings for America, which of course will include a private/public system.  It may sound lofty, but the company is putting out a report arguing technology can streamline the administrative processes and can create a potential savings of some $332 billion over the next decade.   This is a topic that spans healthcare to law, and politics.

UnitedHealth Group’s Center for Health Reform and Modernization has issued this report as a companion to its first paper released in May.  That report identified $540 billion in potential federal medical cost savings.

This new report targets technology to save money by modernizing the administrative and transactional aspects of health care that will accrue to physicians, hospitals and health plans, and to consumers, employers and the government.  It estimates that perhaps half of the $332 billion savings would accrue to physicians and hospitals, another 20% directly to the government through Medicare and Medicaid, and 30% to health plans. What seems an effort to appeal to the government, the report also notes that there are various ways where a higher percentage of the savings could become available to the federal government.

Among some of the targets are tighter mandatory data and transaction standards; eliminating the antiquated manual processes, paperwork, and redundant intermediaries; automating payments; credentialing and quality measurement; and sophisticated and consistent regulatory regimes.

As far as some statistics that the company is highlighting for its own operation, it claims 12,000 technology professionals, with 30 terabytes of health care data, some 7 million hours annually, funding and arranging $115 billion of health care, interactions with over 5,000 hospitals and 650,000 physicians and other health professionals.  It also noted that its technology systems process 60 billion transactions and support 82 million calls, routed to 20,000 service agents.  UnitedHealth now has 30 million magnetic swipe cards in circulation.

Some other administrative cost savings are listed as $18 billion from a broader use of automated swipe cards, $41 billion from the creation of a national payment accuracy clearinghouse, and $109 billion from dumping paper checks and paper remittance advice.

The additional savings and targets can be found at the www.unitedhealthgroup.com/reform site.

If you think Unitedhealth is alone in this, it is  not.  Every insurer and processor is creating their own “work for reform and change” now.  The reason is simple: survival.  Very few industries like new reform and  change that attacks their businesses.  But there is the old “If you can’t beat them, join them” mentality at work.

Do the changes mean lower revenues, lower margins, and more regulation and oversight?  The answer to this is probably as close to “ABSOLUTELY!” as you can get.  But along with all change, there will be some winners and losers in the insurance and healthcare sectors.  Companies which have been serving this sector for years and years are trying to make sure they have their say and their role in the new healthcare system.

This is a topic that will not go away.  It will be front and center for years.  The question is now “How much change is coming?” rather than “Will they change healthcare in America?”…

What will end up being the question of tomorrow is going to be “Is this better or worse than it was?”…

Jon C. Ogg
June 30, 2009