UnitedHealth Group Incorporated (NYSE:UNH)'s UNH health service business, Optum, recently forged a relationship with Boulder Community Health (NYSE:CYH) (BCH) to provide an enriched, seamless and affordable healthcare to patients residing in Boulder County and the surrounding communities.
Optum, a leading information and technology-enabled health services business, brings in a wide array of capabilities to this unique tie-up, which in turn, will help BCH strengthen its clinical and operational performance. Like every other hospital and healthcare system, BCH is facing economic issues. This relationship will enable Optum to reduce costs and increase efficiencies, and BCH will be able to continue as an independent, community-based health system.
The newly-forged tie-up will offer enhanced services, scale and resources to BCH, comprising a host of essential functions covering data and analytics, revenue cycle management and care coordination. BCH clinicians and leaders take all vital decisions to make sure that the organization is run to fulfil the growing requirements of people.
The companies will coordinate on achieving better health outcomes for patients. This, in turn, will improve the use of data and analytics to target medical interventions more effectively and also build analytics platforms, etc. This solid combination is expected to drive revenues, facilitate research and develop project management to name a few.
Teaming up with Optum will help BCH deal with certain financial pressure affecting smaller health systems and maintain a patient-centric medical care. The collaboration is expected to solidify BCH’s capability to maintain its independence and help accelerate clinical and operational performance.
Per the deal, around 280 BCH employees will become Optum staff who will be able to gain traction from skill-advancement opportunities, technologies and processes at Optum, which in turn, will aid both to serve communities better.
Optum, the health service business line of UnitedHealth, is becoming increasingly valuable. It is also crucial to the company’s diversification strategy. The primary drivers for Optum are pharmacy care services, care delivery, technology, government services etc.
The segment expanded to contribute to 48% of operating earnings in 2019 compared with 25% in 2014. From 2010 to 2019, the segment’s compounded revenues and earnings witnessed a CAGR of 19%. In first-quarter 2020, revenues and earnings grew 24.6% and 12.2%, respectively.
A number of acquisitions made in this segment, use of cutting-edge technology, market-leading health analytics, modern care delivery and data-driven population health approaches pave the way for Optum’s growth in the long haul. Revenues from this business are expected in the range of $127-$128 billion for 2020, indicating a nearly 13% rise from the figure reported in 2019 (calculated at the mid-point).
Shares of this currently Zacks Rank #2 (Buy) company have rallied 18.5% in a year’s time, outperforming its industry’s growth of 7.8%.
Other companies in the same space, such as Molina Healthcare (NYSE:MOH) Inc. MOH, Centene (NYSE:CNC) Corporation CNC and Humana Inc (NYSE:HUM). HUM, have also gained 31.3%, 21.5% and 41%, respectively, in the same time frame. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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