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UnitedHealth Expands ACO Initiative - Analyst Blog

Posted
9/13/2013 4:57:00 PM
By: Zacks.com
Referenced Stocks:AET;CI;HUM;UNH

UnitedHealth Care, a unit of UnitedHealth Group Inc. ( UNH ), has formed an Accountable Care Organization with Quality Health Solutions, Inc. (QHS) and Medical College of Wisconsin.

An ACO is a collaboration of health care providers, who voluntarily form alliances to provide coordinated high quality care to patients. An ACO is accountable for the quality, cost, and overall care offered to members. Focus on the needs of patients and linking payments to outcomes directs the model to improve the health of individuals and communities and curb rising health care costs.

Via this ACO UnitedHealth Care intends to serve more than100,000 residents in Wisconsin who are enrolled in UnitedHealthcare's employer-sponsored health plans. 

The ACO which will start its service in Jan 2014, will serve the patients via a network of 3,000 physicians and 18 hospitals comprising the five QHS members in southeastern Wisconsin (Agnesian Healthcare, Columbia St. Mary's, Froedtert Health, Wheaton Franciscan Healthcare and the Medical College of Wisconsin).

Network physicians and hospitals will be paid on the basis of quality of care they provide. At present these care providers are paid $650 million as annual reimbursements.  

QHS will enable primary care providers ensure a better service to their patients by providing them status reports on their patients. 

More than 100,000 UnitedHealth Care employee-sponsored plan participants who currently receive care from participating providers will also be able to receive benefits under this ACO.

UnitedHealth Care already has a significant presence in Wisconsin. Via a care provider network of more than 130 hospitals and 19,500 physicians statewide, it serves more than 1.4 million Wisconsin residents.

In the U.S., UnitedHealth is engaged in accountable care contracts with more than 575 hospitals, 1,100 medical groups and 75,000 doctors. 

Via ACOs, UnitedHealth targets on getting timely information to the provider to improve care for patients and build healthier communities. These solutions also focus on growing membership in the company's medical products through provider collaborations that are designed to lower costs. 

UnitedHealthcare is significantly expanding its use of accountable care contracts over the next five years across its employer-sponsored, Medicare and Medicaid businesses, working with care providers to transition from fee-for-service contracts to payment models that reward value over volume and improves health outcomes for patients.

Today, more than $23 billion of UnitedHealth's reimbursements to hospitals, physicians and ancillary care are tied to its accountable care initiatives. By the end of 2017, UnitedHealth Care's accountable care contracts are expected to total $50 billion.

Other health insurers like Aetna Inc. ( AET ) and Cigna Corp. ( CI ) are also aggressively forming ACOs. Going forward, we expect such patient-centered collaborations to grow rapidly.

UnitedHealth carries Zacks Rank # 2 (Buy). 

Another player in the same industry Humana Inc. ( HUM ) with Zacks Rank  #1 (Strong Buy) is worth considering.  



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