March 15, 2024

The model vertically integrated payer

In this week’s graphic, we take a closer look at UnitedHealth Group (UHG)’s 2023 financials to show the success of its vertical integration strategy. The company reported $367B in consolidated revenue in 2023, earning more than three quarters of that from its UnitedHealthcare insurance arm. While its Optum health services arm—which includes Optum Rx, Optum Health, and Optum Insight—earned $88B of consolidated revenue, an additional $136B of revenue from its insurance arm was redirected into its Optum businesses in the form of intercompany eliminations. This figure, up 26 percent from last year, represents over 60 percent of Optum’s total revenue. These payments from UnitedHealthcare to Optum allow UHG to retain profit-capped insurance revenue by shifting it to other divisions, driving increased profitability for the overall enterprise. Optum Health, UHG’s provider arm, has been a particular focus of recent growth. Over the last decade, it has become the nation’s largest employer of physicians, and the division now owns or affiliates with at least 90K physicians, roughly 10 percent of all US physicians. It has increased its earnings over eightfold since 2014, consistently earning the majority of its revenue from UHG’s insurance arm. This reflects a key aspect of UHG’s provider acquisition strategy: targeting provider assets in markets where UnitedHealthcare insurance plans are dominant. 

UHG Revenue Graphic