UnitedHealth Continues to Lead the MCO Industry With Its Vertically Integrated Business Model

UnitedHealth operates a top-tier health insurer (UnitedHealthcare), pharmacy benefit manager (Optum Rx), provider (Optum Health), and health analytics franchise (Optum Insight). This integrated strategy has resulted in some of the best returns in the industry over the years and has been copied at least in part by the late 2018 mergers at CVS Health, which added Aetna's medical insurance assets to its retail stores and PBM, and Cigna, which added Express Scripts' PBM assets to its medical insurance operations. With the alignment of these interests, we think vertically integrated organizations like UnitedHealth have the opportunity to help bend the healthcare cost curve in the US, but questions continue to swirl around whether managed care organizations' pursuit of profits outweighs those broader benefits for the US health system.