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Industry Insights

Paduda: What's Up With Optum Workers' Comp?

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Tuesday's non-announcement that ExamWorks bought Optum’s Settlement (MSA) business should not have been a surprise.

Joe Paduda

Joe Paduda

Word on the street is that Optum’s been trying to offload its pharmacy benefit management and ancillary services businesses for some months now. That and, for those of us who’ve been in this business for a while, UnitedHealthcare’s history in workers' comp make this almost inevitable.

Here’s what I wrote on this a few years ago.

[A]t various times, the company [UHC] owned:

  • A technology business focused on bill review (Power-Trak, later sold to Mitchell).
  • MetraComp, a WC PPO and managed care firm (and a former employer). 
  • Focus (this last of some interest to one reader in particular.
  • Here is a brief note on UHC’s ill-fated entry into workers’ comp insurance back in the '90s. (Spoiler alert: That damn tail will always get you.)
  • Much more recently, UHC’s Optum got into the work comp PBM business in a very big way, buying Catamaran.

So, this marks the sixth time (at least) UHC has gotten into and out of workers’ comp and WC services.

Briefly, my educated view is:

  • UHC gets into WC, as WC looks simple, is really inefficient, UHC likes to diversify (and in most instances does this quite successfully) and is extremely self-confident.
  • And UHC gets out of WC because it is very complicated, has very limited upside, is a shrinking business and distracts management from important stuff.

One data point: Total national work comp medical spend is a bit over $30 billion. That is 1/12th of UHG’s total revenue.

What does this mean for you?

History predicts the future. 

Joseph Paduda is the principal of Health Strategy Associates, a consulting firm focused on improving medical management programs in workers’ compensation. This column is republished with his permission from his Managed Care Matters blog.

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