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Aetna wants to build out Optum-like unit from Humana deal

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Medicare Advantage is the obvious prize Aetna Inc. has been eyeing in its acquisition of Humana Inc. But Aetna also hopes to create a health services division with Humana's other assets.

It's a sign that even the largest health insurance companies realize they must do more than just sell health insurance if they want to remain at the top of the food chain in the long term. UnitedHealth Group Inc. has embraced this model through its Optum subsidiary.

The country's aging demographic and Humana's Medicare brand made Humana one of the most desirable targets in the market, Aetna Chief Financial Officer Shawn Guertin said at a conference Thursday hosted by banking giant Morgan Stanley. However, Humana has grown its provider and clinical lines of business.

For instance, Humana controls the fourth-largest pharmacy benefit manager in the country. That allows the Louisville, Kentucky-based insurer to negotiate prescription drug prices on its own instead of outsourcing. It has also invested in the clinically based Humana At Home division, which helps seniors transition out of the hospital and into their homes.

“This is really one of the most exciting pieces of this longer term,” Mr. Guertin said. “How do you deploy a lot of these Humana health care services assets into the Aetna book?”

Aetna could create its own version of Optum, which is built primarily around clinical consulting, data analytics and drug management. While Humana has the clinical and pharmacy parts, Aetna has the health care information technology components, which include Healthagen and Bswift. Healthagen works with hospitals and health systems on accountable-care contracting, and Bswift is a technology company focused on private exchanges.

“You put this together, and you have a very attractive portfolio of businesses,” Mr. Guertin said. There are no definitive or immediate plans to build a separate unit, however, as Aetna awaits federal approval for the transaction.

When Aetna announced its $37 billion deal for Humana this summer, many financial analysts agreed that the potential was there for Aetna to build up its own clinical and consulting operations, especially on the drug side.

“If the end goal is to create an OptumRx-like entity, Aetna has the technologies and capabilities through Humana's PBM,” Charles Rhyee, a managing director at investment firm Cowen & Co., said in a July investor note.

Diversifying beyond health plans and claims management has proven to be a money-maker, at least for UnitedHealth. Optum is UnitedHealth's most profitable segment, posting a 6.4% operating margin in the second quarter of this year compared with a 6.1% figure for the insurance division. Optum had a 6.9% margin in fiscal 2014, while UnitedHealthcare tallied a 5.8% figure.

Bob Herman writes for Modern Healthcare, a sister publication of Business Insurance.