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UnitedHealth relies on innovation to stay ahead of the pack

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UnitedHealth Group Inc.

UnitedHealth Group Center

9900 Bren Road East

Minnetonka, Minn. 55343

Phone: 800-328-5979

www.unitedhealthgroup.com

Innovation is a core aspect of UnitedHealth Group Inc.'s business model that allows the company to differentiate itself from key competitors.

For the third straight year, the Minnetonka, Minn.-based health insurer has been voted the best overall managed care company in Business Insurance's 2007 Readers Choice Awards.

The company, like the general managed care industry, is contending with sluggish commercial membership growth. To combat this the company is seeking to introduce innovative new products. For example, it is introducing two products to help small employers offer affordable benefits to their employees.

Vital Measures, a program that reduces out-of-pocket health care expenses for individuals and families with healthy lifestyles, was introduced in July. It is aimed at employers with 100 to 1,000 fully insured employees in Colorado, Ohio, Pennsylvania and Rhode Island. A national launch is slated for 2008.

The company soon will launch UnitedHealthcare Edge, a benefit product for small businesses that helps connect employees to quality premium network providers.

"We believe this product will enhance our small-business offerings and compare favorably with the narrow-network restrictive-access products that others offer," Stephen Hemsley, president and chief executive officer, said during the company's second-quarter earnings conference call.

UnitedHealth has faced challenges over the past year, notably dealing with the stock options backdating scandal that led to the resignation of former Chairman and CEO William McGuire, but has made "significant strides" in the advancement of its governance initiatives, Mr. Hemsley said.

UnitedHealth re-entered the mergers and acquisitions game in a major way this year, with its planned purchase of Sierra Health Services Inc., the second-largest insurer in Nevada. However, the deal has run into strong objections from health care providers, some local politicians and consumer groups. Sierra has a major presence in the Las Vegas market, one of the few U.S. markets experiencing significant commercial membership growth.