Surgeons in an operating room performing surgery
Surgical athletes performing in the field of medicine…

UHC & SCA: A Super Surgical Team

John G. Baresky

… $2.3 Billion Acquisition Has Nationwide Impact; United Healthcare’s purchase of Surgical Care Affiliates is re-writing the healthcare industry’s playbook…

United HealthCare’s business model has been changing and expanding. It reaches into several sectors beyond being a leading provider of healthcare insurance / managed care plans. With its acquisitions in and outside the managed care plan market sector, it widens revenue streams and becomes a diversified competitor not only in healthcare insurance but in provider sectors as well. The Surgical Care Affiliates (SCA) acquisition adds considerable dimension and income to the United HealthCare (UHC) business model.

…Based in Minnetonka, Minnesota, UHC (also known as UnitedHealth Group / UHG) was founded in 1974 and is ranked number 6 in the Fortune 500; it has approximately 230,000 employees and annual revenues exceeding $184 billion…

Base facts of the SCA acquisition…

  • UHC, with its OptumCare business unit, announced it was acquiring Surgical Care Affiliates (SCA) for $2.3 billion in January 2017
  • United Health Group / UHC (NYSE: UNH) paid $57 per share for Surgical Care Affiliates (NASDAQ: SCAI) outstanding common stock
  • Based in Deerfield, Illinois, SCA operates 203 surgical centers located in over 30 states; their facilities perform about 1 million surgical procedures annually
Surgical Care Affiliates — SCA logo

UHC’s expansion and diversification details; they have been steadily widening and deepening their business model for years; notable additions include:

  • MedExpress, an urgent care center provider with locations in 14 states, was acquired by UHC in 2015 for $1.5 billion
  • In 2015, they acquired AxelaCare, a home infusion provider which operates in 44 states through 34 pharmacies
  • UHC acquired Catamaran, one of the largest PBMs in the United States, for $12.8 billion in 2015 to bulk up their internal PBM unit OptumRx; OptumRx now serves over 67 million consumers, processes more than 1 billion claims and manages about $80 billion in pharmacy spend
  • In 2016 it acquired Rocky Mountain Health Plans (not to be confused with Intermountain Healthcare); RMHP’s business is in western Colorado, comprised of about 300,000 lives and also features Medicaid
  • In 2017, UHC is launching a nationally branded accountable care organization as part of a value-based care push designed to attract self-funded employers; called “NexusACO”, it has a national network of UnitedHealth’s “Tier 1” doctors already meeting the insurer’s quality and efficiency measures in place to care for patients.

As consumers, employers, employee benefits consultants, government agencies and other stakeholders pressure UHC to reduce premium increases, UHC can leverage its total business model as a plan AND provider:

  • It can lower out-of-pocket costs for members having procedures performed via SCA units rather than outside providers
  • They can negotiate with employers and other organizations by promoting the advantages their broad array of services can offer in select markets versus “plan only” competitors
  • In areas where SCA facilities are located, it can leverage them against hospitals and other surgical centers located in the surrounding area.
  • UHC will be able to collect revenue from other plans (competitors) if their members have procedures performed at SCA facilities
  • By operating its own surgical centers, UHC will gain a more direct administrative and clinical understanding of surgical center business aspects to better manage costs of their own facilities and influence other surgical center providers to improve their operations
  • It can work with clinicians to establish better protocols to reach improved outcomes and incentivize them to provide better care at lower cost

Two of UHC’s largest competitors, Aetna and Anthem, are tied up in the courts with acquisition deals facing antitrust issues (Aetna is seeking to buy Humana and Anthem is seeking to buy Cigna).

United Healthcare logo
… UnitedHealthcare’s business model is assertively transforming from payer to payer and provider …

UHC’s differentiated approach helps them avoid antitrust regulatory issues and provides them with other competitive advantages:

  • As healthcare systems expand their business models by developing their own types of health plans, UHC keeps its business model competitive by developing provider capabilities
  • As it grows SCA and its overall provider capabilities, it can leverage its buying power for better pricing from healthcare product manufacturers like pharmaceuticals and medical devices

…The UHC / Optum acquisition of SCA is a significant development; it defines a commitment by UHC to become a provider of advanced patient care…

Moving Forward…

UHC likely has other acquisition targets and designated new healthcare sectors to expand into. There will be actions taken by their competitors -both insurance plans and provider organizations- to account for UHC’s maneuvers which serve as a catalyst for more business model changes across industry sectors. Despite the delays Aetna and Anthem are experiencing, it is likely they are evaluating their long term business plans -not to mention that other entities like BCBS plans and healthcare systems are probably doing the same.

For now, UHC has to contend with assimilating its acquisitions, learning their unique businesses and become proficient at managing them to the point where they can collectively optimize and competitively deploy them. Based on UHC’s evolving business model over the last several years, the rules of engagement across the legions of plans and providers will continue to change.

Thank you for reading this story

Read my other articles about medical and healthcare business trends, content marketing and digital strategy, brand and product management, consumer wellness, managed care and market access strategy. Contact me today for your healthcare content writing and content strategy needs for medical, business, academic, patient and consumer healthcare audiences.

I have over 20 years of experience in the healthcare industry producing valuable healthcare content for audiences and customers spanning physicians, nurses, pharmacists plus pharmaceutical companies, medical technology manufacturers, healthcare provider organizations, managed care, investors, consumers and other stakeholders.

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As a healthcare content writer, my work aligns with an organization’s voice, brand, SEO elements, marketplace and objectives. It establishes trust in their company and recognized value in its products and services that generates revenue.

This experience was earned through working at Walgreens, Pfizer, AbelsonTaylor, TAP (Takeda Abbott Partnership), Hospira Worldwide and Boston Software Systems. ​

To a large degree, my professional interests emulate my family which includes doctors, nurses, physician assistants and other clinicians plus those that are working in healthcare administration and commercial enterprises.



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