UNITED HEALTHCARE: EYES SACRAMENTO MARKET
"United HealthCare Corp., one of the nation's largestThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
managed care organizations and a bellwether in the industry, has
its eyes on the highly competitive Sacramento medical market,"
SACRAMENTO BEE reports. The company's move into the Sacramento
area, which is "awaiting regulatory approval, will coincide early
next year with pushes into other Northern California counties as
the Minneapolis-based company tries to expand its presence in the
TOUGH ACT: United HealthCare, which has almost 14 million
members nationwide, "plans to grow its California market from a
comparatively small foundation of about 700,000" members.
According to industry analysts, while the company is "a large
national player, its entrance into Sacramento and other
California markets will be difficult." In Northern California,
United HealthCare currently has 275,000 members, "most of whom
are enrolled in indemnity plans." Analysts and competitors "said
those small numbers" could make it difficult for the company to
grow in the state, where about 85% of the market "already belongs
to a managed health care plan."
REAX: Gary Velasquez, president and CEO of Foundation
Health Corp's California plan, said, "I think for another player
to come into a market that is saturated, broker-driven and ultra-
price sensitive is challenging. Unless United HealthCare is
prepared to buy market share and incur substantial losses, I
would doubt they would gain significant market share." Dale
Waters, president of Benefit Insurance Services in Sacramento,
agreed, saying, "It's a great company with a great reputation.
But anyone who wants a crack at the market has to contend with
Kaiser (Permanente), which is at the low end of the pricing
structure, and you need to have a good provider network." BEE
notes, however, that United HealthCare "is not a price-leader
within the industry."
SATURATION: Henry Loubet, United HealthCare's senior vice
president and CEO of health plan operations in the Pacific
region, said that to serve clients throughout the region and the
country, "we have to be in all the major markets in California."
He said the company "plans to garner market share" through new
products and "its national reach, serving more than 40 million
people in 50 states." Waters "said he thinks the community will
benefit from" United HealthCare's entrance into the market "given
the pending mergers of PacifiCare with FHP/Takecare and
Foundation with Health Systems" (see AHL 10/2). "Turning four
plans into two is not healthy for businesses," Waters said.
"United will fill a vacuum at a perfect time. We need another
carrier or two to keep it competitive" (Chiu, 12/17).