United Healthcare 2009 Annual Report Download - page 33

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read together with the accompanying Consolidated Financial Statements and
Notes to the Consolidated Financial Statements thereto. Readers should be cautioned that the statements,
estimates, projections or outlook contained in this report, including discussions regarding financial prospects,
economic conditions, trends and uncertainties contained in this Item 7, may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995, or PSLRA. These
forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially
from the results discussed in the forward-looking statements. A description of some of the risks and uncertainties
can be found in Item 1A, “Risk Factors.”
EXECUTIVE OVERVIEW
General
UnitedHealth Group is a diversified health and well-being company, serving more than 70 million Americans.
Our focus is on improving the overall health and well-being of the people we serve and their communities and
enhancing the performance of the health system. We work with health care professionals and other key partners
to expand access to high quality health care. We help people get the care they need at an affordable cost, support
the physician/patient relationship, and empower people with the information, guidance and tools they need to
make personal health choices and decisions.
Through our diversified family of businesses, we leverage core competencies in advanced technology-based
transactional capabilities; health care data, knowledge and information; and health care resource organization and
care facilitation to make health care work better. These core competencies are focused in two market areas,
health benefits and health services. Health benefits are offered in the individual and employer markets and the
public and senior markets through our UnitedHealthcare, Ovations and AmeriChoice businesses. Health services
are provided to the participants in the health system itself, ranging from employers and health plans to physicians
and life sciences companies through our OptumHealth, Ingenix and Prescription Solutions businesses. In
aggregate, these businesses have more than two dozen distinct business units that address specific end markets.
Each of these business units focuses on the key goals in health and well-being: access, affordability, quality and
simplicity as they apply to their specific market.
Revenues
Our revenues are primarily comprised of premiums derived from risk-based health insurance arrangements in
which the premium is fixed, typically for a one-year period, and we assume the economic risk of funding our
customers’ health care benefits and related administrative costs. We also generate revenues from services
performed for customers that self-insure the health care costs of their employees and employees’ dependants. For
both risk-based and fee-based health care benefit arrangements, we provide coordination and facilitation of
medical services; transaction processing; health care professional services; and access to contracted networks of
physicians, hospitals and other health care professionals. We also generate service revenues from Ingenix health
intelligence and contract research businesses. Product revenues are mainly comprised of products sold by our
Prescription Solutions pharmacy benefit management business and sales of Ingenix publishing and software
products. We derive investment income primarily from interest earned on our investments in debt securities. Our
investment income also includes gains or losses when the securities are sold, or other-than-temporarily impaired.
Operating Costs
Medical Costs. Our operating results depend in large part on our ability to effectively estimate, price for and
manage our medical costs through underwriting criteria, product design, negotiation of favorable provider
contracts and medical management programs. Controlling medical costs requires a comprehensive and integrated
approach to organize and advance the full range of interrelationships among patients/consumers, health
professionals, hospitals, pharmaceutical/technology manufacturers and other key stakeholders.
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