United Healthcare 2010 Annual Report Download - page 29

The success of certain OptumHealth businesses depends on maintaining physician relationships. The primary
care physicians that practice medicine or contract with our affiliated physician organizations could terminate
their provider contracts or otherwise become unable or unwilling to continue practicing medicine or contracting
with us. If we are unable to maintain satisfactory relationships with primary care physicians, or to retain enrollees
following the departure of a physician, our revenues and results of operations could be adversely affected.
In addition, physicians, hospitals, pharmaceutical benefit service providers, pharmaceutical manufacturers, and
certain health care providers are customers of our Health Services businesses. Given the importance of health
care providers and other constituents to our businesses, failure to maintain satisfactory relationships with them
could adversely affect our business and results of operations.
Sales of our products and services are dependent on our ability to attract, retain and provide support to a
network of independent third-party brokers, consultants and agents.
Our products are sold in part through independent brokers, consultants and agents who assist in the production
and servicing of business. We typically do not have long-term contracts with our independent brokers,
consultants and agents, who generally are not exclusive to us and who typically also recommend and/or market
health care products and services of our competitors. As a result, we must compete intensely for their services
and allegiance. Our sales would be adversely affected if we are unable to attract or retain independent brokers,
consultants and agents or if we do not adequately provide support, training and education to them regarding our
product portfolio, or if our sales strategy is not appropriately aligned across distribution channels.
Because broker and agent commissions are included as health insurer administrative expenses under the medical
loss ratio requirements of the Health Reform Legislation, these expenses will be under the same cost reduction
pressures as other health insurer administrative costs. Our relationships with brokers and agents could be
adversely impacted by changes in our businesses practices to address these pressures, including potential
reductions in commissions and changes in the treatment of consulting fees.
In addition, there have been a number of investigations regarding the marketing practices of brokers and agents
selling health care products and the payments they receive. These have resulted in enforcement actions against
companies in our industry and brokers and agents marketing and selling these companies’ products. For example,
CMS and state departments of insurance have increased their scrutiny of the marketing practices of brokers and
agents who market Medicare products. These investigations and enforcement actions could result in penalties and
the imposition of corrective action plans and/or changes to industry practice, which could adversely impact our
ability to market our products.
Our relationship with AARP is important and the loss of such relationship could have an adverse effect on
our business and results of operations.
Under our agreements with AARP, we provide AARP-branded Medicare Supplement insurance, hospital
indemnity insurance and other products to AARP members and Medicare Part D prescription drug plans to
AARP members and non-members. One of our agreements with AARP expands the relationship to include
AARP-branded Medicare Advantage plans for AARP members and non-members. Our agreements with AARP
contain commitments regarding corporate governance, corporate social responsibility, diversity and measures
intended to improve and simplify the health care experience for consumers. The AARP agreements may be
terminated early under certain circumstances, including, depending on the agreement, a material breach by either
party, insolvency of either party, a material adverse change in our financial condition, material changes in the
Medicare programs, material harm to AARP caused by us, and by mutual agreement. The success of our AARP
arrangements depends, in part, on our ability to service AARP and its members, develop additional products and
services, price the products and services competitively, meet our corporate governance, corporate social
responsibility, and diversity commitments, and respond effectively to federal and state regulatory changes. The
loss of our AARP relationship could have an adverse effect on our business and results of operations.
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