United Healthcare 2010 Annual Report Download - page 39

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 are 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, whose 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 help 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 Employer & Individual, UnitedHealthcare Medicare &
Retirement, and UnitedHealthcare Community & State 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 typically at a fixed rate per individual served 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 fee-based 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 consulting 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 care provider
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