United Healthcare 2014 Annual Report Download - page 47

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Operating Costs
The increase in our operating costs during 2013 was due to business growth, including an increase in fee-based
benefits and fee-based service revenues and a greater mix of international business, which carry comparatively
higher operating costs, partially offset by our ongoing cost containment efforts.
Reportable Segments
UnitedHealthcare
UnitedHealthcare’s revenue growth in 2013 was primarily attributable to the impact of 2012 acquisitions and the
growth in the number of individuals served. The effect of these factors was partially offset by the government
funding reductions described previously and the customer funding conversion discussed above.
UnitedHealthcare’s earnings from operations and operating margins in 2013 decreased compared to the prior
year as operating margins were pressured by the funding reductions that decreased revenues and by decreased
levels of favorable reserve development.
Optum
Total revenues increased in 2013 primarily due to broad-based growth across Optum’s services portfolio with
growth in each of Optum’s major businesses led by pharmacy growth from the insourcing of UnitedHealthcare
commercial customers and external clients.
Optum’s earnings from operations and operating margin in 2013 increased significantly compared to 2012,
reflecting progress on Optum’s plan to accelerate growth and improve productivity by strengthening integration
and business alignment.
The results by segment were as follows:
OptumHealth
Revenue increases at OptumHealth in 2013 were primarily due to market expansion, including growth related to
2012 acquisitions in local care delivery, and organic growth.
Earnings from operations and operating margins in 2013 increased primarily due to revenue growth and an
improved cost structure across the business, including local care delivery, population health and wellness
solutions, and health-related financial services offerings.
OptumInsight
Revenues at OptumInsight in 2013 increased primarily due to the impact of a 2012 acquisition and growth in
services to commercial payers.
The increases in earnings from operations and operating margins in 2013 reflected increased revenues, changes
in product mix and continuing improvements in business alignment and efficiency.
OptumRx
The increase in OptumRx revenues in 2013 were due to the insourcing of UnitedHealthcare’s commercial
pharmacy benefit programs and growth in both UnitedHealthcare’s Medicare Part D members and external
clients. Over the course of 2013, we completed our transition of 12 million migrating and new members to the
OptumRx platform from a third-party.
Earnings from operations and operating margins in 2013 increased primarily due to strong revenue growth,
pricing disciplines, and greater use of generic medications.
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