United Healthcare 2001 Annual Report Download - page 24

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PAGE 23 UnitedHealth Group
2 0 0 1 RESULTS COMPARED TO 2 0 00 RESULTS
CONSOLIDATED FINANCIAL RESULTS
Revenues
Revenues include premium revenue from risk-based (insured) products, fees from management,
administrative and consulting services, and investment and other income.
Consolidated revenues increased in 2001 to $23.5 billion. Strong and balanced growth across all
business segments was partially offset by the impact of planned exits in 2000 from UnitedHealthcare’s
commercial businesses in the Pacific Coast region, the withdrawal of its Medicare+Choice product offering
from targeted counties and the closure of Uniprise’s Medicare fiscal intermediary operations. Adjusted for
the effects of these business and market exits and excluding revenues from acquired businesses, consolidated
revenues increased approximately $3.0 billion, or 15%, over 2000. Following is a discussion of 2001
consolidated revenue trends for each revenue component.
Premium Revenues Consolidated premium revenues in 2001 totaled $20.7 billion, an increase of
$1.8 billion, or 9%, compared with 2000. Adjusted for the effect of business and market exits and
excluding revenues from acquired businesses, premium revenues increased 13% over 2000. This
increase was primarily driven by average net premium yield increases in excess of 13% on
UnitedHealthcare’s renewing commercial insured business.
Fee Revenues Fee revenues in 2001 totaled $2.5 billion, an increase of $526 million, or 27%, over
2000. The overall increase in fee revenues is primarily the result of record growth of 20% in
Uniprise’s multi-site, large-employer customer base, growth in UnitedHealthcare’s fee-based business,
and Ovations’ Pharmacy Services business that began operations in June 2001.
Investment and Other Income Investment and other income in 2001 totaled $281 million, an increase of
$49 million over 2000. Lower interest yields on investments in 2001 compared with 2000 were largely
offset by increased levels of cash and fixed-income investments in 2001. Net realized capital gains in
2001 were $11 million, compared to net realized capital losses of $34 million in 2000.
Medical Costs
The combination of pricing, benefit designs and comprehensive care facilitation efforts is reflected in
the medical care ratio (medical costs as a percentage of premium revenues).
The consolidated medical care ratio decreased from 85.4% in 2000 to 85.3% in 2001. Excluding
AARP business, the medical care ratio was 83.9% in both 2000 and 2001, as net premium yield increases
were generally well matched with increases in medical benefit costs.
On an absolute dollar basis, medical costs increased $1.5 billion, or 9%, over 2000. The increase was
driven by medical cost inflation, increased consumption patterns, benefit changes and product mix changes.