Optum Health is rolling back parts of its rapid expansion to refocus on its core value-based care model after what executives described as a drift from the company’s original mission, according to an Oct. 29 earnings call from parent company UnitedHealth Group.
The move comes as Optum Health’s revenue held steady year over year at $25.9 billion, but earnings from operations fell sharply to $255 million, representing a 1% operating margin, down from $2.2 billion and an 8.3% margin in the third quarter of 2024.
Here are seven notes from the earnings call:
1. UnitedHealth Group CEO Stephen Hemsley said the company is taking “concrete steps” to realign Optum Health around its original value-based care model. The restructuring includes narrowing provider networks and emphasizing aligned physicians, strategic geographies and benefit design.
2. Optum CEO Patrick Conway, MD, said the company’s strategy “strayed from the initial intent of the model,” resulting in an oversized provider network, operational inconsistencies and overreliance on less-aligned affiliated physicians.
3. According to Dr. Conway, Optum Health’s three key priorities are returning to the original clinical framework that supports value-based care, building a more-integrated provider network and aligning with the right managed benefit products and patient base.
4. Optum is bringing “greater discipline” to its risk contracts, Dr. Conway said, working with payers on benefit adjustments and rate structures that better reflect the populations it serves.
5. The company expects its value-based care membership to decline about 10% in 2026 as it exits certain markets and PPO contracts covering roughly 200,000 lives. Growth is expected to resume in 2027.
6. Optum is prioritizing high-performing, engaged providers and moving toward employed or contractually dedicated physicians. Less-aligned providers are being removed from networks, which will shrink further in 2026. As of July 17, UnitedHealth employs or contracts with more than 90,000 physicians, about 10% of the U.S. physician workforce.
The company is prioritizing high-performing providers and moving toward employed or contractually dedicated physicians. Less-aligned providers are being removed from networks, which will shrink further in 2026. As of July 17, UnitedHealth employs or contracts with more than 90,000 physicians, accounting for about 10% of the entire U.S. physician workforce.
7. Mr. Hemsley said Optum plans to consolidate locations and refine its geographic footprint to strengthen operations and “scale the leading value-based clinical care business of Optum Health.”
