Who are the key competitors for uhc medicare supplement product

Running head: UNITEDHEALTH GROUP 1

2

UNITEDHEALTH GROUP

Cover Page

Table of Contents

Introduction to the Company Page

Current Firm Description 3

Company History 3-5

Vision and Mission Statement 5-6

Vision and Mission Statement Assessment 6-7

External Assessment

External Factor Evaluation (EFE) Matrix 7-12

Competitive Profile (CPM) Matrix 12-14

Internal Assessment

Internal Factor Evaluation (IFE) Matrix 14-19

Financial Ratio Analysis 19-22

External and Internal Assessment Implications 22-24

Current Strategy 24-26

Strengths, Weaknesses, Opportunities, and Threats (SWOT) Matrix 26-29

The Strategic Position and Action Evaluation (SPACE) Matrix 29-31

Boston Consulting Group (BCG) Matrix 32-34

Possible Strategic Alternatives 34-38

Current Organizational Structure Evaluation 38-39

Organizational Recommendations

Organizational Culture 39-40

Business Processes 40-41

Rewards Structure 41

Technology 41-43

References 44-52

Introduction to UnitedHealth Group

Current Firm Description

UnitedHealth Group (UHG) is a publicly-traded healthcare organization that serves millions of individuals of all ages through their two sectors, Optum and United Healthcare. The company has become the largest health insurance company in the United States, with a current market share of 13% (Trefis Team, 2020). The firm's goal is to make a healthier world by making the health care system easier to navigate through their insurance coverage and included services for their members (United Healthcare, 2020). Optum is a healthcare service made up of patient care and pharmaceutical services in the United States (Optum, 2020). United Healthcare sells various health, vision, dental, and supplemental insurance plans to large and small groups, and individuals and families. The organization caters to local communities by offering Medicaid and Children’s Health Insurance Program (CHIP) plans for those with low income while following state regulations and those in retirement age and disabilities by providing Medicare Part A, B, C, and D plans.

Company History

UnitedHealth Group is a public healthcare company based out of Minnetonka, Minnesota, United States, specializing in insurance services and healthcare products. The company began with the name United Healthcare in 1974 with the founding of Charter Med by Richard Taylor Burke based in Minnesota (Patrick, 2015) to manage the Physicians Health Plan of Minnesota. The Physicians Health Plan was an early health management company. United Healthcare expanded in 1988 with a new name (UnitedHealth Group) and went public with the Diversified Pharmaceutical Services subsidiary, its first pharmacy benefit management. The company began managing pharmacy benefits delivering mail and retail pharmacy services. The pharmaceutical subsidiary was then sold to SmithKline Beecham in 1994 (Patrick, 2015). The journey into the insurance business began in 1994 with the acquisition of Ramsey-HMO, which is an insurer in Florida. In 1996, UnitedHealth Group continued operations through the purchase of Healthwise of America, which had several Health Maintenance Organizations (HMO) in areas such as Tennessee, Maryland, and Kentucky (Patrick, 2015).

Critical events. The company realigned its operations in 1998 to include five independent businesses such as UnitedHealthcare, Ovations, Uniprise, Specialized Care Service and Ingenix. This significant realignment resulted in United Healthcare Corp being renamed to UnitedHealth Group (Haefner, 2017). United Health Group also acquired HealthPartners of Arizona in the same year. The organization became the operator of Arizona’s largest Arizona Health Care Cost Containment System (AHCCCS). The company continued its operations by purchasing several other organizations, such as PacifiCare Health Systems (Patrick, 2015). There were antitrust concerns at the time, which made the organization divest parts of PacifiCare’s commercial health insurance. There were sales and other agreements, such as the end of the network access agreement with Blue Shield of California. Over time, the company continued to invest in different organizations and expand its operations.

Current leadership. The UHG is under the direction of Chief Executive Officer (CEO), David Wichmann, who was appointed to the position on September 1, 2017. As the CEO, he is in charge of the company’s strategic direction, growth, and overall performance. The Vice-Chairman is Larry C. Renfro. Additional leaders from various subsidiaries of the organization include Sir Andrew Witty, who is the CEO of Optum, Ken Ehlert, Chief Scientific Officer of UnitedHealth Group, Cory B. Alexander, Executive Vice President at UnitedHealth Group, Richard Migliori, Chief Medical Officer of UnitedHealth Group, Dan Schumacher, President and Chief Operating Officer of Optum, and John Rex, Chief Financial Officer of UnitedHealth Group (UnitedHealth Group, 2020a)

Primary competitors. There are several primary competitors for the UHG. The first competitor is Humana, which is a health services and insurance provider. The second competitor is Cigna, also a health insurance company.

Vision and Mission Statement

According to the UnitedHealth Group website (2020b, para. 1), their mission is, “Helping people live healthier lives and helping make the health system work better for everyone.” They work to achieve this mission by improving their performance to help the customers that they serve to become healthier individuals. They also partner with health care providers and clinics to provide care at the lowest prices. UHG works to achieve its vision through a unique set of values. UHG’s mission statement is the following:

We seek to enhance the performance of the health system and improve the overall health and wellbeing of the people we are privileged to serve and their communities.

We work with health care professionals and other key partners to expand access to high-quality health care so people get the care they need at an affordable price.

We support the physician/patient relationship and empower people with the information, guidance, and tools they need to make personal health choices and decisions.

This mission statement is listed on the UnitedHealth Group website (2020b, para. 2-4). The firm’s values include Compassion, Integrity, Innovation, Performance, and Relationships (UnitedHealth Group, 2020b). The firm lists these values on their website, but they do not list a vision statement anywhere on their website.

Vision and Mission Statement Assessment

David, David, & David (2019) identify nine components of a mission statement: customers, products or services, markets, technology, survival, growth, profitability, philosophy, self-concept, public image, and employees. UHG has a mission statement that reflects each of the above components. A mission statement should support the vision and serves to communicate purpose and direction to employees, customers, vendors, and other stakeholders (Society for Human Resource Management [SHRM], 2018). United Health Group's mission statement identifies its customers as people who want to live healthier lives who would benefit from an efficient health system. It identifies the group's services as healthcare meant to ensure that people live healthier lives. Technology and the survival, growth, and profitability are part of a mission statement's nine components (David, et al., 2019), but are featured in UHG values section. They are listed under the company’s values and are classified as innovation, performance, compassion, and integrity (UnitedHealth Group, 2020b). The mission statement hints at the employees and their role in promoting health through the term help, which implies that the organization's employees will work with patients to lead healthier lives. Similarly, the statement loosely describes the organization's market as people who would benefit from an efficient healthcare system. However, the geographical and demographic features of the market are not featured.

According to David, et al., (2019, p. 44), “Core values provide the needed ethical foundation for creating an excellent vision and mission.” UHG’s core values are appropriate, given the firm’s industry. Although closely associated, a firm’s core values differ from the vision and mission, because unlike the vision and mission, core values do not change. It is common for a firm’s core values to include one or more components related to honesty and integrity. Saint Leo University and UHG have this in common, as both specifically chose integrity (Saint Leo University, n.d.). While this is the only exact match for the two firms, parallels can be drawn between some of the others chosen by the University (excellence, community, respect, personal development, and responsible stewardship) and UHG. Core values should reflect the firm’s beliefs, and these chosen characteristics should be represented in the actions taken in pursuit of mission fulfillment.

External Assessment

The External Assessment consists of two matrixes and accompanying analyses. The matrixes are the External Factor Evaluation (EFE) Matrix (see Table 1) and the Competitive Profile Matrix (CPM) (see Table 2).

External Factor Evaluation (EFE) Matrix

The External Factor Evaluation (EFE) Matrix is a way for companies to evaluate external opportunities and threats. The following section includes an EFE for UHG.

Opportunities. In this section, we will discuss the opportunities that are present for the UHG. These opportunities include new service offerings/ telehealth & bundling, projected growth in healthcare & accidental insurance, United Healthcare sector growth, high market presence and high level of customer satisfaction.

New service offerings/telehealth . While the COVID-19 pandemic poses a significant threat, it also indirectly provides an opportunity in the form of telehealth options. This capability is not new, itself, but the demand continues to increase due to concerns over safety amidst the pandemic. In fact, according to the U.S. Department of Health and Human Services, “in April, nearly half (43.5%) of Medicare primary care visits were provided through telehealth compared with less than one percent (0.1%) in February” (2020, para. 3). This rise in demand for telehealth services uniquely benefits UHG, as the firm already had a well-established telehealth program pre-COVID (Pifer, 2019, para. 2), allowing for the timely expansion of telehealth options for clients during the pandemic. Not only does telehealth allow for enhanced safety and convenience, but it also allows UHG to continue to stay connected to clients and deepen existing relationships.

Projected growth in healthcare & accidental insurance . When thinking of health insurance, one may think of the type of traditional coverage that helps cover doctor’s visits or prescriptions, but accident insurance is a supplemental insurance product that presents an opportunity for UHG. Due to factors such as increasing auto accidents and the continued effects of COVID-19, “these policies are responsible for the high growth rate of global personal accident and health insurance market over forecast period” (Market Insight Reports, 2020, para. 2). Supplemental insurance products such as accident insurance contribute revenue, but they also help with retaining clients. There is a strong correlation between the number of active policies a client has and the firm’s retention of those clients (McQuerrey, 2017, para. 3).

United Healthcare sector growth . Optum is UHG’s medical care provider, and this part of the business plays a significant role in the overall growth UHG anticipates in 2020 and beyond. Carrigan Miller (2019, para. 3) of the St. Paul Business Journal writes, “the company expects OptumHealth to grow revenue and earnings by more than 25 percent in 2020”. This is consistent with the projected growth estimate of 11.70% (Yahoo Finance, 2020) and further demonstrates continued success for the firm in this sector.

High operating margin . Operating margin is a performance or profitability ratio that reflects the proportion of profit an entity makes from its business operations (Corporate Finance Institute, 2018). UHG has always reported a high operating margin compared to its competitors. In 2017, the organization’s operating margin was 7.56; in 2018, the entity’s operating margin was 7.67; in 2020, the margin was 8.13 (NYSE, 2020). These figures represent a high operating margin as compared to the company’s competitors. Anthem, for instance, had an operating margin of about 5.54 in 2017, and in 2018 and 2019, it had an operating margin of around 6.33 and 6.46 consecutively (Macrotrends,net, 2020). When a company has a high operating margin, it has a competitive advantage. It can afford to reduce prices to attract more clients. It can also easily attract potential investors to the business.

Large market presence . A large market presence means that an entity has got its strategies right by providing products or services that exceed or meet customer requirements. High market presence also likely means greater sales, strong market entry barriers, and fewer efforts to increase sales. UHG has a high market presence. In 2015, it had a market share of approximately 7.6 %, which increased to around 22% in 2017. Last year, the company had about 14% market share (Nasdaq, 2019). A firm with a high market presence can build a business image that helps win and attract new customers. A firm with a huge market presence can also maintain its market position by offering new products and services to customers. A large market presence can also translate into more sales and revenues. A large market presence also likely translates to higher production, which translates to a decreasing production cost.

High level of customer satisfaction . Customer satisfaction is all about how happy clients are with a firm’s product, capabilities, and services. UHG has achieved a higher level of customer satisfaction among its current and future customers. Its vision plans have even been ranked among the highest and greatest in customer satisfaction among the county’s providers. A high level of customer satisfaction can result in greater customer loyalty, growth in sales and revenue, and increased brand acceptance and popularity.

Threats. The need to anticipated threats to any company is vital. Below are brief explanations of potential threats to UHG.

Data security threats . Data breaches in the healthcare insurance sector have become pervasive; studies show 29% of businesses that face a data breach end up losing revenue (Davis, 2019). Between July 30 and November 13, 2019, UHG had experienced a data breach when an unauthorized third party had gained access to customers' health information through a care provider portal (Garrity, 2020). Personal information for members such as their names, health plans, and private medical claims information was exposed. Businesses such as health insurance companies that suffer data breaches may have to grapple with costs incurred from containing the breach, compensating affected customers, a decrease in share value due to customers turning their back on the company, and heightened security costs (Davis, 2019).

High competition . Traditionally healthcare industry has been into curative healthcare, but as the science advanced and expectations started building up, healthcare is now also into preventive and maintenance segments (Auti, 2019). Many competitors are advancing the way they are conducting business with their members by incorporating technology and innovations to aid in the advancing healthcare industry (Business Wire, 2019a). Many companies are opting for direct-to-customer digital technology business models; The impact of digital technology on health insurance is accelerating with the increasing adoption of health tracking sensors, mobile apps, and telehealth services (Business Wire, 2019a). With the increase in direct-to-customer digital technology use, it is more difficult for UHG to directly engage with customers in selecting and managing their health care benefits and health care usage. The new technology developed by the competitors within the healthcare industry poses a threat to the UHG because it will cause UHG overall market share to decrease due to possible sales reduction because of low customer engagement (Institute of International Finance, 2016, p. 4).

Changing government regulations . Health care is the most regulated industry in the United States after passing the Affordable Care Act. The numerous regulations come at a cost to health care organizations, including insurance companies. The need to hire healthcare compliance specialists will continue to increase to ensure healthcare providers receive the appropriate reimbursement at a growth rate of eight percent (Michigan State, 2019). While, the threat of political adversaries seeking to eliminate and replace ACA, the continuous growth curve of health insurance premiums could be disrupted (United States Insurance, 2020).

Table 1

External Factor Evaluation Matrix

Key External Factors

Weight

Rating

Score

Opportunities

1. New service offerings/telehealth

0.10

4

0.40

2. Projected growth in healthcare & accidental insurance

0.10

4

0.40

3.United Healthcare sector growth

0.05

4

0.20

4.High operating margin

0.10

4

0.40

5.Large market presence

0.05

4

0.20

6.High level of customer satisfaction

0.10

4

0.40

Threats

Weight

Rating

Score

7. Data security threats

0.10

4

0.40

8. High competition

0.10

4

0.40

9. Changing government regulations

0.05

3

0.15

10. Pandemic/high claims w/ fewer premiums

0.10

3

0.30

11.Shortage of skilled labor

0.10

3

0.30

12. Barriers to entry

0.05

3

0.15

Total

1.00

3.70

Pandemic/higher claims with fewer premiums . The economic decline due to the current pandemic threatens the health insurance industry due to more individuals seeking Medicaid and ACA Market based plans (Levins, 2020). The economic consequences of a pandemic leads to an increase of instances of higher claims of individuals with low to no premiums costing health insurance firms’ economic profits (United States Insurance, 2020).

Shortage of physicians . The shortage of physicians in healthcare markets may represent a threat to UHG profits. As the United States healthcare system serves a more extensive, older, and less healthy population, the need for primary care will increase significantly in the coming years (UnitedHealth Group, 2018). With the increase in the market for primary care, there is a decrease in healthcare workers. Thirteen percent of U.S. residents (44 million) live in a county with a primary care physician shortage, defined as less than one primary care physician per 2,000 people (UnitedHealth Group, 2018). More ever, not having adequate primary care services may effectively service an obstacle for revenue for health insurance companies such as UHG because individuals may opt out of traditional health insurance to save money.

Barriers to entry . The increased demand for individuals becoming aware of the financial benefits of saving and investing in full life insurance products has resulted in an increased competition of the life insurance sector. The demand has increased the competition among incumbents of supplemental insurance, creating difficulty for insurance companies using life and other additional insurance as an add on to penetrate the market (United States Insurance, 2020).

Conclusion. The firm’s general opportunities and threats cover a wide range of topics from new services to barriers to entry. The EFE in Table 1 provides guidance for the management team at UHG to determine areas they need to focus on for their strategic planning.

Competitive Profile (CPM) Matrix

A Competitive Profile Matrix (CPM) is a tool used by companies to help management compare themselves to their competitors on essential factors to help them develop strategic plans with an understanding of their advantages and disadvantages over these competitors (David, et al., 2019). Table 2 below contains a CPM for UHG and its competitors Cigna and Humana. Each factor in the CPM is given a weight adding up to a total of 1.0.; the companies are then rated from one to four on how well each company is doing regarding these factors resulting in a weighted number; and these numbers are added up to provide a composite score from 1.0 to 4.0. The higher the result, the better the company is doing against its competitors (David, et al., 2019).

Advertising. UHG spent $377 million on advertising in 2017 (Statista.com, 2020). Cigna and Humana both spent under $100 million on advertising in 2019 (MediaRadar, 2020a, and 2020b). UHG spent more than Cigna and Humana combined. UHG’s higher spending resulted in a higher score in the CPM and reflects how UHG has made advertising a priority for the company.

Stock performance. UHG’s stock is currently valued at $304.60 on the New York Stock Exchange (NYSE, 2020). Cigna is currently valued at $169.74 (NYSE, 2020) and Humana is valued at $393.37 (NYSE, 2020) making it the highest performer in this area. UHG’s higher stock value resulted in a higher score in the CPM and reflects how the company is valued at higher level compared to Cigna and Humana.

Customer service. According to the Consumer Affairs website (2020), UHG receives a score of 3.4 in customer service. Cigna receives a low score of 1.0 and Humana received a score of 4 (Consumer Affairs, 2020). Humana is the highest performer in customer service, and has outperformed UHG in this area. UHG should include improving customer service in their strategic planning process.

Financial profit. In 2019, UHG had profits of $242 billion and Cigna made $153 billion and Humana made $64 billion (Macrotrends.net, 2020). UHG had the highest profits of these three companies. UHG appears to be a larger company than Cigna and Humana due to these significantly higher profits.

Market share. According to Statista.com (2020), UHG has 14.1% of the market share and Cigna only has 2.88% and Humana has 8.4%. UHG is the highest out of these three companies. UHG’s higher market share also confirms that the company is larger and more successful than it’s competitors.

Conclusion. UHG is the highest performer according to the overall ratings in the CPM in Table 2. Humana has the close rating to UHG and Cigna is struggling in many areas that need to be improved through strategic planning.

Table 2

Competitive Profile Matrix

UnitedHealth Group

Cigna

Humana

Critical Success Factors

Weight

Rating

Score

Rating

Score

Rating

Score

1. Advertising

0.20

4

0.80

3

0.60

3

0.60

2. Stock performance

0.20

3

0.60

2

0.40

4

0.80

3. Customer service

0.20

3

0.60

2

0.40

4

0.80

4. Financial profit

0.15

4

0.60

2

0.30

3

0.45

5. Market share

0.25

3

0.75

2

0.50

2

0.50

Total

1.0

3.35

2.20

3.15

Internal Assessment

The Internal Assessment consists of the Internal Factor Evaluation (IFE) Matrix (see Table 3 and discussion) and financial ratio analysis (see Table 4 and discussion).

Internal Factor Evaluation (IFE) Matrix

The Internal Factor Evaluation Matrix is an analysis of a firm’s internal strengths and weaknesses; each is given weights based on their importance to obtain a competitive advantage (David, et al., 2019). Each strength and weakness are given a rating from one to four (one being the worst and four being the best) of how well UHG performs in the specific area. Table 3 depicts each of UHG’s strengths and weaknesses with appropriate weights and ratings to guide the internal analysis of the firm’s strengths and weaknesses and how to utilize them to gain competitive advantage (David, et al., 2019).

Strengths. The following is an explanation of the five internal strengths of UHG. Each strength will be thoroughly explained separately and how it is beneficial to the firm.

High level of customer satisfaction . UHG has put action towards their values of integrity, compassion, relationships, innovation, and performance. UHG has ranked highest by a J.D. Power Study for their vision and dental plans’ customer satisfaction consistently for the past seven years (UnitedHealth Group, 2020). They have also been ranked the highest in their Optum Rx benefits and self-insured customer satisfaction throughout the years (UnitedHealth Group, 2020). By maintaining high customer satisfaction, UHG attracts and retains a loyal customer base (UnitedHealth Group, 2020).

Innovated and diversified products . UHG operates under four sub-brands, including United Health Care, Optum Rx, Optum Insight, OptumHealth. Each sub-brand offers a variety of products that segments to different markets (Adhikari, 2020). UnitedHealth Group offers health and other insurance coverage to individuals and employers and works with state and federal government to provide Medicaid and Medicare based coverage (Adhikari, 2020). Optum Rx provides specialty pharmacy and mails out prescription services to over sixty-five million individuals. They also provide licensing to their local pharmacies and network with sixty-seven thousand retail pharmacies to meet a wide range of customers (Adhikari, 2020). Optum Insight offers a consulting service to hospitals, outpatient physicians, government agencies, and other healthcare organizations. The consulting consists of recommendations to software products to business process outsourcing to create a more efficient organization. Optum Health offers services to progress the standard of health individuals receive through different health management programs (Adhikari, 2020). Offering a wide array of products and services diversifies UHG and allows them to grow a diversified customer base while providing products and services to meet their needs.

Growth in the United Healthcare segment. UHG has seen an increase in revenues for both United Health Care and Optum, consistently. However, UHC has seen the most significant growth in revenues, with an increase of 12.4 percent. United Health Care is the most profitable segment of UHG, bringing in 64.1 percent of the entire organization’s revenue (UnitedHealth Group Inc., 2020) The growth in the United health Care segment generates profitability for the UHG giving the organization a financial position to continue to research, develop, acquisition, or increase market share (UnitedHealth Group Inc., 2020).

Technological innovation . UHG has invested over five hundred million dollars into product development and research for the last five years. This large investment has been geared towards reducing greenhouse gas emissions and artificial intelligence. The objective is to prepare the organization for current, and potential customer's future needs as society continues to direct themselves into an efficient technology-based future (Adhikari, 2020). Currently, UHG has utilized its R&D in app development for both Optum and United Health Care sectors to give customers easy and direct access to health care needs, savings, and customer service to retain a loyal customer base (Adhikari, 2020).

High operating margin . In 2018 UHG’s operating margin was at 7.66 percent. In the same year, UHG saw their percentage of sales to operating costs decrease 0.10 percent. By operating at a high margin, the firm creates an opportunity for growth and creates value for the firm’s shareholders. Their operating cash in the positive gives the opportunity to meet creditor obligations; thus, reducing their liability (UnitedHealth Group Inc., 2020).

Weakness. In the following section the internal weaknesses of UHG will be explained thoroughly. There are four weaknesses that will be discussed separately and how they can potentially be detrimental to UHG.

Demand forecasting . Insurance companies are subject to government regulations following the Affordable Health Care Act. Regulations leave UHG vulnerable to a significant change in product demand due to the continuous threat of changing government regulations, which puts the firm in a position to forecast demand inaccurately. Eighty percent of revenues are used to pay out insurance claims leaving UHG with a small margin of error in demand forecasting (McFarlane, 2019).

Table 3

Internal Factor Evaluation Matrix

Key Internal Factors

Weight

Rating

Score

Strengths

1.

High level of customer satisfaction

0.10

3

0.30

2.

Innovated and diversified products

0.20

4

0.80

3.

Growth in United Healthcare segment

0.20

4

0.80

4.

Technological innovation

0.15

3

0.45

5.

High operating margin

0.05

3

0.15

Weakness

Weight

Rating

Score

6.

Demand Forecast

0.10

1

0.10

7.

Shortage of healthcare professionals

0.05

1

0.05

8.

False legal claims and disputes

0.10

2

0.20

9.

Vulnerability to Data Breaches

0.05

2

0.10

Total

1.00

2.95

Shortage of healthcare professionals . The shortage of healthcare professionals is a concern among all health care organizations in the United States. On a global standard, the World Health Organization predicted that by 2035, we would see a gap of 12.9 million healthcare workers. In the United States, the major cause of the shortage is due to the increase in chronic illness among adults (Adhikari, 2020). UHG foresees this as a weakness due to the high cost of hiring healthcare professionals, especially with the need for physicians and pharmacists to fulfill their Optum and United Health Care segments.

Legal claims and disputes . In 2018 UHG received a lawsuit against them from the U.S. Justice Department claiming the firm received over one billion dollars from their Medicare products that they were not permitted to. The claim was that United Health Care received inflated and adjusted payments based on inaccurate and untruthful information from their Medicare Advantage patients, the lawsuit is still ongoing (UnitedHealth Group Inc., 2020). Lawsuits of any kind can be a source of damage to a firm’s reputation, which leads to a negative effect on their financial performance and competitive advantage.

Vulnerability to data breaches . UHG serves over 6.2 million people under their health care coverage and more than 2.2 million individuals under their dental insurance benefits (UnitedHealth Group Inc., 2020). Given the large customer base, UHG is highly subject to personal customer information breaches and other cyber-attack threats (McFarlane, 2020). Any type of data breach is a threat to UnitedHealth Group’s reputation. If their customer base feels their personal information is not being protected, this could result in a loss of customers and ultimately a loss in revenues from a lack of premiums.

Conclusion. Overall, UHG has five strengths with the diversification of products and growth in the private insurance sector, United Healthcare, being the greatest of importance in gaining competitive advantage. UHG benefits from the high level of customer service, technological innovation, and the high operating margin. United Health Care suffers from multiple weaknesses as well that can potentially take away from their competitive advantage. Those weaknesses include inaccurate demand forecasting potential, shortage of healthcare professionals, false legal claims and disputes, and a vulnerability to data breaches. Of those four weaknesses, false legal claims and disputes and demand forecasting have the most potential to damage the firm’s ability to compete at higher levels than the competition.

Financial Ratio Analysis

The financial ratio analysis in Table 4 helps to identify strengths and weaknesses regarding investing, finance, and dividend (David, et al., 2019). The ratio categories include

ratios on liquidity, leverage, activity, profitability, and growth.

Table 4

Financial Ratio Analysis

Ratio Category

Fiscal Years

Liquidity Ratios

2019

2018

2017

Current Ratio

0.69

0.73

0.73

Quick Ratio

0.42

0.61

0.62

Leverage Ratios

2019

2018

2017

Debt-to-Total Assets

0.21

0.23

0.21

Debt-to-Equity

0.61

0.64

0.58

Activity Ratios

2019

2018

2017

Total Asset Turnover

1.38

1.48

1.44

Equity Turnover

4.17

4.35

4.19

Profitability Ratios

2019

2018

2017

Return on Equity

0.24

0.23

0.23

Gross Profit Margin

0.24

0.24

0.23

Growth Ratios

2019

2018

2017

Sales

6.97%

14.54%

8.36%

Net Income

15.46%

13.53%

50.46%

Liquidity ratios. The current ratio and quick ratio are both categorized as liquidity ratios. As the name suggests, analyzing these ratios allows ones to determine the financial health according to the amount of liquid capital a firm has readily available. Both ratios demonstrate a firm’s ability to meet short-term obligations. The difference, though, is that the quick ratio removes inventory from the equation and is based solely on current assets (David, et al., 2019, p. 110). The higher these ratios are, the better the liquidity position, allowing for a more manageable payment of debts.

For UHG, one will notice that since 2017, the current ratio has remained mostly constant, with the quick ratio decreasing by almost one third. This appears to be caused by an increase in liabilities, disproportionate to the firm’s assets. UHG should seek to manage liabilities more effectively to bring both ratios to at least 1.00, representing an equal amount of assets available to cover liabilities.

Leverage ratios. The debt-to-total assets ratio displayed in Table 4 shows the total debt used to finance the company assets. A ratio below 1.0 means that a significant portion of company assets are funded by equity (Hayes, 2020). Based on the data for the last three years, UHG numbers have remained constant between .21 and .23. These numbers remained below 1.0, which is an indicator to the shareholders that the company is financially stable.

The debt to equity ratio compares a company’s total liabilities to its shareholder equity. The debt to equity ratios is used to evaluate how much leverage a company uses (Hayes, 2020). Table 4 shows that for all of the three years, UHG numbers were less than 1.0. UHG is considered less risky, this implies the company has more equity than their total debt.

Activity ratios. The total asset turnover ratio shows the total asset turnover within the company. This ratio is an activity ratio calculated as total revenue divided by total assets. According to Stock Analysis on Net (2020), UHG’s total asset turnover ratio improved from 2017 to 2018 and deteriorated from 2018 to 2019. The equity turnover is an activity ratio calculated as total revenue divided by shareholders’ equity. The equity turnover ratio improved from 2017 to 2018 and deteriorated from 2018 to 2019. UHG would benefit significantly if the two ratios improved, as shareholders would view the increase as a reason to hold onto their equity in the company.

Profitability ratios. Return on equity is a ratio to determine investors profitability in the firm. Compared to UHG’s greatest competitor Humana, Investor profitability is the same for the most recent year 2019, both with the Ratio of 0.24 (Netadvantage, 2020a; Netadvantage, 2020b). Investors would find both firms to be profitable given the equal ratio of 0.24. However, UHG’s return on equity has stayed consistent for the last three years at either 0.23 or 0.24 (Netadvantage, 2020a). Humana on the other hand has seen an inconsistency of their ratio dipping to 0.17 in the year 2018 making UHG more attractive to investors. Gross profit margin ratio indicates the margin of revenue available to cover operating expenses, while still maintain a profit (David, et al., 2019). UHG has stayed consistent the last three years with a gross profit margin of 0.24 or 0.23. The firm is exceeding their competitors by a margin of 0.07 indicating that UHG is more profitable firm then Humana and Cigna (NetAdvantage, 2020b; NetAdvantage, 2020c). Overall, the given profitability ratios suggest that UHG is consistently creating profits that either match or exceed the competition.

Growth ratios. The Sales ratio reflects how the company is doing each year in the growth or decline of sales. UHG’s sales grew significantly from 2017 to 2018 by an increase of 6.18%, and unfortunately, in 2019, the sales declined by 7.57%, which is greater than the previous increase according to Macrotrends website (2020). The net income ratio reflects the growth in profits year over year. UHG experienced a huge increase in 2017 of over 50%, but this declined to 13.53% in 2018 and rose to 15.46% in 2019 (Macrotrends, 2020). UHG should determine what generated the large increase in 2017 and try to mimic that behavior. According an article in Business Wire (2019b), these fluctuations are due to currency exchange rate fluctuations and downgrades to their credit rating. Currency fluctuations are out of the control of UHG, but keeping a strong credit rating is something that UHG management can work on improving.

Conclusion. In general, the ratios reflect that UHG has remained fairly stable with a few increases and a few decreases. The most concerning change is the decrease in their net income growth ratios between 2017 and 2018. These ratios provide management with a snapshot of how they are doing and what areas need attention in their strategic planning process. UHG is in a strong financial position as shown from these ratios and their strong stock value and market share position.

External and Internal Assessment Implications

External Assessment Implications

UHG’s EFM considers opportunities and threats which are present in the health insurance industry. Perhaps the most noteworthy implication in the current environment is the COVID-19 global pandemic and the uncertain and ever-changing regulatory constraints. The health insurance industry continues to face scrutiny due to rising premiums, which are only magnified by the pandemic. UHG must be prepared to adapt to potential regulatory changes to avoid penalties and rise above their competitors quickly.

UHG’s CPM considers industry-specific CSFs. The most significant implications for this firm are related to market share and financial profit. These are two key areas where UHG is outperforming their key competitors, Humana and Cigna. Because UHG accounts for the biggest market share of the three and saw more profits in 2019 than both rival firms combined, UHG is well positioned to continue gaining market share and increasing profits, despite the uncertain regulatory environment.

Internal Assessment Implications

In reference to the Internal Factor Evaluation Matrix, UHG must continue to focus on all key strengths, including its high level of customer satisfaction, innovative and diversified products, growth in the United Health Care segment, technological innovation, and high operating margin to keep their competitive advantage. By investing in product development and artificial intelligence, UHG stays ahead of the foreseen customer’s needs and wants (Adhikari, 2020). Yielding to the customer, has led to high satisfaction with their various insurance products and the prescription services offered. Keeping the core values in mind, UHG has found a way to grow its United Health Care sector, giving them increased revenue and creating high operating margins, pleasing shareholders and creditors (UnitedHealth Group Inc., 2020). Overall, UHG has built upon its strengths to satisfy the firm’s various stakeholders; the customer is the foremost.

Also noted in the Internal Factor Evaluation Matrix, UHG has weaknesses that must be worked on and addressed. Those weaknesses include potentially inaccurate demand forecast, shortage of healthcare professionals, false legal claims and disputes, and vulnerability to data breach. UHG has attracted and retained a high level of customers leaving their private information vulnerable to cyber-attacks and breaches (McFarlane, 2019). The firm must utilize their financials in technological advancement in protecting customer information (Adhikari, 2020). In addition, UHG may be vulnerable to government regulations that result in legal claims and disputes, generating a damaged reputation (UnitedHealth Group Inc., 2020). Government regulations have also created a weakness in demand forecasting. UHG has little wiggle room for error in forecasting demand due to its revenues heavily relying on premiums, outweighing the number of claims (McFarlane, 2019). Lastly, the high demand leading to a shortage of healthcare professionals has created a financial weakness for UHG. As the demand for physicians, pharmacist and other healthcare professionals increase, the more UHG will have to pay in salary for those positions compromising their high operating margin (Adhikari, 2020).

UHG has built a strong financial position, through a steady increase in revenues, low debt, and high operating margin as indicated in Table 4’s ratio analysis. Their strong financial position drives opportunity for continuous growth and competitive advantage over their major competitors making them the leader in their industry.

The next section will transition to current strategies, including additional analyses. These will include Current Company Strategies and the Strengths, Weaknesses, Opportunities, and Threats (SWOT) Matrix. Two additional analyses to be included are the Strategic Position and Action Evaluation (SPACE) Matrix and the Boston Consulting Group (BCG) Matrix. These analyses will provide possible strategic alternatives.

Current Strategy

Related Diversification

UHG’s vital strategy is related diversification. Diversification can be defined as a strategy that combines a wide range of investments and activities in a portfolio (Gyan et al., 2017). UHG runs under four divisions: Optum Rx, Optum insight, United health care, and OptumHealth. These sub-groups serve a range of different markets and customers from public sectors to sole proprietors and individual consumers. They provide different healthcare services from pharmacies services, health technology services, health insurance services to health and well-being services. The reason for pursuing the diversification strategy is to increase growth opportunities. UHG is now among the leading entity in the healthcare sector (UnitedHealth Group, 2019). It is also among the top 50 most admired entity overall.

Unrelated Diversification

Another UHG’s current strategy is unrelated diversification. Unrelated diversification is a strategy that includes the introduction of new products and services, the introduction of new production methods, the introduction of new processes, and many more. In other terms, the focus is on improvement and newness. UnitedHealth Group constantly improvises, strive, and experiment to develop new services and products that aim to enhance the overall healthcare system (UnitedHealth Group, n.d). This strategy has enabled the company to perform well in the industry and currently it is among the top and the best company in the healthcare sector.

Table 5

Current Company Strategies

Current Strategy

Current Firm Actions/Behavior

1. Related Diversification

1. Acquisitions

2. Unrelated Diversification

2. Strong focus on new technologies

3. Product Development

3. Strong focus on R&D

4. Achieving Profitable Growth

4. Development of programs

5. Achieving Customer Satisfaction

5. Dedication

Product Development

Another current strategy pursued by UHG is product development. The company has invested a huge amount of money into technological innovation. The main reason for this is to prepare the company for potential and current consumer’s future requirement as the general public continues to turn themselves towards the effective technology-based future. Technological innovation has enabled the company to bring consumer new and improved services and goods that enhance their overall health.

Achieving Profitable Growth

Achieving profitable growth is another current strategy that UHG takes. Profitable growth is a mixture of growth and profitability. It is characterized by a well-defined financial plan, creation of organizational alignment, well-defined business objectives and goals, critical review of a business, and assessment of business performance, just to name a few. UHG has been following a constant strategy of bringing profitable growth. And from the looks of things, the company is achieving both constant growth and profitability. By delivering profitability and growth, UHG is creating value for itself and its shareholders.

Achieving Customer Satisfaction

Achieving customer satisfaction is another key strategy pursued by UnitedHealth Group. The company always invest in innovative programs and customer service improvements. This strategy has enabled the company to become the biggest player in the healthcare market and has contributed to its huge market share. In 2019, UHG was the leader in the market with approximately 14.1 per cent market share (Rudden, 2020). This is immense compared to other firms such as Humana and Anthem who had a market share of 8.4% and 9.6% consecutively.

Strengths, Weaknesses, Opportunities, and Threats (SWOT) Matrix

The following is a strength, weaknesses, opportunities, and threats matrix for UnitedHealth Group as indicated in table six. Within the table are strategies that take advantage of the listed strengths and opportunities (SO), strengths and threats (ST), weaknesses and opportunities (WO), and weaknesses and threats (WT). Each strategy will be thoroughly explained below.

SO Strategies

The increase of telehealth services and their availability, a forward integration strategy, will consists of providing online appointments for needed general care, specialty care, emergency care, and pharmaceutical consultations directly through UHG eliminating outside healthcare providers (David, et al; 2019). UnitedHealth Group has the available budget capacity to develop this new opportunity for customers with their high operating margin, their advancement in customer service software platform, and their diversified products already obtained physician and pharmaceutical services (Adhikari, 2020). This SO strategy will take advantage of the increase of demand for telehealth appointments and then need for high customer satisfaction in the healthcare industry.

The second SO strategy is to hire one hundred or more customer service agents. As the health and accidental insurance grows UnitedHealth care can increase customers capacity by adding in-house customer service to aid consumers with questions and concerns about their provided services. The more attractive UnitedHealth Group will be to the potential new customer pool. This strategy differentiates UHG from its competitors by hiring their own customer service employees who are trained and expected to abide by the UnitedHealth Group mission and values (David, et al; 2019). UnitedHealth Group has the operating capacity to expand their customer service agent employees and can provide this added value service.

WO Strategies

UnitedHealth Group has 6.2 million current customers making them extremely vulnerable to data breaches (UnitedHealth Group, 2020). With the growth in the healthcare and accident insurance industry this threat will only increase. UHG will implement a WO strategy, a multiple server platform where customer information is stored on separate servers to reduce this threat. By increasing the security of customer personal information UnitedHealth Group is broadly differentiating their customer service portal from their competitors to make their products more attractive to new customers and to retain the massive 6.2 million customer base (David, et al; 2019).

The second WO strategy to hire twenty or more Medicare and Medicaid auditors, a market penetration strategy, will create efficiency and accuracy in collecting claims in those sectors (David, et al; 2019). The healthcare industry is navigating towards telehealth and more individuals are seeking insurance coverage resulting in inaccuracy and legal claims against the firm which can be costly with inaccurate revenues that must be paid back later along with massive legal fees as well as publicity issues.

Table 6

SWOT Matrix with SO, WO, ST, and WT Strategies

Strengths

1.High operating margin

2.Technological innovation

3.Innovated and diversified products

4.UnitedHealth Care sector growth

Weaknesses

1.Vulnerability to data breaches

2.Legal claims and disputes

3.Demand forecast

Opportunities

1.New service offerings/telehealth

2.Projected growth in healthcare/accidental insurance

3.Customer satisfaction

SO Strategies

1.Increase telehealth service options and availability to 24-hour service (S1,S2,S3, O1)

2.Hire 50 or more in-house customer service agents (S1,S4,O3)

WO Strategies

1.Implement multiple server system (W1, O1, O3)

2.Hire 20 or more Medicare/Medicaid auditors (W2, O2)

Threats

1.Data security threats

2.High competition

3.Changing government regulations

4.Shortage in skilled labor

ST Strategies

1.Increase affordable premium products through private and employer options (S3, S4, T3, T2)

2.Develop customer reward program for preventative service completion (S4, T2)

WT Strategies

1.Develop forecasting software (W3, T2, T3)

2.Hire 5 or more IT employees with data security expertise (W1, T1)

Note: SWOT matrix was referenced from (Kenneth Research, 2020); (Yahoo Finance, 2020); (Garrity, 2020); (United States Insurance, 2020); (Adhikari, 2020); (UnitedHealth Group Inc., 2020)

ST Strategies

The ST strategy of offering more affordable premium options in the private and employer insurance coverage products is meant to take advantage of UnitedHealth Care sector’s growth and UHG’s diversified product list while combating the threat of government regulation changes. Offering affordable options outside of the government-based insurance coverage, a narrow cost leadership strategy, from Medicare and Medicaid will lessen the reliance of these products for revenue and to combat the threat of government regulation changes (David, et al; 2019)

The second ST strategy of developing a reward system for customers who obtain preventative exams and services takes advantage of the diversified products UHG offers and their technological advancements through their online customer platforms, while defeating the threat of high competition in the insurance industry. This broad differentiation strategy sets UnitedHealth Group apart from their competitors by adding value through offering more than just insurance coverage (David, et al; 2019).

WT Strategies

The WT strategy of developing forecasting software is a product development strategy that turns the demand forecasting weakness into a strength and defeating the threat of high competition, shortage of skilled labor and the change of government regulations (David, et al; 2019). Improving the demand forecasting software can give UHG an advantage by hiring the appropriate high cost labor and not allowing their claims to outweigh their incoming premiums.

Increasing the information technology team with data security expertise is a product development strategy meant to overcome the vulnerability to data breaches by utilizing technological innovation of health care products but include data security as a top concern due to the growing threat. This product development strategy is meant to protect customers’ personal information to make UHG a more attractive choice in the highly competitive insurance industry (David, et al, 2019).

The Strategic Position and Action Evaluation (SPACE) Matrix

“The Strategic Position and Action Evaluation (SPACE) Matrix is a tool that uses two axes and four quadrants to reveal whether aggressive, conservative, defensive, or competitive strategies are most appropriate for a given organization” (David, et al., 2019, p. 169). Figure 1 below, demonstrates the SPACE Matrix for UnitedHealth Group.

FP

+7

+6

+5

+4

+3

+2

+1

0

Aggressive Strategy

0

CP -7 -6 -5 -4 -3 -2 -1 0

0 +1 +2 +3 +4 +5 +6 +7 IP

-1

-2

-3

-4

-5

-6

-7

SP

Figure 1 SPACE Matrix

Table 7 provides a breakdown of the factors that determine the strategic position shown in figure 1. The selected factors are based on those most relevant to the managed health care industry and fall within broader categories of internal strategic position (+1 to +7), external strategic position (-1 to -7), competitive position (-1 to -7), and industry position (+1 to +7).

The completed SPACE Matrix for UHG suggests that an aggressive strategy is appropriate. Examples of these specific strategies are:

· “Backward, forward, horizontal integration

· Market penetration

· Market development

· Product development

· Diversification (related or unrelated)” (David, et al., 2019, p. 169).

Table 7

SPACE Matrix Factors

Internal Strategic Position

External Strategic Position

Financial Position (+1 to +7)

Rating

Stability Position (-1 to -7)

Rating

Current Ratio

3

Government Regulations

-5

Debt-to-Equity Ratio

5

Technological Changes

-1

Net Income

4

Shortage of Healthcare Professionals

-4

Revenue

3

Competitive Pressure

-4

Operating Margin

5

Barriers to Entry

-1

Average Rating =

4

Average Rating =

-3

Competitive Position (-1 to -7)

Industry Position (+1 to+7)

Market Share

-2

Growth Potential

6

Product Quality

-2

Financial Stability

5

Customer Loyalty

-2

Ease of Entry into Market

7

Variety of Products Offered

-1

Resource Utilization

4

Advertising

-2

Profit Potential

5

Average Rating =

-1.8

Average Rating =

5.4

CP + IP = x-axis coordinate

3.6

FP +SP = y-axis coordinate

1

Of these aggressive strategies, the recommended approach is to pursue market penetration. Market penetration is a strategy which seeks to increase market share (David, et al., 2019, p. 130). UHG can accomplish this by taking advantage of the COVID pandemic and increase marketing and advertising spending to position itself as the provider of choice for consumers.

Boston Consulting Group (BCG) Matrix

UHG operates through four divisions: UnitedHealthcare, OptumHealth, OptumInsight, and OptumRx (Reuters, 2020). First, we will analyze Table 8 and identify where each division falls within the BCG matrix for UHG. Each division will fall under one of the four quadrants in the BCG Matrix, depending on what percentage it makes up of the company's overall revenue and how the divisions market share compares to their competitors. Finally, we will review the BCG matrix in Table 2, which will help UHG implement each division's business unit strategies.

Table 8

Boston Consulting Group Matrix Information

Division Sales %Sales Profits %Profit RMSP IG Rate %

UnitedHealthcare $193.8 63% $10.4 46% 1.0 -.20

OptumHealth $30.3 10% $6.2 28% 1.0 0.20

OptumInsight $10 3% $1.1 5% 1.0 .11

OptumRx $74.3 24% $4.8 21% .90 -.20

Total $308.4 100% $22.5 100%

Note. Dollar amount in billions. Information retrieved from businesswire.com

Table 8 lists the divisions for UHG and their sales, profits, RMSP, and IG rates. The information analyzed in this table will determine the placement of each division in the BCG Matrix. As a whole, UHG division has a total growth rate of 5.6 (Business Wire, 2020). This division consists of the UnitedHealthcare Employer & Individual, UnitedHealthcare, Medicare & Retirement, and UnitedHealthcare Community & State. Optum, as a whole, has an industry growth rate of 11.5 percent; this division consists of OptumHealth, OptumInsight, and OptumRx, with notably strong growth in OptumHealth (Business Wire, 2020).

Question Marks

Question marks have a low market share position, and they compete in a high growth industry. This division typically needs the most help with product development, market penetration, or market development (David, et al., 2019, p. 178). Currently, there are no divisions that fall under this category for UHG.

Figure 2. BCG Matrix

Stars

Stars typically characterize the unit that has a significant share in the fast-growing market. This division maintains and strengthens its position with the forward, backward, and horizontal integration strategies (David, et al., 2019, p. 178). The OptumHealth and OptumInsight fall in this category; these divisions generate the second and third highest revenue for UHG, but since there are other competitors such as chain pharmacies and data servicing companies, both would need to focus on increasing their product development. When they focus on their products and figure out how they can improve, then both divisions may become the next cash cow.

Cash Cows

Cash cows are characterized as having high relative market share positions that compete in low growing industries. This division usually maintains its strong position with product development and diversification (David, et al., 2019, p. 178). UnitedHealthcare and OptumRx fall under this category due to generating the most revenue than the other divisions in the BCG matrix. UnitedHealthcare and OptumRx both offer services that market all consumers, and they both used their generated revenues to help develop the different business units. UnitedHealthcare contributes to 46% of the overall revenue, and OptumRx contributes to 21% of the overall revenue.

Dogs

Dogs have a low market share position and compete in a slow-or no- market- growth industry. This category usually gets divested through the strategic strategy of retrenchment (David et al., 2019, p. 178). Currently, there are no divisions that fall under this category for UHG.

Possible Strategic Alternatives

The following is an analysis of possible alternative strategies as listed in table 9. The purpose of analyzing strategic alternatives from those already being utilized by UnitedHealth Group is to determine the benefits and risks of each strategy and if it could lead to a competitive advantage for UHG beyond the strategies currently being applied (David, et al.; 2019).

Market Penetration

Presented in both SWOT and SPACE matrixes, market penetration is a strategy UHG can pursue through marketing and advertising. This strategy can be utilized along with other strategies to gain market share. UHG spends more than three times than Cigna and Humana on advertising, with a budget of $377 million in 2017 (Statista.com, 2020). This is clearly worthwhile, as UHG owns 14.1% of the market share (Statista.com, 2020).

Table 9

Possible Alternative Strategies

Possible Strategy

Corresponding Firm Actions/Behavior

1. Market Penetration

1. Increase advertising

2. Narrow Cost Leadership Strategy

2. UHC sector to offer low premium plans for private health insurance products

3. Product Development

3. Invest in forecasting software

4. Forward Integration

4. Increase telehealth services available offered at 24 hours a day

Note. Possible Alternative Strategies were referenced from the SWOT, SPACE, BCG Matrixes.

Strengths/benefit. Strong correlation between dollar sales and dollar marketing expenditures (David, et al., 2019, p. 135).

Weaknesses/risk. The firm must be mindful of reaching a point of diminishing returns on advertising and use analytics to determine where there is greatest potential reach.

Firm fit. Utilized under three UnitedHealth Group brands; UnitedHealth Care, OptumRx, and OptumHealth.

Feasibility. UHG already has a large budget for advertising, which is yielding results, evident by market share position, but there is potential for even more. The firm should continually evaluate its return on investment and adjust spending, focus, and content accordingly.

Narrow Cost Leadership Strategy

Cost leadership strategies can be narrow or broad. For UHG, offering low premium plans for private health insurance products represents a narrow cost leadership strategy. Originally mentioned in the SWOT, UHG should pursue this strategy to further sector growth. This approach provides consumers with a low-cost alternative to government run insurance programs and positions the firm to continue leading market share over competitors like Cigna and Humana.

Strengths/benefit. Appeals to consumers shopping based on price alone.

Weaknesses/risk. UHG’s competitors can easily replicate the strategy, eliminating competitive advantage.

Firm fit. Utilized by UnitedHealth Care sector.

Feasibility. This strategy is currently being utilized by UHG to take advantage of sector growth and gain market share.

Product Development

The product development strategy in consideration is to invest in developing a more accurate forecasting software. This strategy is necessary due to the weakness of demand forecasting previously mentioned in the IFE and SWOT matrix (McFarlane, 2019). The industry threat of government regulation changes also influences this strategy by interfering with the demand on health insurance (McFarlane, 2019). Forecasting the demand of health insurance is critical to ensuring that the premiums collected outweigh the claims paid out by UnitedHealth Group (McFarlane, 2019). This product development strategy will give UHG the benefit of accurately forecasting the operating budget and capital venture budgeting that may result in increasing their added value activity across all UnitedHealth Group brands. However, with this benefit there is the risk of tying up capital for a long period of time with no guarantees of more accurate results.

Strengths/benefit. Accurate operating budget and capital venture forecasting.

Weaknesses/risk. Ties up capital for long period of time with no guarantee of results.

Firm fit. Demand forecast software can be utilized through all UHG brands.

Feasibility. UHG has already invested in technological innovation and could easily add the development of demand forecasting software to their R & D. Giving them a competitive advantage by increasing their profitability allowing for further added value activity (Adhikari, 2020).

Forward integration

The forward integration strategy to be considered is to increase their already available telehealth services availability to twenty-four hours a day as well as increase the general, specialty, and pharmaceutical services. This strategy should be utilized under UnitedHealth Group’s cash cow brand, UnitedHealth Care, and can also be utilized under their star brand, OptumRx, to increase their profitability as seen in the BCG Matrix. This approach could also launch the OptumHealth brand into higher market share due to the high demand of telehealth services (Business Wire, 2020). This specific forward integration strategy is an aggressive strategy to eliminate claims owed to third party health services. However, this strategy comes with high operating costs but is still feasible due to UHG’s diversified products already including some patient care services and is essential to increase customer satisfaction in this highly competitive industry (Adhikari, 2020).

Strengths/benefit. Eliminate claims owed to third party health services.

Weaknesses/risk. High operating costs.