Healthcare reform is likely to leave larger insurers and managed healthcare companies relatively unscathed, which bodes well for the market share growth of UnitedHealthcare Group Inc., according to an article on investor website Seeking Alpha.
The Minnesota-based managed-care company has about 3,800 workers in Orange County after buying Cypress-based PacifiCare Health Systems in 2005.
A combination of size, status as a luxury health insurance provider and ownership of a healthcare information business will help UnitedHealthcare hold its own, author Sahil Singh wrote.
UnitedHealthcare, which has annual revenue of $87 billion, is a “giant,” which will help it survive the latest changes in insurance regulations, he said.
“In health insurance today, reform will most adversely impact smaller, managed-care companies,” Singh wrote.
Starting next year, insurers will have to spend 85% of their premium dollars collected from large employers and 80% of those collected from small employers and individuals on medical care.
These requirements could hurt smaller insurance providers, prompting a rash of consolidation.
“This will make what is already one of the most consolidated industries in America—health insurance—even more so,” Singh said.
Larger companies such as UnitedHealthcare will be better positioned to take short-term losses, he said.
Luxury plans, like UnitedHealthcare’s, can get away with charging corporate clients higher premiums when the company needs to raise them, Singh said.
Those clients aren’t likely to dump their more expensive plans because their employees view them as valuable perks, he said.
In other news, UnitedHealthcare said last month that it signed a contract with Santa Ana-based Integrated Healthcare Holdings Inc. The contract gives UnitedHealthcare’s commercial and Medicare health plan members access to Integrated’s four local hospitals: Western Medical Center-Santa Ana, Western Medical Center-Anaheim, Coastal Communities Hospital in Santa Ana and Chapman Medical Center in Orange.
Masimo Settles Suit
Masimo Corp., an Irvine maker of pulse oximetry devices used to measure oxygen in the blood, said it settled a lawsuit with Birmingham, Ala.-based Hygia Health Services Inc., a company that reprocesses used medical equipment.
Terms weren’t disclosed. Masimo said in a release that the settlement was made on “mutually agreeable terms.”
The lawsuit covered labeling on pulse oximeters that were made by Masimo and reprocessed by Hygia. Hygia had sued Masimo after Masimo sent a letter threatening a patent infringement suit unless Hygia stopped repackaging single-use sensors and labeling them with the Masimo trademark, according to an article on the Medical Devices Business Review website.
The Alabama company had received Food and Drug Administration clearance to reprocess the sensors. But Masimo claimed that marking the repackaged sensors with its corporate logo constituted patent infringement.
Clarification
I wrote about CardiAQ, a medical device maker in Irvine, in my June 14 column and since then have gotten some updated information. The company, which was founded more than 2 years ago, is developing a minimally invasive heart valve implantation device. It is operating from an 8,500-square-foot building, which previously housed CoreValve Inc., a device maker that’s now part of Medtronic Inc. The space was designed for medical device usage, including research, development and manufacturing.
Bits and Pieces
UC Irvine Medical Center in Orange said that the American College of Surgeons renewed the hospital’s accreditation as a Level 1 bariatric center, its highest designation. The hospital houses one of three weight-loss surgery centers throughout California that holds such a designation … Irvine drug maker Spectrum Pharmaceuticals Inc. named George Tidmarsh senior vice president and chief scientific officer. Tidmarsh’s career includes founding a pair of drug makers: Northbrook, Ill.-based Horizon Pharma Inc. and Threshold Pharmaceuticals Inc. of Redwood City … Saddleback Memorial Medical Center, a hospital with campuses in Laguna Hills and San Clemente, said it bought a freestanding outpatient imaging center in San Clemente from San Diego-based Imaging Healthcare Specialists Inc. for an undisclosed price.
