UnitedHealth Group Inc. is finding one size isn? fitting all when it comes to how it? been melding Cypress-based PacifiCare Health Systems Inc. into its fold.
The Minnesota-based health insurer bought PacifiCare for $9 billion more than three years ago. It has had some challenges combining the two companies since then, particularly when it comes to customer service and relations with doctors and hospitals.
UnitedHealth now is looking to ?hat makes sense in California,?said Steve Nelson, the company? West region chief executive, who spends half of his time in Cypress.
?ust because we?e a national company doesn? mean we have to do everything the same,?said Nelson, who? been in his position since August.
UnitedHealth? efforts include creating a 30-person team of ?rovider service advocates?to work with doctors and hospitals, as well as modifying how it works with insurance brokers.
It? also come out with different types of health insurance plans, including what UnitedHealth calls Suite Spot, which it offers with Oakland-based health maintenance organization Kaiser Permanente.
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UnitedHealth largely has replaced the Pacificare name, though it still uses it for some health maintenance organization plans.
The name will be going away for good in the next 12 to 18 months, Nelson said.
?e want to be thoughtful about that in this market,?he said. ?acifiCare has a strong reputation, so we want to make sure that everything? working right be-fore we start doing away with names.?
The overall pace of integration, according to Nelson, has ?een frustrating for everybody who? in-volved, to be honest.?
?eople were trying to impose one over the other,?he said, and weren? working to meld the ?est of both worlds.?
UnitedHealth has been starting to see ?eal traction?on all fronts in the past six to eight months, according to Nelson.
The company is seeing gains in service, products, leadership, em-ployee morale and in reactions from doctors, hospitals, brokers and customers, he said.
He characterized the situation as ?oo long, but not too late.?
UnitedHealth has made no secret of issues surrounding the deal.
During an investor conference in late 2007, company officials ac-knowledged that they lost more than 300,000 PacifiCare customers that year because of customer service issues.
UnitedHealth? travails in integrating PacifiCare make for a ?uman story about an organization that gets too big for its britches, thinks it? invulnerable and finds out that it isn?,?said Sheryl Skolnick, a managed care analyst who follows UnitedHealth for CRT Capital Group LLC in Stamford, Conn.
?his was a significant misstep for United on a lot of fronts,?Skolnick said.
Among other things, Skolnick said with managed care plans, California? ? particularly challenging market to work, (even) under normal circumstances, with a lot of scrutiny and quite frankly, consumer protection, more so than we have in the rest of the country.?
Overall, UnitedHealth has some 2.6 million members in California, including about 150,000 members who belong to health maintenance organizations and other health plans in Orange County.
Nelson, a Phoenix resident who spends about half of his time in California, said it? been ?retty open?that the integration of PacifiCare and UnitedHealth hasn? gone as smoothly as expected.
?art of my job was to try to come in and figure out where we need to stay on course and finish what we started (and) figure out where (we) need to make changes,?Nelson said.
In many acquisitions, companies often choose managers from one side of a company or another.
But Nelson considers himself ?eutral,?rather than a UnitedHealth guy, because he? only been with UnitedHealth since late 2007.
Before taking his current job, Nelson
was president of AmeriChoice Corp., UnitedHealth? Medicaid arm, in Minnesota.
David Hansen, a PacifiCare executive who previously oversaw the California operation, now is chief executive of UnitedHealth? Northwest region.
UnitedHealth has about 3,900 employees in OC, spread among several buildings, including the former PacifiCare headquarters on Valley View Street in Cypress.
UnitedHealth, which has projected 2009 revenue of $86 billion and a recent market value of about $33 billion, is ?ctively engaged?in brewing healthcare reform in Washington, D.C., according to Nelson.
?ur view is that reform is not a bad thing?e?e not afraid of it,?Nelson said.
UnitedHealth? stance is that healthcare reform can? just rely on mandating benefits, cutting reimbursements or turning the system over to the government, according to Nelson.
?t cannot be a one-dimensional solution,?he said.
