Blog Post

What it really means to become a 'health solutions company'

Health plans are evolving into new and different kinds of healthcare companies—something we've coined "health solutions companies" and explored in previous blogs. While these health solutions companies do not all look the same, most are defined by some degree of diversification outside of their traditional insurance business.

Distinct from plans' historic approach to growth by entering new geographic markets or new lines of business, current plan diversification pursuits have centered on a few key areas beyond but ideally synergistic with existing insurance products.

Major areas of diversification

1. Care delivery

Health plans are accelerating their moves into the care delivery space—in some extremes, seemingly developing full health systems just without the hospitals. Primary care is a major focus area of care delivery for insurers, as both an additional revenue stream and as a tactic to move the plan's control of the member experience upstream.

Owning primary care practices allows plans to stage earlier interventions in member care and influence downstream steerage to less costly, most appropriate sites of care. While most physician and practice ownership has centered on primary care, some health plans are further diversifying into select ambulatory specialties or facilities like infusion centers.

Beyond physicians' offices, health plans are also making huge moves towards owning care delivery in the home. Owning home care assets achieves the same goals of engaging more closely with members' care while keeping them in less costly settings—it's also synergistic with many plans' ambitions for growth in the lucrative Medicare Advantage space.

In practice:

  • UnitedHealth Group's Optum Care owns and operates 1,450+ clinics across the country and employs 60K+ physicians as the largest physician employer in the nation.1
  • Humana's purchase of Kindred strengthened their presence in the home care game, while their acquisition of senior focused primary care practices solidifies their presence in care delivery.

2. Pharmacy services

Rising drug costs are one of the biggest expenses for health plans, who further struggle with transparency around drug purchasing. Plans consider diversification into pharmacy services to keep dollars in-house, generate revenue from other purchasers, and potentially lower overall drug spend.

Plans are approaching the pharmacy services space with interest in two key areas: PBMs and specialty pharmacies. The pharmacy benefit manager (PBM) market is already largely concentrated (80%) within the three largest PBMs—all of which are owned by large national health plans.2

Despite this, there is still room for others to enter the market at a smaller scale: some health plans have recently launched their own PBMs to gain a small but lucrative piece of the PBM pie and exert more control over their drug spending. The specialty pharmacy market is more fragmented, across both health plans and health systems, but similarly looks to control the flow of drugs to members and reduce total drug expenditure.

In practice:

  • CVS's PBM Caremark controls 33% of market share by total equivalent prescription claims manage in 2021, the largest of any PBM.
  • University of Utah Health Plan launched start-up PBM RealRx with the goal of negotiating lower drug prices and exerting more control over the drug purchasing process.

3. Digital and data

Some of the greatest potential for future health plan diversification exists in the digital health sector, where plans are already investing in solutions that take advantage of new business and technological needs across the industry. Virtual care, including but not limited to telehealth platforms, wearables, and member-facing apps, saw a huge boom across the Covid-19 pandemic. Health plans, in addition to thousands of other investors, recognize that a strong digital experience is essential to attracting and retaining members of the future.

Plans who own digital assets hope they will improve member access and convenience while exposing their brand to potentially millions more purchasers. Health plans also develop or purchase data and analytic capabilities that bring in-house administrative and technology services they would otherwise need to outsource. Plans developing or purchasing data and analytic capabilities to meet their own needs may then look to sell these services to other health plans, providers, and employers as a revenue driver.


The ambition of health solutions companies

Health plans can collect a variety of assets, but to be a health solutions company those assets must work together to solve specific problems or meet a specific need of purchasers. Plans believe ownership of diversified services leaves them best equipped to meet those needs, including:

  • Employer needs: Lower total cost of care; increased value-based adoption with providers; improved downstream member satisfaction; improved member outcomes
  • Individual member needs: Lower member costs; improved member experience; improved coordination of & access to care; increased member retention

The hope that synergies across diversified products will create a whole solution greater than the sum of individual services is largely still unproven. However, diversification remains a more stable path to business growth and competitive market positioning, even without complete integration. We anticipate that health plans and health solutions companies will focus on addressing barriers to synergistic integration while continuing their steady march into diversified business divisions.

In our final installment of the health solutions blog series, join us to dive deeper into how plans are entering the provider space—and consider the flip side of providers moving into the insurance space.


1Advisory Board is a subsidiary of Optum, owned by UnitedHealth Group. All Advisory Board research, expert perspectives, and recommendations remain independent.

2CVS Health is the parent company of CVS Caremark; Cigna is the parent company of Express Scripts; UnitedHealth Group is the parent company of OptumRx.

Emerging idea: Health plan line of business diversification

Health plans are diversifying outside of their historic business operations in response to heighted market pressures and to achieve long-term stability and growth.

Line of business diversification is one of the traditional methods of diversification, in which plans expand outside of their core market segment to leverage opportunities in other markets. Here's what we're paying attention to.






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