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Introduction

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Company Background

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UnitedHealth Group is the largest healthcare company in the United States. In 2023, the company employed 400,000 workers and earned $371.6 billion in revenue (UnitedHealth Group, 2024).

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The company has two main divisions:

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UnitedHealthcare is the health insurance side. It covers 47 million Americans through employer plans, Medicare, and Medicaid. This division brought in $281.4 billion in 2023.

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Optum is the healthcare services side. It earned $226.6 billion in 2023 through three parts:

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  • OptumHealth runs medical clinics with 70,000 doctors

  • OptumRx manages prescription drug benefits

  • OptumInsight provides technology and data services

 

In 2022, UnitedHealth Group bought Change Healthcare for $8 billion. Change Healthcare handles payment

processing and billing for healthcare providers across the country.

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​Figure 1: UnitedHealthcare Logo] Source: UnitedHealth Group (www.unitedhealthgroup.com)

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​​Figure 2: UnitedHealth Group Organizational Structure] Source: Union Healthcare Insight (2023). Retrieved from https://www.unionhealthcareinsight.com/post/unitedhealth-group-approach-to-vertical-consolidation

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The Service: Medical Claims Processing
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This project focuses on medical claims processing. When patients visit a doctor, the doctor sends a bill called a "claim" to the insurance company. The insurance company reviews the claim and decides how much to pay.

UnitedHealth Group handles about 1.3 billion claims every year (CAQH, 2024). Getting this right matters because:

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  • Doctors need fast payments to keep their practices running

  • Patients need to know what they owe

  • The company needs to control costs

 

How the Current Process Works
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The current system relies mostly on manual work (McKinsey & Company, 2024a). Here is what happens when a claim comes in:

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  1. A doctor's office sends a paper or electronic claim

  2. Mail room workers sort and scan the documents

  3. Data entry clerks type the information into computers

  4. Verification staff check if the patient has active insurance

  5. Medical coders review diagnosis and procedure codes

  6. Claims examiners calculate how much to pay

  7. Supervisors approve the payments

  8. The finance team processes payments in weekly batches

  9. Staff mail paper explanation letters to patients

 

Each claim takes about 18 minutes to process, and the company needs 2,400 workers just for claims processing (CAQH, 2024).

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Figure 3: Current Claims Processing Model at UnitedHealthcare

The Problem: Manual Processing is Too Slow and Error-Prone

 

The main problem is that manual claims processing causes delays, errors, and high costs. Here are the specific issues:

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Too Slow: Claims take 14 to 21 days to process. The industry standard is only 7 to 10 days (McKinsey & Company, 2024b). Doctors wait weeks to get paid, which hurts their cash flow.

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Too Many Errors: About 15% of claims have mistakes (American Hospital Association, 2024). When errors happen, staff must fix and resubmit the claims. This wastes time and money.

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Too Expensive: Processing costs about $4.80 per claim. Administrative work now makes up over 40% of total hospital expenses (American Hospital Association, 2024).

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Providers Are Frustrated: Claim denials increased 20.2% between 2022 and 2023 (American Hospital Association, 2024). The current denial rate is 23%, meaning almost 1 in 4 claims gets rejected.

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