UnitedHealth's 'moonshot gamble' with Obamacare site risks company's digital reputation

  • Article by: JIM SPENCER , Star Tribune
  • Updated: November 17, 2013 - 7:32 AM

In agreeing to oversee the repair of the troubled federal health care website, the insurance giant’s Optum subsidiary took on a tough job.


Cheryl Campbell, Senior vice president of CGI Federal, left, testifies on Capitol Hill in Washington, Thursday, Oct. 24, 2013, before the House Energy and Commerce Committee hearing with contractors that built the federal government's health care websites. From left, Campbell, Andrew Slavitt, group executive vice president for Optum/QSSI, and Lynn Spellecy, corporate counsel for Equifax Workforce Solutions.

Photo: Evan Vucci, Associated Press - Ap

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– As a Nov. 30 deadline approaches on a White House promise to fix its floundering health insurance website, UnitedHealth Group Inc. faces a test that some experts believe could make or break its reputation as the premier player in digital health care delivery.

Success for the subsidiary that is the general contractor managing fixes to the troubled computer operation could establish Minnetonka-based UnitedHealth as a model of 21st century technology and digital know-how. Failure could blemish its carefully nurtured cutting-edge image.

“To do this is really a kind of high-stakes, moonshot gamble,” said Steve Parente, a professor at the University of Minnesota’s Carlson School of Management. “If they can pull it off, they will be seen as a nimble, smart firm that goes beyond old, dowdy health insurance.

“If the system is not there to handle the demand that’s going to come after Thanksgiving, they’ve got an absolute mess.”

United advertises its Optum division as providing the technical expertise to make the health care system run more efficiently. It points to things like a $14 million Medicaid fraud and abuse prevention contract that saved Iowa $86 million over three years.

But the association of Optum subsidiary Quality Software Systems, Inc. with the federal health care website poses financial and political risks, experts say. The website is for people in states that, unlike Minnesota, did not build their own insurance sites.

UnitedHealth spokesman Donald Nathan said the decision to expand its role with the embattled website was a matter of “delivering quality work” for the Centers for Medicare and Medicaid Services and the Department of Health and Human Services.

“We had a customer asking for assistance on a priority that we are uniquely capable of helping on,” Nathan said. “Ultimately, in the marketplace, we’re judged on the quality of our work.”

Those who know the company best believe its officers took the potential for fallout into account before agreeing to oversee the website’s fix.

“They didn’t create this mess,” said David Heupel, an analyst who studies United for Minneapolis-based Thrivent Financial. “They were asked to fix it. … I’m not sure people will point fingers at United if they can’t.”

Sheryl Skolnick of CRT Capital Group, who has followed the company for years, is not so sure.

“United is very cautious in that it will evaluate all the risks as well as the opportunity associated with any business decision and look at the return vs. the investment very very carefully,” Skolnick said.

Still, she added, when Quality Software Services agreed to become the general contractor in charge of fixing the struggling, much-publicized HealthCare.gov site, United chose to put itself in a political “hot seat” that might ultimately impact its image, if not its business.

“It’s a very high-profile place for United to be,” she explained. “But no pain, no gain.”

Political debates

United acquired Quality Software Services — better known as QSSI — in 2012 for an undisclosed amount. QSSI already had a contract to help build the insurance exchange website that was to play a major role in implementing the Affordable Care Act.

From the moment the purchase became known, some members of Congress questioned giving the country’s largest health insurer influence in rolling out the nation’s most comprehensive health care reform.

Overseeing the website repair has led to what seems unprecedented political pressure on a company that has handled billions of dollars in government contracts for decades.

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