Insurance Company Subsidiaries... Dozens of Companies Hidden within United, Cigna, CVS, Blue Cross

This video, presented by Dr. Eric Bricker of AHealthcareZ, offers a detailed exposé on the complex and often hidden subsidiary structures of the four largest health insurance carriers in the United States: United Health Group, The Cigna Group, CVS Health, and Elevance Health (the largest Blue Cross company). The primary purpose of the analysis is to demonstrate how these corporate behemoths, through their vast networks of owned companies, create an illusion of choice and competition within the healthcare market. Dr. Bricker contends that this extensive consolidation is largely a result of growth by acquisition, financed by cheap debt, rather than through the delivery of superior customer value in terms of better, faster, or cheaper services.

The presentation systematically breaks down each major carrier, detailing its core insurance arm and numerous other ventures. For United Health Group, Dr. Bricker highlights United Healthcare, UMR (a TPA), and the expansive Optum, which itself includes OptumRx (a major Pharmacy Benefit Manager or PBM), Emisar (a Group Purchasing Organization or GPO for pharma payments), Optum Specialty Pharmacy, Change Healthcare (a critical electronic billing interface that recently suffered a ransomware attack), and Interqual (which sets standards for hospital bed days). United also owns consulting firms like The Advisory Board Company and large physician practices such as Kelsey-Seybold, WellMed, and Atrius. The Cigna Group's structure is similarly dissected, revealing Cigna Healthcare, Allegiance (TPA), and Evernorth (Cigna's equivalent to Optum), which encompasses Express Scripts (another massive PBM), Ascent Health Services (a GPO), eviCore (a leading prior authorization company), MDLive (telemedicine), and significant investments in physician groups like VillageMD and Summit Health.

A unique and central methodology employed throughout the video is the "up/down arrow" framework. For each subsidiary, Dr. Bricker analyzes whether its business model primarily profits from increasing or decreasing overall healthcare costs. This reveals a fascinating and often contradictory set of financial incentives within these integrated healthcare giants. For instance, while the core insurance arms (e.g., United Healthcare, Cigna Healthcare) generally profit from lower healthcare costs, many of their PBMs (e.g., OptumRx, Express Scripts), billing interfaces (Change Healthcare), and even some physician groups (e.g., Atrius, Summit Health) are structured to make more money as healthcare costs increase. This internal tension underscores the complexity of their revenue models.

The analysis continues with CVS Health, detailing its health insurance arm Aetna, the TPA Meritain, the colossal CVS Caremark (PBM), Zinc (a GPO), CVS Specialty Pharmacy, the ubiquitous CVS retail pharmacies, and the intriguing Cordavis—a newer subsidiary that acts as a "shell" pharmaceutical manufacturer, licensing drugs from other companies. Elevance Health (Anthem, WellPoint) is presented with its healthcare services arm, Carelon, which includes AIM Specialty Health (another major prior authorization company) and large physician groups like Millennium Physician Group. The video concludes by emphasizing that the proliferation of these subsidiaries serves to mask market concentration and that their growth strategy has been predominantly through mergers and acquisitions, fueled by readily available cheap debt, rather than through genuine competition or the delivery of enhanced value to consumers or the healthcare system.

Key Takeaways:

• The US health insurance market is highly concentrated, with four major players (United Health Group, Cigna Group, CVS Health, Elevance Health) controlling vast and complex networks of subsidiaries that obscure their true market power and interconnectedness.
• These conglomerates have vertically integrated across the healthcare ecosystem, owning not just insurance plans but also Pharmacy Benefit Managers (PBMs), specialty pharmacies, Group Purchasing Organizations (GPOs), prior authorization companies, telemedicine services, consulting firms, physician practices, and even venturing into pharmaceutical manufacturing.
• PBMs like OptumRx, Express Scripts, and CVS Caremark are critical components within these structures, significantly influencing drug pricing, formularies, and distribution channels, which directly impacts pharmaceutical companies' market access and commercial strategies.
• A key insight is that different subsidiaries within the same parent company often have conflicting financial incentives; some profit from increasing healthcare costs (e.g., PBMs, billing services), while others benefit from decreasing them (e.g., traditional insurance plans, capitated physician groups).
• Entities such as Change Healthcare (United Health Group) and eviCore/AIM Specialty Health (Cigna/Elevance) are central to healthcare operations, managing electronic billing, payments, and prior authorizations, which are crucial touchpoints for patient access to pharmaceutical products and services.
• The primary driver of growth for these health insurance giants has been aggressive industry consolidation through acquisitions, largely financed by cheap debt, rather than organic growth stemming from superior customer value, innovation, or efficiency. This suggests a market where financial engineering outweighs competitive service delivery.
• The existence of GPOs like Emisar, Ascent Health Services, and Zinc highlights the intricate mechanisms PBMs use to collect payments from pharmaceutical companies, a critical area for pharmaceutical commercial and market access teams to understand and strategize around.
• CVS Health's subsidiary, Cordavis, acting as a "shell" pharmaceutical manufacturer, signals a trend of payers entering the drug production space, which could significantly alter market dynamics and competitive landscapes for traditional pharmaceutical companies.
• The ownership of large physician practices (e.g., Kelsey-Seybold, WellMed, VillageMD, Summit Health, Millennium Physician Group) by health insurance groups represents a strategic move towards integrated care delivery, potentially influencing prescribing patterns, referral networks, and patient pathways for pharmaceutical products.
• The complex web of subsidiaries creates an illusion of extensive choice and competition for employers, patients, and government entities, masking the concentrated power and coordinated pricing strategies that exist across various healthcare services.
• For pharmaceutical and life sciences companies, understanding these intricate relationships, financial incentives, and operational structures is paramount for navigating market access, optimizing commercial operations, developing effective data integration strategies, and ensuring regulatory compliance.
• The video implicitly warns that the current market consolidation, driven by financial leverage rather than value creation, may not necessarily lead to better or more efficient healthcare services for patients or the broader system.

Key Concepts:

• Subsidiaries: Companies controlled by a parent company.
• PBM (Pharmacy Benefit Manager): Third-party administrator of prescription drug programs for commercial health plans, self-insured employer plans, Medicare Part D plans, and other government-sponsored programs.
• TPA (Third-Party Administrator): An organization that processes insurance claims or certain aspects of employee benefit plans for a separate entity.
• GPO (Group Purchasing Organization): An entity that helps healthcare providers realize savings and efficiencies by aggregating purchasing volume and using that leverage to negotiate discounts with manufacturers, distributors, and other vendors.
• Prior Authorization: A requirement from a health insurance company that a patient obtain approval before receiving a specific medical service or medication.
• Capitated Payment: A fixed amount of money paid per patient to a provider or health plan for a specific period, regardless of how many services the patient uses.
• Fee-for-Service: A payment model where services are unbundled and paid for separately.

Examples/Case Studies:

• United Health Group Subsidiaries: United Healthcare, UMR, Optum (OptumRx, Emisar, Optum Specialty Pharmacy, Change Healthcare, Interqual, The Advisory Board Company), Kelsey-Seybold, WellMed, Atrius.
• The Cigna Group Subsidiaries: Cigna Healthcare, Allegiance, Evernorth (Express Scripts, Ascent Health Services, eviCore, MDLive), VillageMD, Summit Health.
• CVS Health Subsidiaries: Aetna, Meritain, CVS Caremark (Zinc), CVS Specialty Pharmacy, CVS Retail Pharmacies, Cordavis.
• Elevance Health Subsidiaries: Anthem, WellPoint, Carelon (AIM Specialty Health), Millennium Physician Group.