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UNITED HEALTHCARE CORP. MOVING INTO PHARMACY MANAGEMENT

Executive Summary

UNITED HEALTHCARE CORP. MOVING INTO PHARMACY MANAGEMENT as an independent service business. The HMO management company is setting up a new subsidiary, Diversified Pharmaceutical Services, to market pharmaceutical cost containment services to clients outside United's managed care network. The pharmacy management company will provide "drug formulary development, drug interaction monitoring, claims processing and preferred purchasing arrangements," United said in a Jan. 27 release. The new company is being spun out of United's division of pharmacy. The division, to date, has primarily performed pharmaceutical management services for United's 20 HMOs, but has also provided the services on a contract basis to some outside managed care providers. DPS is headed by John Middleton, who previously headed the United Health Care pharmacy division. United Healthcare was an early proponent of formularies for its drug coverage, and the firm says it now uses formularies in all of its markets ("The Pink Sheet" March 21, 1988, p. 10). The Minneapolis-based company said it is "looking at" submitting a proposal to HCFA for data processing services under the Medicare outpatient drug benefit. United maintains that "demand for the company's ]pharmaceutical management[ services has been overwhelming, with 850,000 new members signed even before the start of formal marketing." DPS' clients include: The Johns Hopkins Health Plan, Key Health Plan (Indianapolis, Indiana), Equicor Health Plan (Richmond, Virginia), Physicians Association of Clackamas County (Portland, Oregon), and Samaritan Health Plan (Milwaukee, Wisconsin). In addition to DPS, United also operates two other cost containment service companies: HealthMarc, a provider of acute-care hospital utilization review and catastrophic case management services; and United Behavioral Systems, a provider of mental health and chemical dependency services. Revenues from the three businesses are estimated to reach $8-10 mil. in 1989.

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