UnitedHealth beats TriWest for $20B defense contract

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UnitedHealth has won a coveted $20 billion contract to provide managed care services in 21 states for the Department of Defense after it challenged the department's decision to award the Tricare contract to TriWest.

With the new five-year contract, UnitedHealth will provide insurance for 2.9 million Tricare beneficiaries in the West. Perhaps more importantly though, it serves as the insurer's entrance into the military healthcare market, which it has aggressively pursued since 2007 when it formed a subsidiary, UnitedHealth Military & Veterans Services, to attract Tricare business, reported the Minneapolis Star-Tribune.

"It's a huge strategic win for them because they're not in the military space," Ana Gupte, an analyst with Sanford C. Bernstein & Co., told Bloomberg. "It just extends the reach of United into every part of health benefits in the United States."

TriWest, on the other hand, is experiencing a reversal of fortune after losing the Tricare contract it has held since 1996. Although the insurer said it was disappointed with the DoD's decision, it hasn't yet decided whether it will appeal. "We really do not know what our next step will be until we find out next week from the government the reason for this decision," Scott Celley, vice president of external affairs for TriWest, told the Phoenix Business Journal. "Based on all our experience and our 16 years of taking care of military families, we still believe that we are well qualified to be the company that takes care of our troops and families."

UnitedHealth is looking forward, saying it hopes to hire some TriWest employees, including staff clinical, customer service and staff management workers, the Arizona Republic reported. "Given the fact that our goal is to provide military service members, veterans and families the highest quality care, we certainly intend to actively recruit the highly qualified Arizona workforce that has experience in Tricare," UnitedHealth spokesman Matt Stearns said.

He added that UnitedHealth could recruit TriWest employees in other states involved in the Tricare contract. "We have the flexibility to increase staff levels if we find qualified candidates," Stearns told the Republic.

To learn more:
- read the Bloomberg article
- see the Minneapolis Star-Tribune article
- check out the Phoenix Business Journal article
- read the Arizona Republic article

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