UnitedHealth Group to Grow the Size of Its Operations

Case Type: improve profitability; growth.
Consulting Firm: KPMG Advisory first round full time job interview.
Industry Coverage: life & health insurance.

Case Interview Question #00923: Our client UnitedHealth Group Inc. (NYSE: UNH) is a large diversified managed health care company based in Minnetonka, Minnesota, United States. It offers a spectrum of products and services through two operating businesses, UnitedHealthcare and Optum, both subsidiaries of UnitedHealth Group. The company serves approximately 70 million individuals throughout the United States.

Beginning in 2011 and continuing into 2012 the client UnitedHealth Group implemented an enterprise reorganization. They have brought in a team of management consultants to determine an appropriate strategy for improving their profitability through growth in the size of its operations. They hope to reach their profitability goals over the next three years. As one of the consultants working on this case, what would you do?

Possible Answer:

This profitability case has no single right or wrong answer. Rather, the interviewer is interested in seeing how you approach the problem. The key is to appear logical and to demonstrate an ability to move from the specifics of the case to the general issues involved in improving profitability anywhere. In other words, the case isn’t about health care at all. So don’t panic if you’re not an expert in the health care industry.

Remember that the interviewer is principally looking for you to demonstrate analytical skill: How you think, how you structure a problem, and whether you are skilled at building a framework for thinking about a situation. You should be able to draw on models from competitive strategy, finance, marketing, operations, organization, or behavior. The point is this, however: You don’t need to reference them – just use them.

1. Opening

A good way to begin this case is to question whether expansion of operations is the right way to achieve their profitability goals.

* Are they currently profitable? If not, growth just further destroys value and perhaps they must attack profitability from the cost side.
* If they are currently profitable, then they have three options: increase sales, lower costs, or both.

Don’t assume that growth is the only answer, show the interviewer that you would consider all options and understand both drivers of profitability – cost and revenues.

2. Probing

Once you structure the options, the interviewer will lead you down the relevant path for this case, so follow the lead. If you’re told that the client company has low costs relative to the industry, then pursue the sales growth option. One way to structure your thinking about this problem would be to use a Growth Tree framework. Use the tree to think aloud for the interviewer and guide your questioning:

“If the client company has two possible growth options – they can expand into existing businesses or diversify into new business. I think that growth in existing businesses should be considered first because that’s where they have core skills. In existing businesses they can grow their product market or consider vertical integration…”

Feel out the interviewer: Where are the opportunities? What might be some options you can readily eliminate, e.g. is vertical integration really a viable option for a health-care provider?

Continue to work through the growth tree systematically. If you ask about opportunities for pushing new products into existing markets and the interviewer seems very interested, pursue this path by offering suggestions for potentially viable new products.