(Corrects 12-month UnitedHealth stock price change in the final paragraph.)

July 15 (Bloomberg) -- UnitedHealth Group Inc., the largest U.S. health insurer, and Cisco Systems Inc., the biggest maker of computer networking gear, will build a network of virtual clinics to make medical care available in offices, stores and rural areas around the country.

UnitedHealth will spend “tens of millions” of dollars to set up clinics with Cisco’s equipment, allowing doctors to examine far-away patients, Stephen Hemsley, chief executive officer of the Minnetonka, Minnesota-based insurer, said in a statement today. The company and San Jose, California-based Cisco unveiled the plan in a news conference in Washington.

Cisco and UnitedHealth see a growing market in remote doctoring as lawmakers consider an overhaul of U.S. health care, said Jim Woodburn, a UnitedHealth vice president. The stimulus package approved in February included $6 billion for “telehealth” initiatives, and Congress is considering legislation that would tie government payments to hospitals and insurers to their record at keeping patients healthy.

“When we can put a health clinic on an oil platform out in the Gulf, or in a facility in Kansas where we can take care of the employees right there, not only can we improve costs, we can improve productivity,” Woodburn said. “You don’t have to have workers go driving a long way to the doctor.”

Cisco and UnitedHealth, the largest insurer by sales, will collaborate on six “Connected Care” pilot projects around the country, said Stephen Rodgers, an executive vice president with the health plan. The companies also announced plans with Project Hope, a Millwood, Virginia-based nonprofit organization, to bring an 18-wheel, mobile version of the clinics to rural New Mexico.

The iPhone Model

The clinics will provide video conferencing to doctors as well as equipment that allows physicians to listen to a heartbeat, measure blood-oxygen or sugar levels and take other vital signs remotely, Rodgers said. The companies hope to follow Apple Inc.’s iPhone model and create a “technology platform” that other vendors or insurers might adapt with their own innovations, making Cisco and UnitedHealth’s “franchise” more popular, he said.

“The in-person visit with a doctor is no longer the sole ‘gold standard’ method for delivering high-quality health care services,” said Kaveh Safavi, Cisco’s vice president for global health-care practice, in the statement.

The New Mexico project should begin early next year, Rodgers said. The clinics may cost anywhere from $5,000 to $100,000, depending on the level of technology, he said. Doctors, hospital systems and government are expected to pay some of the installation costs, as are patients who will make copayments to visit the clinics, he said.

Sending a Message

The collaboration is “a tangible sign” of UnitedHealth’s technological leadership among insurers, said Ana Gupte, a Sanford C. Bernstein & Co. insurance analyst in New York. It’s no accident the announcement came in Washington as Congress considers creating a government health plan to compete with the industry, she said.

“They want to say that managed care companies such as themselves, the leading players, are on the cutting edge of using health information technology to address the nation’s problems,” Gupte said in a telephone interview. “They’re saying they’re pretty far ahead already and for a public plan to catch up with that will take a great deal of effort.”

UnitedHealth rose 14 cents, to $24.91, in New York Stock Exchange composite trading at 4:15 p.m. The company has risen 12 percent in 12 months. Cisco rose $1.08, or 5.8 percent, to $19.81 in Nasdaq Stock Market composite trading. Cisco has declined 5.8 percent in 12 months.

To contact the reporter on this story: Alex Nussbaum in New York anussbaum1@bloomberg.net.

Last Updated: July 15, 2009 16:32 EDT