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UnitedHealth Group’s first-quarter earnings call will mark the health care giant’s first major public comments since a cyberattack on its Change Healthcare billing and payments subsidiary in February, which has led to the biggest disruption in U.S. health care for the reason that Covid pandemic.
“Everybody looks to United because the bellwether of all of healthcare services. This shall be different,” said Lisa Gill, managing director and health care analyst at JPMorgan.
The info breach on the Change Healthcare unit forced the firm to take down its massive billing and payment processing service. While the corporate has restored services for pharmacies, the outage has continued to disrupt operations for health care providers across the country.
Change Healthcare is a subsidiary of UnitedHealth’s sprawling Optum division, which incorporates 90,000 doctors under the Optum Care unit and one in all the nation’s largest pharmacy advantages managers, OptumRx.
Analysts shall be in search of how the corporate accounts for the prices related to the cyberattack in addition to the impact of the outage on other operations inside Optum’s businesses.
“We shall be very interested in the charge that they’ll be incurring … in terms of how they’re estimating either lost revenue or additional expenses,” said Scott Fidel, managing director and health care analyst at Stephens.
UnitedHealth says it has provided $4.7 billion in no-interest loans to providers, though the American Medical Association says greater than half of physician groups surveyed in early April said they’d had to make use of personal loans to keep up operations.
One such physician, Nashville dermatologist James Allred, said he’s needed to take out loans to maintain his practice, Wellskin Dermatology & Aesthetics, afloat because he’s been unable to get claims processed and paid by private health insurers. The last six weeks have forced to him to present up on plans to expand his practice this yr.
“For one single hack to disrupt the complete American healthcare industry… brings numerous questions on how healthy is it, from a system standpoint, to have this massive consolidation?” Allred said.
Larger providers, like home infusion services firm Option Care Health, have also warned that the outage could impact their quarterly results.
Medicare Advantage uncertainty
On the medical insurance side, the timing of the Change hack has increased uncertainty for UnitedHealthcare and rivals like Humana, CVS Health’s Aetna and Elevance, which reports its quarterly results on Thursday.
All the Medicare Advantage insurers reported higher-than-expected medical utilization rates amongst seniors throughout the fourth quarter.
With the Change outage going down mid-way through the primary quarter, it has likely made it harder for insurers to trace medical utilization costs in real time. JPMorgan’s Gill expects most will report adjusted or estimated numbers.
“We will should wait for the second quarter to actually get a greater idea as to what’s happening with medical cost trend for United and probably for the industry,” said Gill.
The delayed outlook on medical costs may also raise the stakes for the health insurers as they prepare 2025 Medicare Plan bids, that are due in early June. It comes after disappointing government payment rate increases for 2025, announced earlier this month, that are expected to pose a profit headwind.
“We have got elevated cost trends. We have got still… a fairly competitive market,” said Gill. “So, they should work through that.”