United Health Group Tuesday’s first-quarter earnings report will be the healthcare giant’s first major public comment since a cyberattack on its billing and payments subsidiary Change Healthcare in February that led to the biggest disruption in the U.S. healthcare system since the Covid pandemic.
“Everyone looks at United as the pioneer of all healthcare services. This will be different,” said Lisa Gill, managing director and healthcare analyst at JPMorgan.
The data breach at the Change Healthcare unit forced the company to shut down its extensive billing and payment processing service. While the company restored service to pharmacies, the outage continued to impact the operations of healthcare providers across the country.
Change Healthcare is a subsidiary of UnitedHealth’s sprawling Optum division, which includes 90,000 physicians under the Optum Care division and one of the nation’s largest pharmacy benefit managers, OptumRx.
Analysts will examine how the company accounts for the costs associated with the cyberattack as well as the impact of the outage on other operations within Optum’s businesses.
“We will be very interested in the burden that will be placed on them … in terms of how they assess either lost revenue or additional expenses,” said Scott Fidel, chief executive and healthcare analyst at Stephens.
UnitedHealth said it provided $4.7 billion in interest-free loans to providers, although more than half of physician groups surveyed in early April said they had had to use private loans, according to the American Medical Association. to maintain operations.
One of those doctors, Nashville dermatologist James Allred, said he had to take out loans to keep his practice, Wellskin Dermatology & Aesthetics, afloat because he was unable to get claims processed and paid by private health insurers. The last six weeks have forced him to abandon plans to expand his practice this year.
“That a single hack brings down the entire American healthcare industry … raises a lot of questions about how healthy is this massive consolidation from a systemic perspective?” Allred said.
Larger providers, e.g. B. a provider of home infusion services Health care optionhave also warned that the outage could have an impact on their quarterly results.
Uncertainty about Medicare Advantage
On the health insurance side, the timing of the change hack has heightened uncertainty for UnitedHealthcare and competitors such as. B. increased Humana, CVS Health Aetna and Heightwhich reports its quarterly results on Thursday.
All Medicare Advantage insurers reported higher-than-expected medical utilization rates among seniors in the fourth quarter.
Since the Change outage occurred in the middle of the first quarter, it has likely become more difficult for insurers to track medical utilization costs in real time. JPMorgan’s Gill expects most will report adjusted or estimated numbers.
“We’ll have to wait for the second quarter to really get a better idea of what’s happening with medical cost trends for United and most likely the industry,” Gill said.
The delayed medical cost forecast will also increase demands on health insurers as they prepare bids for the 2025 Medicare plan, due in early June. This comes after disappointing increases in government payment rates for 2025 announced earlier this month, which are expected to be a headwind to earnings.
“We have increasing cost trends. We still have…a pretty competitive market,” Gill said. “So they have to get through this.”
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2024-04-15 15:53:55
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