UnitedHealth Q1 outcomes: Change cyberattack in focus

UnitedHealth Group’s first-quarter earnings name will mark the well being care big’s first main public feedback since a cyberattack on its Change Healthcare billing and funds subsidiary in February, which has led to the biggest disruption in U.S. well being care because the Covid pandemic.

“Everybody looks to United as the bellwether of all of healthcare services. This will be different,” mentioned Lisa Gill, managing director and well being care analyst at JPMorgan.   

The information breach on the Change Healthcare unit compelled the agency to take down its large billing and cost processing service. Whereas the corporate has restored providers for pharmacies, the outage has continued to disrupt operations for well being care suppliers throughout the nation.

Change Healthcare is a subsidiary of UnitedHealth’s sprawling Optum division, which incorporates 90,000 medical doctors beneath the Optum Care unit and one of many nation’s largest pharmacy advantages managers, OptumRx.

Analysts will probably be searching for how the corporate accounts for the prices related to the cyberattack in addition to the affect of the outage on different operations inside Optum’s companies.

“We will be very interested in the charge that they’re going to be incurring … in terms of how they’re estimating either lost revenue or additional expenses,” mentioned Scott Fidel, managing director and well being care analyst at Stephens.

UnitedHealth says it has provided $4.7 billion in no-interest loans to suppliers, although the American Medical Affiliation says greater than half of doctor teams surveyed in early April mentioned they’d had to make use of private loans to keep up operations.

One such doctor, Nashville dermatologist James Allred, mentioned he is needed to take out loans to maintain his follow, Wellskin Dermatology & Aesthetics, afloat as a result of he is been unable to get claims processed and paid by non-public well being insurers. The final six weeks have compelled to him to surrender on plans to increase his follow this yr.

“For one single hack to disrupt the entire American healthcare industry… brings a lot of questions about how healthy is it, from a system standpoint, to have this massive consolidation?” Allred mentioned.

Bigger suppliers, like house infusion providers agency Option Care Health, have additionally warned that the outage may affect their quarterly outcomes.

On the medical health insurance facet, the timing of the Change hack has elevated uncertainty for UnitedHealthcare and rivals like Humana, CVS Health’s Aetna and Elevance, which studies its quarterly outcomes on Thursday.

All the Medicare Benefit insurers reported higher-than-expected medical utilization charges amongst seniors in the course of the fourth quarter.

With the Change outage happening mid-way by the primary quarter, it has seemingly made it tougher for insurers to trace medical utilization prices in actual time. JPMorgan’s Gill expects most will report adjusted or estimated numbers.

“We’re going to have to wait for the second quarter to really get a better idea as to what’s happening with medical cost trend for United and most likely for the industry,” mentioned Gill.

The delayed outlook on medical prices may even increase the stakes for the well being insurers as they put together 2025 Medicare Plan bids, that are due in early June. It comes after disappointing authorities cost fee will increase for 2025, introduced earlier this month, that are anticipated to pose a revenue headwind.  

“We’ve got elevated cost trends. We’ve got still… a pretty competitive market,” mentioned Gill. “So, they have to work through that.”