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UnitedHealth Group’s first-quarter earnings report Tuesday 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 most important disruption in U.S. health care because the Covid pandemic.
“Everybody looks to United because the bellwether of all of health-care services. This can be different,” said Lisa Gill, managing director and health care analyst at JPMorgan. Â Â
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 every of the nation’s largest pharmacy advantages managers, OptumRx.
Analysts can be on the lookout for 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 can be very keen on the charge that they will be incurring … by way of how they’re estimating either lost revenue or additional expenses,” said Scott Fidel, managing director and health-care analyst at Stephens.
UnitedHealth said it has provided $4.7 billion in no-interest loans to providers, though the American Medical Association said greater than half of physician groups surveyed in early April said they’d had to make use of personal loans to take care of 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 him to provide up on plans to expand his practice this yr.
“For one single hack to disrupt your entire American health-care industry… brings numerous questions on how healthy is it, from a system standpoint, to have this massive consolidation?” Allred said.
Larger providers, reminiscent of home infusion services firm Option Care Health, have also warned that the outage could impact their quarterly results.
Medicare Advantage uncertainty Â
On the medical insurance side, the timing of the Change hack has increased uncertainty for UnitedHealthcare and rivals reminiscent of Humana, CVS Health’s Aetna and Elevance, which reports its quarterly results Thursday.
All the Medicare Advantage insurers reported higher-than-expected medical utilization rates amongst seniors throughout the fourth quarter.
With the Change outage happening midway 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’ll must wait for the second quarter to essentially get a greater idea as to what’s happening with medical cost trend for United and almost certainly for the industry,” said Gill.
The delayed outlook on medical costs will even 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. Â
“We have elevated cost trends. We have still … a fairly competitive market,” said Gill. “So, they must work through that.”
