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UnitedHealth Group Tuesday's first-quarter earnings report will mark the healthcare giant's first major public comments since a cyberattack on its billing and payments subsidiary Change Healthcare in February, which caused the largest disruption to US healthcare. .since the Covid pandemic.
“Everyone sees United as the bellwether for 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 huge billing and payment processing service. While the company restored services for pharmacies, the outage continued to disrupt operations for healthcare providers across the country.
Change Healthcare is a subsidiary of UnitedHealth's growing Optum division, which includes 90,000 physicians under the Optum Care unit and one of the nation's largest pharmacy benefit managers, OptumRx.
Analysts will look at how the company accounts for the costs associated with the cyberattack, as well as the impact of the disruption on other operations within Optum's businesses.
“We'll be very interested in the charge they're going to incur… in terms of how they estimate the loss of revenue or the additional expenses,” said Scott Fidel, CEO and healthcare analyst at Stephens.
UnitedHealth said it has provided $4.7 billion in interest-free loans to providers, although the American Medical Association said more than half of physician groups surveyed in early April said they had to use personal loans 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 couldn't get private health insurers to process and pay claims. The past six weeks have forced him to give up plans to expand his practice this year.
“For a single attack to disrupt the entire American healthcare industry…raises a lot of questions about how healthy it is, from a systemic point of view, to have this massive consolidation.” Allred said.
Larger providers, such as a home infusion company Health care optionThey have also warned that the interruption could affect their quarterly results.
Medicare Benefit Uncertainty
On the health insurance side, the timing of the Change hack has increased uncertainty for UnitedHealthcare and rivals like human, CVS Health Etna and Elevationwhich reports its quarterly results on Thursday.
All Medicare Advantage insurers reported higher-than-expected medical utilization rates among seniors during the fourth quarter.
Since Change's outage occurred in the middle of the first quarter, insurers will likely find it more difficult to track medical utilization costs in real time. JPMorgan's Gill expects most to report adjusted or estimated numbers.
“We'll have to wait until the second quarter to get a better idea of what's happening with the medical cost trend for United and, most likely, the industry,” Gill said.
The delayed outlook on medical costs will also raise the stakes for health insurers as they prepare Medicare 2025 Plan bids, which are due in early June. It comes after disappointing government payout rate increases for 2025, announced earlier this month, which are expected to pose a headwind to profits.
“We have high cost trends. We still have…a pretty competitive market,” Gill said. “So, they have to figure that out.”
