Q2 2020 UnitedHealth Group Inc Earnings Call
[music].
Good morning, and welcome to United Health Group Second quarter 2020 earnings Conference call.
A question and answer session will follow Unitedhealth group's prepared remarks.
As a reminder, this call is being recorded.
There were some important introductory information.
This call contains forward looking statements on the U.S. Federal Securities laws.
These statements are subject to risks and uncertainties that could cause actual results could differ materially from historical experience or present expectations.
A description of some of the risk and uncertainties can be found in the reports. So we filed with the Securities and Exchange Commission, including the cautionary statements included in our current and periodic filings.
This call will also reference non-GAAP amounts a reconciliation of the non gap to GAAP amounts is available on the financial and earnings report section of the company's Investor Relations page at Www Dot Unitedhealth group Dotcom.
Information presented on this call is contained in the earnings release, we issued this morning, and then our form 8-K dated July 15th 2020, which may be accessed from the Investor Relations page of the company's website.
I'll now turn the conference over to the Chief Executive Officer of United Health Group Mr., David Wickman. Please go ahead.
Good morning, and thank you for joining us.
When we last met in its for 90 days ago. The challenges of Cobot 19 in the Americas, We're just beginning to emerge.
Now some four months into the evolving endemic the individual health system, social and economic implications of the virus or better understood and significant.
Especially the impact of longstanding health disparities affecting your underserved populations hit hardest by the pandemic.
And on turned to periods such as these we lean on our mission and culture values.
The Guy does that mission and those values, calling us to help people to help health systems to help everyone with integrity compassion innovation relationships and performance.
Hi, I'm grateful to I'm proud of our 325000 diverse team members as they continue to provide vital support.
Caring for those we serve and working with the health system partners to combat this disease and the many other daily health challenges that have not gone away.
They've just been deferred and possibly become more complicated.
We deeply appreciate the tireless service of our 120000.
Doctors nurses medical and behavioral professionals, social workers pharmacists and other healthcare workers on the front lines of care.
They serve in Brazil, Chile.
Cumbia, Peru, and Portugal, they serve in New York City, Seattle, Southern California, Phoenix, Texas, Florida, and other communities confronted by covert 19.
There can passion for our patients and members has save lives and help make the lives of countless other people better.
United Health Group was built to be adaptable and instinctive enterprise capable of anticipating change rapidly evolving and reconfiguring capabilities to meet both challenges and opportunities.
The past several months have only highlighted the importance of this agility, so long core to how we operate and deepened our resolve to cultivated.
We've witnessed our people, helping in ways and advancing innovations and solutions and an unprecedented pace scope and scale.
Today, I'd like to provide insights into how our businesses, both responding and advancing.
Sure what we've learned in the past several months describe how these lessons enhance our ability to serve even more people more deeply and as a result, we expect to grow and emerge stronger in the years to come.
Unitedhealthcare and Optum have both experienced the effects of an unprecedented decline in health care services.
Among early actions, we undertook to help people were opening new enrollment periods. So more people could be covered.
Waiting all consumer cobot, 19, diagnostic and treatment treatment costs.
Accelerating $2 billion in needed funding to care providers, and providing over $1.5 billion indirect consumer and customer assistance, including premium forgiveness and suspension of member cost sharing to help people manage their health conditions.
These amounts are in addition to the $1 billion in estimated rebates to be paid in coming periods.
Throughout this pandemic, we have taken an extraordinary measures to ensure people get the essential care they need.
As we speak with you today care access patterns are nearing more normal levels and encouraging sign for People's health.
We see the system operating just short of its normal baseline now.
Far above the lows experienced as the second quarter began.
We currently expect care access patterns, while somewhat more volatile than in the past the moderately exceed normal baselines in the second half as people seek previously deferred care.
And the pandemic with high testing in treatment costs per affected consumer is expected to continue to run its course throughout 2020 and into 2021.
Consistent with the proactive actions we've already undertaken we will continue to act swiftly to address any further financial imbalances arising from the pandemic and related effects.
We are further advancing broad health equity initiatives tapping into our data information and analytics capacities to guide scientific efforts to help eliminate longstanding health disparities.
This is of course, we have pursued for many years and are now even more intentional as we see underserved populations disproportionally impacted by this health crisis.
We establish an innovative community based care model to provide cope with 19 testing education and other necessary services to some of the highest risk and least served communities in the country.
We are focusing on locations with high mortality, along with local community challenges, including poverty crowding prudent security homelessness and the other existing social determinants of health.
Our service includes special deployments in the underserved communities of Philadelphia, Los Angeles, and Orleans parish alongside many other similar communities, we serve through our core Medicare and Medicaid programs.
We are researching new treatment approaches in partnership with pop prominent academic institutions.
For example, working with the more how school of Medicine, we're studying the effect of Copel 19 on those with sickle cell trait a condition, which is prevalent in 8% to 10% of Black Americans.
We are conducting an ace inhibitor virtual clinical trial with the Yale School of Medicine.
Artificial intelligence apply to our data showed that seniors on ace inhibitors, who test positive for coated 19, our 40% less likely to need hospitalizations than those who are not.
Understanding that Theres, a significant racial disparity and the use of ace inhibitors to manage hypertension, we're working rapidly to scale. This 10000 person virtual clinical trial believed to be the first of its type.
We're partnering with a growing number of state governments and employers who are using optums rapid response resources to stand up mobile and fixed testing sites to date, we have helped conduct more than a half a million tests across more than 500 sites, most often in rural and underserved communities.
We committed another $100 million and affordable housing to address homelessness, bringing our total investments to more than $500 million to build nearly 5400 units over the past seven years.
And we will do more focused on working with others to eradicate longstanding health disparities in America and to create a more diverse U.S. health workforce.
The Cobot 19 crisis has accelerated the adoption of new technologies in approaches to care.
We're serving people where they want to be served and more often in the home, which is becoming a preferred additional care setting through new innovative digital offerings.
Peak care system closure in April Unitedhealthcare facilitated more than 4 million digital care visits.
Nearly 30 times the number of visits we enabled in January.
We expect digital and home care to persist and expand in coming years, we're rapidly assembling our next generation comprehensive platform leveraging the digital signaling and monitor capacities of Vivify.
The market leading engagement capabilities of rally.
Our AI enabled individual health record.
The pharmacy ecommerce capabilities of Optumrx, our extensive hands on community based clinical resources and importantly, a proprietary scalable direct to your own Dr. Tele medicine platform.
The understandable unexpected rise in stress anxiety and social isolation has increased the demand for behavioral health services.
Digital platforms are proving to be increasingly effective in remotely diagnosing and caring for people with such needs with a rapidly expanding scope.
Optimism among the largest providers of digital behavioral health care services in the country now with more than 10000 care providers using our virtual visit platform.
Our digital psychiatry offerings extend to community Baber health clinics, enabling hundreds of thousands of digital visits and complements our more than 500 community based behavioral health pharmacies.
Optum nurses are meeting the increasing need for infusion services in the comfort and safety of People's homes.
A double digit trend, we expect will accelerate for years to come.
Home infusion visits by our nurses offer fully equivalent clinical efficacy greater patient convenience and satisfaction and reduced risk of immuno compromised people.
At up to one half the cost of traditional settings.
And our house calls services include extensive digital clinical care visits supplementing in home visits by Optum nurses.
As clinical techniques and technologies advance ambulatory surgical care is expanding as an appropriate care setting for high acuity members and procedures like cardiovascular surgeries.
Partly as a result of to cope with 19 disruptions the convenience safety and better patient and surgeon experience is becoming more deeply understood.
For example in just the last few months, we welcome several hundred new surgeons to our centers.
End of opened new and higher acuity service lines.
We expect the alignment of physicians to value based care models to accelerate.
The recent months have served as a compelling example of why care delivery has and should continue to advance in this direction.
Optumcare continues as the physician partner of choice with over 6500, additional clinicians primarily pcps specialists nurse practitioners and physicians assistant added so far this year.
These clinicians are seeking alignment with the entity best equipped to help move to high performing and more stable accountable care models.
We believe that entity is optumcare.
These are a few examples of how we.
Have and continue to innovate to help make people healthier to help make health systems work better for everyone.
The information and technology enabled ambulatory care and pharmacy capacities of Optum leveraged and deployed by United Healthcare and other payers and other health systems hold significant process promise for the future of the U.S. health system now I'll turn it over to the financial Officer John Rex.
Thank you David as expected our second quarter earnings were meaningfully impacted by unprecedented and far reaching disruption in care patterns.
We expect this temporary impact will be offset in the quarters ahead by the proactive assistance measures we have already taken.
The resumption of more normal care patterns and future cobot 19 impacts.
Both within the healthcare sector and the economy at large.
Looking more specifically at that pandemic effects in the second quarter.
Often revenue and earnings for fee for service care delivery and the Optuminsight and Optumrx volume based businesses were reduced by lower level of Karen counters.
For the company as a whole this was more than offset by the disrupted care patterns within the United healthcare and the Optumhealth risk based businesses.
Prior period development of 1.4 billion arose primarily from the lower than expected care levels in the second half of March contributing to the lower medical care ratio this quarter.
The impact of this care disruption is reduced by factors such as coded related treatment and testing and the financial assistance we are providing.
Notably the assistance component has a more pronounced financial impact future periods.
For example, the suspension of member cost share will have an accelerating benefit and corresponding impact for the people we serve as care delivery systems further reopen and they seek care again.
At the lowest point in April inpatient care inclusive of Cobot 19 related care was about three quarters of baseline.
In June this recovered to nearly 95%.
At the same lowest point out patient and physician services sell through roughly 60% of normal levels.
As we exited June they were also recovery tracking above 90%.
Steve National trends have continued thus far in July even as certain states are seeing short term deferral of services, where there are elevated levels of infection and hospitalization.
Turning to optimize overall performance each of the three businesses performed well, while they were affected in different ways by care deferral and the economic downturn.
Optumhealth second quarter earnings increased 22% year over year.
The impact of the lower patient visits in fee for service practices was mostly offset by the same temporary deferral of care effects on the risk bearing practices.
Optuminsight second quarter earnings increased 7% year over year, while the revenue backlog grew by nearly 1 billion to 19.4 billion.
Many of Optuminsight payer and care provider clients have volume based contracts for technology and managed services.
After an expected slowing of such volumes early in the second quarter due to care deferral, we're now seeing activity rebound.
And we see the new business pipeline strengthening again as evidenced by the new partnership with Boulder community Health.
Optumrx earnings declined by 6% year over year in the second quarter as script volumes were impacted by lower Carrick activity.
Unsurprisingly, given the sharp drop in primary care and specialist visits first filled prescriptions declined by about one third early in the second quarter.
Began to recover as the quarter progress and have continued to do so at care activity increases.
Turning to United Healthcare second quarter operating earnings were significantly higher due to the temporary care deferrals.
We continue to serve more people through our public sector and senior businesses, including an increase to the second quarter of nearly 600000 people year to date.
As expected given the economic climate commercial enrollment declined, albeit at lower levels in the change in unemployment might have suggested as many employers continued benefits coverage for furloughed employees.
During the second quarter growth in sales of individual policy that Medicaid membership accelerated the latter state eased redetermination requirements to ensure sustainable coverage for people.
We're also awarded contracts to serve Medicaid members in Kentucky and 2021.
Our honored to have been selected to serve the Medicaid population in Indiana and are pleased to continue serving in Philadelphia.
After a strong annual enrollment period for Medicare advantage, the pacing of new enrollees in April and May east as traditional in person sales slowed.
In recent weeks sales of accelerated with the current level of Medicare advantage enrollment activity, having rebounded to pre cobot 19 expectation levels.
Our liquidity and financial position have remained strong.
Second quarter cash flows reached 10 billion or 1.5 times net earnings.
Both cash flows and dating claims payable were impacted by the Swift moves we undertook to provide enhanced liquidity by accelerating payments to individual care providers and health systems.
Offsetting this impact was the timing of second quarter income tax payments, which will now occur in the third quarter.
As noted in our press release. This morning, we are maintaining our full year earnings per share outlook in anticipation of the delivery of previously deferred and potentially even higher acuity care as well as continued cost to address cobot 19 in the second half of the year.
We are encouraged by the rapid pacing of the reopening of care delivery systems, and our proactively working to help people quickly obtained a care they need.
In addition, we incorporated second half view for a more pronounced impact from the consumer customer and care provider assistance initiatives already undertaken.
As Dave stated.
We will act to address further imbalances should they arise over the duration of this pandemic.
With that I'll turn it back today.
Thank you John.
Today in the midst of the covered 19 crisis foremost on our mines is the safety of our team members and their families.
On the need to continue adapting rapidly innovating and delivering for those we serve.
Building you begin to focus at this time on what will come in 2021 and beyond.
At this distance the evolution of the pandemic when and to what extent the economy will improve our very much open questions.
We expect the macro net economic impacts of the broader unemployment and actions we have taken to assist customers and communities to continue well into next year.
Helping our customers through an unexpected macro environment and the extended impact from disruptions in care has and will continue to be an area of intense focus for our business leaders and care providers.
During this period, our diversified businesses are trading unique opportunities to serve.
And we don't believe these are just passing trends.
They bring more effective clinical outcomes satisfaction and convenience for people at lower cost.
A significant contribution to the next generation health system, one that operates in a socially conscious way.
These are accelerating a durable trends well supportive of our 13% to 16% long term growth objective in the years to come.
Public sector and senior benefits programs, our care delivery businesses, our digital and at home based initiatives pharmacy care services data and analytics and health banking and payments platforms will continue contributing a significant growth factors long into the future.
Thank you for your time today, operator can you. Please open the lines for questions.
And at this time, if you'd like to ask your question. Please press star and one on your Touchtone phone you may removed yourself from the Q by pressing the pound cake.
We do ask that you limit yourself to one question. If you ask multiple questions. We will only be answering the first question. So we can respond to everyone at MCU. This morning. Thank you.
We'll go first to Justin Lake with Wolfe Research. Please go ahead. Your line is open.
Thanks, Good morning.
One of the follow up on your comments on second half medical costs, you talked about getting back to about 90% of typical in June for little above 90%, maybe you're expecting north of 100%. The second half. So just hoping you can put some numbers are on a few things first how much above normal do you expect to be into back half speedier.
How much of the headwind you expect the pacing data client give backs to be in the back half in terms of the headwind and all are the impact MLL R and they can you talk about how your price in 2021 in terms of utilization.
Thanks.
Okay, well they will start with John and then a as it relates to 22 of them on I'm sure you're talking about the commercial markets and we'll have a durcan dresses. Good morning, I think generally be great as well. Thanks, Okay. Good morning, John Rex here just in.
A few comments here in terms of.
Medical cost ratio and can be and the impacts of customer assistance in how they how they flow through the year. So.
Yes, you are right clearly we expect.
Higher higher than historically normal medical cost ratios as we move into that as we move into the second quarter of the year and that's certainly implied in our maintained guidance view and so you can see as you look at it versus historical levels of a typical second half were running you know in the in the zone of a couple of hundred basis.
Points above what we would consider kind of historical medical cost ratios in the in the second half of the year kind of give you a little color in terms of how that how that flows through in terms of the customer efficiency initiatives and how those play out so among some of the more significant customer assistance initiatives that were that we are that we're taking on.
Our the weighting of co pays for seniors in both at for both primary care and.
Very importantly on the specialists component as that's a very significant burden for seniors.
Those really how much more impact as we get into the second half.
From the perspective of as care delivery systems reopened that's when those costs will be incurred so you're incurring those costs as seniors are accent and people are really accessing that care and thats, where the assistance component comes in so.
That component, which is one of the more significant opponents of the customer assistance initiatives. We've undertaken is really could more weighted to really more weighted to the back half of the year than the first half of the here.
Great. Thank you and then as it relates to pricing I think we'll start with Medicare with Tim Knoll, and then we'll go to commercial with Bill Golden Tim.
Morning, just internal thanks for the question as we talked a little bit last quarter about 'em pricing for 2021, and Medicare and a as a reminder, pretty cold bid we talked about total revenue related items roughly on par with our estimates of forward trend and we also have the repeal of the permanent repealed.
Health insurance tax in 2021, if you take those things all else equal we would've expected 2021 to be a benefit investment year on the Medicare advantage.
Certainly call they create some challenges with on diagnosis collection, given utilization patterns that we're seeing.
And talking about and also CMS has not provided any discrete adjustments in the final notice to account for that nor have they done on anything I'm sense on still too early to get specific on our bid offerings for 2021 beds are fine all nor are they public but again our top priority.
As providing stable unreliable benefits from members that we serve.
And we feel really good about 2021 and expect to continue our multiyear momentum in Medicare advantage. Thanks, Thanks, Tim and I'd, just add to that I think the way. This year is setting up and I know, it's relatively early but in terms of the overall positioning is to continue the pace of growth that we've been seeing across the.
The vigil Medicare advantage lines and then obviously, we're deeply focused on the group Medicare market and growth there as well.
Bill Golden do you want to handle commercial.
Sure, Yes, thanks, Dave and thanks for the question.
So we're going to continue our longstanding approach to pricing, we're disciplined in where pricing of our best estimate of future cost trends.
We have extensive we modeled the potential impact Dakota, 19, including to our testing and treatment costs potential vaccine costs and cost that will be expected to be deferred into 2021.
Which includes the potential higher severity because of the deferred care and also the potential.
Our continued depressed demand for health care services in some regions and states.
Paul This is built into our forward view of medical cost trends and we're working very closely with our customers right now and into August as we start to.
Put out all renewals for 2021.
Our clients are really expecting in appreciating consistent stable pricing from us.
Thank you great. Thank you Bill and thank you Justin for your question next question. Please.
Our next question is from Josh Raskin with Nephron Research. Please go ahead.
Hi, Thanks, and good morning wanted to talk a little bit about the impact on the physician side and you know optumhealth optumcare, specifically the recruitment of physicians and maybe have there's how that's changed I think there was an illusion and in the press release too.
Maybe an acceleration of bringing in more primary care and maybe some talk on specialty and then can you just flesh out sort of within that within Optumcare. Yeah. The impact was a lot lower than I think we'd expect it I heard John mentioned the risk space entities offsetting the fee for service entities could you just gave us a magnitude on that and sort of how much.
The United Health care payments impact sort of how did optumcare hold up so well.
Good questions, Josh appreciate them and we did try to lean into this a little bit in the script in terms of give you to a general impression that there's kind of movement a flood of physicians advanced practice clinicians.
Towards a stable models that allow them to preserve their independence practice at the top of their license to achieve the triple aim of health care and a weve clearly seen that and then we've also as you probably can suspect had a fair agenda around inorganic build to.
To access a new geographies and we've made a decent amount of progress on that front during this timeframe as well.
So, but but I think.
Scented too wide decker here, he can talk a little bit about the value proposition optumcare and what people are seeking this important time and why this model is the one that they're pursuing optum or what.
Dave Thanks, and Josh Thanks for the question.
You're absolutely right, Dave we have seen a continued interest in growth in our up from care model, which has become really the nation's predominant predominant physicians less value based patient centered ambulatory medical practice and that may sound like a mouthful, but it's really focused on doing what's right for patients.
Delivering care and both more convenient and lower cost settings in value based construct keeping the patient epicenter of everything we do.
We've seen to the second question Josh around the performance of Optumcare. We've seen that are large geographic footprint combined with our both risk base from fee for service model has created substantial resiliency in the business and as John Rex mentioned, we saw some.
Countervailing financial performances when fee for service God quieter during the peak of the pandemic.
We're now seeing very rapid recovery in part because of our tremendous support of our frontline providers and the other piece that I would want to underscore is our incredible gratitude to our frontline providers that have done a.
Credible job caring for both covert patients and helping us effectively navigate through this complex pandemic. Your first question around ongoing recruitment of physician groups and individual physicians to your implied assumption is correct. We are we're seeing.
Substantial interest in our practice model as well as in becoming part of Optumcare and a this is part of a multi year trend that we have continued to grow and as you know we have relationships with multiple physician groups that are either affiliated or employed today over.
52000 doctors in both categories combined.
And we have seen a continued interest and expect a pipeline of affiliated and employed physicians to grow robustly. Thank you.
Good.
Thank you Josh appreciate your question next question. Please.
Well go next AJ Rice with credit Suisse. Please go ahead.
Hi, everybody.
Let me just ask a number of your business lines commercial large group commercials appeal Optumrx and Optuminsight are driven by large RFP activity and I Wonder I think last time, you had alluded to the fact that especially in Optuminsight. Some of that RFP activity had been put on hold can you comment about.
How its return to normal is just going to ends up being normal year in those segments or are you seeing people put on for year, making large decisions until there's some clarity around what's happening and.
Sure well why don't we give you color or from a number of different angles here A.J. will start with direct to give you a sense of what's going on with United Health carriers and their self funded business and the RFP activity, there and maybe even a as it relates to some of the government programs based business and I'm going to pivot over to.
John prints to talk about.
Our next and then Robert Musslewhite to comment on on the activities or in the market segments of Optuminsight dark. So thanks, Dave So Ajay high so I as I look at National accounts that I think about this selling season. What we really saw was is that were about 60 days behind normal in terms of people kind of making decisions.
For 120 today, you know not old decisions had been made and you know as as we handicap or wins and losses, what we expect will be roughly flat to little bit up in terms of group wins and losses for 121, but you know the really the tail is going to be told with respect to national accounts as to what attrition occurs throughout the remainder of the.
Sure.
Affiliate I would say in terms of general RFP activity I think I would say that in national accounts based sort of things just progressed, just a little bit slower than what we've seen previously as it relates to Medicaid alternate over to 10 spilker, let's give us a quick.
Thoughts on the RFP activity and Kate.
Yeah. Thanks Durcan. Thanks for the question yet so we're excited about.
As we mentioned earlier.
We're really nice wins and of course, we were thrilled to see that North Carolina finalized its Medicaid funding for seven 121 start so understandably.
Some of their procurement timelines.
But overall, we are starting to see those.
Four months, we believe our value proposition is strong and well positioned for growth.
Hi, procurements as they come through.
He is our new CEO of Communion state you, probably recall that Heather seeing Franco was the primary rather the former CEO.
She was promoted to oversee option.
As its leader.
And.
For a positioning some of our strongest leaders into the Optumhealth segment given the.
Rapid growth expectations.
That business over the next decade, or so Medicare to Brian Thompson, who were touching it yeah, thanks, Dave a as well.
Shaping up to be a very strong here for 2021, obviously a lot of large customers.
Go through this time and we're really incurred.
Bridged by strong pipeline and on some next year in that space as well yeah. The team's done really well and the government program space around growth.
And are they have a substantial amount of momentum and continue to two forward.
John principal and touch on Rx Oh, sorry.
Hey, Jay if John France, as you know when they the Optumrx business were in middle of our selling season right now.
And are very excited about the opportunities in the March.
Market.
In the first half a year or we had some good wins from American health and market.
As we pivot to the half the back half a year or more attunitys as we.
Welcome to the big opportunities are pursuing right selling season.
So there is.
So a robust pipeline for 2022.
And that makes a vote at the decisions.
Few less movement and 2021.
Going to them as we have seen in.
Previous years.
Overall, I think our retention is going to be very strong as it has been for the last four years, we're going to be tracking to the high nineties.
As we've been tracking before so right with the strong growth overall I think the are our stories resonate in the market, we're seeing client affordability, our tools around making sure our members to healthy.
The overall a strong growth in the market.
Robert Musslewhite to round it up here.
The risk the action activity with.
And then also with health plans.
The business and thanks, everyone for the question.
We have felt like while there's certainly been some disruption during the quarter in some of our smaller technology deals on the larger deals.
The pipeline continues to be strong interest remains high.
Order, we think the these larger comprehensive pardon.
Our ships will continue to be very attractive to health systems that align with us across our commitment to total cost of care reductions and affordability patient these types of partnerships as weve.
Seen in the past not only help mitigate liquidity and cash flow issues in the near term, but importantly, accelerate the broader transformational clinical and structure work in the medium longer term and in that light, we're particularly pleased to be having announced yesterday, our partnership with Boulder community Health, which is again a comprehensive new relationship.
Focused on multiple things, including clinical domain and really seed.
This is indicative of the broader pipeline build gut feel very good about the ability to continue to support them there on the pace.
Air side I'm again, similar story, obviously, they've been places during the quarter, where we've had some impact on on payers willingness to step forward with large going forward, where we're able to provide a lot of value and support.
HM two our pair partners going forward and feel good about the pipeline there in the second happened here hopefully that was responses. Thank you for the question.
Your next question please.
For an extra Charles re with Cowen. Please go ahead. Your line is open.
Yeah. Thanks, Thanks for taking what I just I wanted to follow up on sums earlier question.
If we if we think about the additional billion dollar in premium rebate you guys are looking to.
Push out should we think about that as a starting point for additional rebates and what's sort of the timing as we think that runs through the piano.
As we think about that are there. Some states. So I think that are excluded since you know you spoken with some experts said they suggest some say test or NTS kick back car and you rebate rules that limit your ability to repay premiums back intra year, how can you kind of give us some thoughts around that.
That kind of plays out across your business. Thanks.
Sure.
So the additional billion EUR 1 billion in premium rebates is the best estimate at this point in time, you know as these things move and we continue to do you have the a pandemic as well as.
The impacts on the economy. This that that number will shift around and it's your results on a.
Current term basis. So it's reflected in the results is that you see us so far year to date. So it's already through and then as it relates to rebates. Yes. There are a into kicked back rules and all those things we have a very complex set of.
Engagements that we need to make with a with the insurance commissioners and others to make sure that we can gauge in that and and have been successful at a getting concurrence with them around providing these ah.
Rebates.
Obviously, it's a lot easier to get money back then it has to do they ask for new and so are they they've been very receptive and very collaborative and extremely appreciative that we were as proactive as we weren't as early as we were and providing immediate relief to our commercial members as well as the actions that we took on the on the Medicare.
[music].
Thank you for the question next question please.
Next question is from Robert Jones with Goldman Sachs. Please go ahead [noise].
Great. Thanks for the question I guess, maybe just wanted to ask on Disenrollment enrollment in the in the commercial and Medicaid books, you know it seems like the heightened unemployment environment is obviously, having an impact on commercial enrollment. So I was hoping maybe you could share your thoughts on how you're thinking about this enrollment in the commercial book into back half.
And then and then related lead do you feel that so far you've been able to capture.
Sure and market share on the increased Medicaid.
Market, particularly as we think about recent evidence that previously furloughed employees are becoming more permanently laid off and potentially obviously answering that Medicaid space.
Sure Yeah sewing so what we're seeing so far is you know our customer base has used for a lot of furloughs versus layoffs to reduce costs in the short term.
In many cases me clearly this allows them to maintain medical benefits.
You know as throughout.
It would also has benefited our overall enrollment is the impact of the stimulus actions I mean, you know the impact on commercial enrollment hasn't been as great as we would've otherwise thought based on the unemployment data just because of the stimulus as well as the furloughs. So you know as we're looking and we're continuing to work with our broker partners and whether employers.
To try to find folks up through to try to find other coverages for for folks if they.
If they don't think commercial what I would say is in them in the Medicaid space, what we've seen so far as is but you know the redeterminations and put on hold so that's been relatively sticky. We also will see people go to our commercial products as we paid our individual products as we pays forward and you know we have a fairly broad.
Commercial individual products as well so I'd say you know across the board I think we'll be able to recapture our share, but there's no doubt there was going to be sort of the delayed and take it back because of the stimulus actions and it'll be I'm, a little bit more pronounced in the second half, but we think we've held our held our own so far.
Okay. Yeah. Okay. Thank you Robert next question. Please.
Next question is from Sarah James with Piper Sandler. Please go ahead.
Thank you.
Okay, I understand how you're thinking about cost shifts between 20, and 21 [laughter] how much of that delayed utilization falls into 20 fish is 21 is there any estimate that can be one and are you, making any changes and completion factor.
Assumption.
<unk>.
Rex.
Good morning, Sarah how you doing.
Few things comment on terms that just thinking about how those cost play out.
Kind of first kind of point out as you can appreciate that we were.
Quite respectable the highly and I respect well, what we just don't know yet.
And is evolving so you.
You can see that kind of our current expectation that the view that as of the maintained or earnings outlook would imply.
You that the deferred care the care that we had expected to be delivered and Twentytwenty. You know that this comes back and is delivered as we look into the back half of the year.
Whether that plays out exactly that way or not aware there as you suggest some of that moves into 2021 also.
If you know in part a a component of how quickly systems help delivery systems reopened.
And how are fully they stay open and also just the consumer preference in terms of their comfort of going into the settings. So all those are elements that play out play out and this thing and so we're being quite respectful that situations. We look forward on it and how that played out was 21 certain certainly some of that could end up in 21.
And at some point I would point and in terms of cost I think is what you're thinking what you're referring to it the investments that we would choose to make and certainly we we are investing heavily and we're investing heavily in part in response to Cobot 19 response in response to the pandemic you probably saw some of that even in our op.
Operating cost ratio this quarter in terms of the investments, we're making on a current period basis.
Mr people and to enhance and strengthen our capabilities.
As we look for it so.
So those are the main components that we that I'd point out in terms of how we're acting and how we're looking ahead to to serve.
There are one of things. We did was we maintained our full workforce. So nobody has been laid off or furloughed or dismiss because of coven 19.
And in part because we knew that on the other side of this kind of initial actual activity that the health system would come back online and consumers would be accessing care. So we needed to make sure that we were.
Prepared to respond.
To the markets demands just as quickly as possible because of all that the service through this time period, we've seen a.
Breaking improvement in consumer MPS across the company.
Virtually all the lines of business at Optum and in the same thing with Oh, I'm, sorry, United Healthcare and the same with Optum, we've seen a nice improvement. So we're making sure that will utilize this time, well and make those investments provide the right kinds of returns. So that a you know were grading creating additional.
So with the marketplace I think thats playing out nicely. Thank you very question Sir our next question. Please.
Next question from Scott Fidel with Stephens. Please go ahead.
Hi, Thanks, John Good morning.
Okay understood. If you can talk a bit about that navihealth steel and and give us an update maybe on your broader post acute strategy and just in particular interested around whether you envision off to moving further continue to acquire more direct home health and provider Arash catch or whether you would see the strategy for post skew being more.
Or more to be at more of a convener like I'd add to not be office right now tax.
I think a little bit of both Wyatt.
Yeah, Scott. Thanks for the question first I would tell you how excited we are im pleased we are to welcome the team of Navihealth, two optimum United Health Group, a second and I would say just to frame at a when you look at seniors in United States. There's over 60 billion dollar spend in the post acute space, which historically.
Has not been well manage both in terms of the patient experience and and expenses and so we think there's a tremendous opportunity and I you can look forward.
With Navajo health as well as our own capabilities.
And our colleagues at sound physicians, which is a hospital staffing group focused on hospitals, who are very engaged in the post acute transition.
To continue to build capabilities to help both patients and people manage that post hospitalization period with the best outcomes and the best experience so more to come but we're very excited about this a combination of our colleagues at Nab now.
Yeah, we did a lot to the to the digital activities in the way in which we're engaging or assembling our our resources across our company to a really create a unique and distinctive.
On a clinical experience.
That includes engagement of our physical resources are nurses that already go into homes. So I could see as a very much being a.
You know us a home.
Through ambulatory.
Surgical past city company and as it relates to the home in particular, our interest would be and primarily in implying skilled health services. So we would we would not be as inclined around.
You know the other home based.
Care services from.
Around 80, L. management things of that nature, we probably would continue our focus on a skilled clinical resources.
Oh, Thanks for the question Scott next question. Please.
And the next question is from Kevin Fischbeck with Bank of America. Please go ahead.
Great. Thanks, My guess is that at this point, you're you're not going to give a point estimate, but just want to conceptually I understand you guys about that next years earnings as you know this year you've done a lot to make sure that you don't capitalize on uncoated, making sure that you know serving customers in the providers to make sure that you're kinda not.
Earning more than what's your guidance was going to be this year I actually think about next year is there conceptually any reason why you wouldn't expect to be earnings target margins on your different products. Just you know if it's we're still having a recession, but didn't have co Rick.
You know would you expect to be hitting the same kind of margins you normally wouldn't know scenario like that or is there any reason to believe that next year's margins across your businesses would be somehow.
Different than normal.
Yeah, it's really hard to tell I mean, we normally don't give guidance at this stage Kevin for 2021, I mean, sometimes we give impressions, but you know given the volatility the market as it stands right now and kind of more the near term focus that we have and making sure that we're serving our patients members customers and then keeping.
Our people safe, including 120000 a.
Clinical resources that on the front line care. We're we're just does not really in a position to.
Talk about 2021, we'll probably give you some sense of that in the Q3 call, but maybe not quite as.
As a as clear as what we may have given in the past just kind of looking forward I I would see our Investor conference is being the place where I think we can give you the the best sense of things as it relates to our core performance of our businesses. There. They are performing well I mean, we're not talking about their individual performances anymore. Because there is nothing normal.
About how any of them are performing at this stage collectively they're doing a great job in there they're right on expectations and the right on the expectations that informed the guidance that we gave you back in December.
Maybe a little bit ahead, so they're performing really well I just I just don't think at this time, it's the right time for us to be thinking about where a wearable land in 2021 and margins will try to do a better job of that for you in the Q3, calling in the than the conference later this winter.
Thank you Kevin next question please.
Next question from Ricky Goldwasser with Morgan Stanley. Please go ahead.
Yeah, Hi, good morning, so as we head into the election never getting a lot of questions from from investors around the potential public option. So can you maybe just kind of like discuss kinda back your thoughts on the dynamics of stay helps ensure a market should it public option being kit.
Oh sure Ricky Thank you for the question I'll just go and you know we're we've seen.
You know at the state level, some indications of of Ah you know efforts around public option and I think a the one that's probably.
Well the most prominent in is the one that occurred in the state of Washington, which a ended up being a an augmentation of their exchange set of product offerings on that and you probably have noticed that we we bid and we were one of the successful bidders.
And are currently in contract negotiations to provide an offering on that exchange.
What's interesting about that is you know from our standpoint is that a we have a very strong relationship with the state of Washington, We have significant care delivery capacities in that state and we serve a 220000 Medicaid and over 40000, dually eligible individuals as well and there's a kind of a unique program design there that.
Really uses of I'll call it roughly a reference reference based pricing.
And Oh, you know, we're curious to see how we perform a in competing on a on a reference based pricing basis, because it's not unusual for us to have a.
A a disadvantage on discounts against a local market player given the given the size and significant to those players in the in the overall market. So we actually think this would be a nice test to see what the.
The Oh, the how did this of our of our business will be I'm generally speaking, we're not a strong supporter of these public option proposals and primarily because they disrupt current coverage platforms, which consumers value in a pretty.
Okay, and we believe there's a near universal coverage system already in America today, It's obviously not completed it has some gaps but we believe those gaps can be close and think that consumers much prefer that we leveraged the existing commercial Medicare and Medicaid markets to to provide.
Slide the types of coverage options and coverages that are necessary for America.
The areas that are likely need some tuning would be around Medicaid and we were obviously strong supporters of the these states that have not expanded to expand we believe Medicaid is a strong coverage option for these a these states and Oh, you know encouraged at that.
That occurs the other area would be that we see a lot of the uninsured or actually folks that have a of affordable coverage option available to them, but they don't.
This is fairly enroll in particularly in Medicare, where there's Medicaid excuse me, where there's about eight and a half million people that are currently uninsured, but have a medicaid option available to them. So we'd be strong proponents of passive enrollment.
As well to ensure that that Americans are getting the coverages that are made available to them by states federal government and a that private insurance system.
So with that thank you for the question Ricky next question. Please.
So an extra Steven Valiquette with Barclays. Please go ahead.
Hi action.
So yes.
That's just doing some quick.
Back of the envelope type math for the full year intact.
It seems that the MLR in the back half of 22.
6% range give or take.
Take.
And I guess really my question is just given the trends that you're seeing in June and July around utilization I guess, I'm curious, whether you're generally assuming that the m. alaris will be fairly consistent in both the threeq.
Third quarter in fourth quarter or would you.
Perhaps see more of your proactive spending grabbing about that I can exist for the back half. Thanks.
[laughter].
Hi, Good morning, Stephen I'm, Yeah few impacts going on as we as we think about kind of that progression. So so definitely there are the proactive actions that we're taking it to help people that have impact in the quarters here typically on <unk>, we would think about there's still being so.
A ramp though in terms of the system reopening right. So as we went as we exited June and we're trying to give you kind of as much clarity and transparency to be could in terms of what we're seeing real time seeing systems reopening that died at this point those that they're still not fully open they're out there.
Getting close their near normal, but not what we'd call for your fully reopened so that will continue to track over the course of the out of the of the second half and we would continue that's I expect so there'd be some trajectory that would that would go on from just from that that component as opposed to reopen.
Creating some offsetting that in that I'm, certainly kind of we have a lot of actions also that are that are impacting that will impact kind of in the near term as as they come on and seniors are able to access care and move through they I move through a using the the a co pay eliminations that we that we.
Put into place. So all those have all those have quite a bit. It have you have quite a bit impact I mean, this distance I would tell you kinda.
We're kind of in the I've, just given the variability or kind of in a in a zone, where those impacts probably have offsetting impacts what kind of said and that was own of we've looked for kind of the relatively you know.
Relatively a consistent levels throughout it typically we have more and that you know as you get a little more impact, though as you get into the four key to our trip historical patterns, which show that.
Okay, all right appreciate the extra color. Thanks.
Thank you Steven Oh, we have time for just a couple more questions. So next question. Please Oh, we'll go next to Ralph Jacoby with Citi. Please go ahead.
Thanks. Good morning, you mentioned June returning to near normal levels right I think I heard John also say that a continued into July. Despite the cobot spikes is that correct and why do you think that would be the case versus retrenching again, and then you mentioned acuity any help on how meaningful that dry.
I've heard that could be on trend in the second half given deferral and if you've already seen that thanks.
Morning, Ralph John Rex So, yes, you're accurate in terms of my my commentary in the prepared comments here and and so that trends were referring to our national trends, you're absolutely correct. If we were to go into pockets into certain metro regions, and the country, where and what you know what.
We've seen.
Were you seeing some some spiking in terms of infection rates and such as we're seeing impact and those particular regions.
But those are very particular regions in terms of that in terms of that dynamic that were seeing saying so when we're talking about kind of what we're seeing through July and cut a it's very much at a at a national level in terms of impact there.
And Dirk has a little additional color commentary I would say you know we would expect the infect infection rates to ebb and flow based on geography.
Well, we don't expect to see sort of a broad base shutdown those play out to see there's going to be some resulting economic impact obviously, some more markets you know sort of individual markets will be some abatement there, but overall like we said on the call today.
And Ralph on your question on it.
Acuity little too soon to really call that one right now or so when we expect that individuals with chronic conditions that I've missed treatments and as they come back into the system.
And coming back potentially with <unk>.
The kind of current and Theyre in the current trip.
At this we sit here today, so really.
Isn't showing up yet, but we expect that to show up as assistance continue reopen for level increases.
I mean, it's kind of hard to ignore the number of new diagnoses.
You know the that that dropped off.
It's hard to ignore.
Stroke.
You can imagine a was fear of consumers is going to any our that caused them not to access.
So we it may be you know.
Speculative here, but I think.
I suggest that there will be.
I'm sorry.
Is that people receive.
We're.
Facilitate them receiving those services.
And.
Well with Deutsche Bank. Please go ahead.
Uh huh.
[laughter] I guess just to wrap it up could you guys talk a little bit about the able to acquisition.
Kind of how you think it fits into your primary your other tele health partnerships and the digital health initiatives. Thank you.
Yeah.
So a we're also very pleased to do a well some of the team from April two and a as you look.
Food, there's a enormous capability digital health tools to those suffering from.
Mild moderate and in some cases behavioral and substance used disorder conditions.
And what you'll see is a will leverage the capabilities of able to in a more comprehensive fashion with other other capabilities, including.
Care or which we have seen an enormous uptick in.
Oh for behavioral health.
Provided in the outpatient setting using digital capabilities and <unk>.
Rules that allow individuals.
Favorite health care needs. So we're very pleased.
And we look forward to continuing to build out both there and our capabilities finally to your point about embedded solutions in primary care.
We have a begun that journey and in fact within Optumcare, you'll find a number of our practices are have embraces today and able to provide more advanced capabilities to use digital tools in that setting as well. So yes, we will continue that integration. Thank you.
And just Oh.
Both old Navy health and able to our our.
Organizations that we've aligned to in the past. So we have a has three of a strong working relationship and knowledge. Good good strong intimate knowledge of the performance of these businesses in where there are innovative capacities lie and a there just have really strong management teams and and do a very good job.
Managing their risk for your engagement today this is a.
Unique time in our history and in the history of health care.
As you have come to expect from US we will continue to meet this unprecedented environment with the highest levels integrity.
Compassion and agility.
The United Health Group is built to be a in adaptable company and as we've seen in the past several months you can expect.
The following from US that we will continue to lean into challenges of the current environment with the full capacity is of this enterprise.
And proactive with others.
As we.
Team, we will fairly resolve any economic imbalances that.
During the development of the next generation health system in a socially conscious way.
So that everyone can be served equally one person one provider one health system at a time and with your continued support we expect to grow in emerge and even stronger company in the years to calm. Thank you. We look forward to talking with you again next quarter.
This does conclude today's program. Thanks for your participation you may now disconnect have a great day.
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