Q2 2021 UnitedHealth Group Inc Earnings Call
[music].
Please standby we're about to begin.
Good morning, everyone and welcome to today's Unitedhealth group's second quarter 2021 earnings Conference call.
And and answer session will follow Unitedhealth group's prepared remarks as a reminder, this call is being recorded.
Here's some important introductory information this call.
Call contains forward looking statements under U S. Federal Securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations a.
A description of some other risks and uncertainties can be found and the reports that we file 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-GAAP to GAAP amounts is available on the financial and earnings reports section of the company's Investor Relations page at Www Dot Unitedhealth group and Dot com.
Information presented on this call is contained and the earnings release, we issued this morning, and and our form 8-K dated July 15th 2021, which may be accessed from the Investor Relations page of the company's website.
I'll now turn the call over to the Chief Executive Officer of Unitedhealth Group Andrew Witty. Please go ahead Sir.
Good morning, and thank you for joining us.
As we discussed our enterprise today I Hope you said and it's growing momentum as we advance and all paths of improving the quality cost and experience of health care every wall and we used to.
Both Optum and Unitedhealth care grew and delivered on our longstanding strategy and we've increased our outlook for the year to a range of $18 and 30 to $18.80 per share.
We continue to prioritize 3 key themes that we believe will underpin the next era of growth for our enterprise.
First unlock the collaborative opportunities within and between Optum and United Health care.
Second increasingly apply technology to improve patient care and experience and to help the system run better.
And third strengthen our consumer focus capabilities and value.
During the quarter, we accelerated our efforts to develop and deploy new and innovative products and informed by the insights of both Optum and Unitedhealth group.
In areas, such as oncology care delivery rare disease drug management, Optum virtual Optum financial services and many others.
We're doubling down on efforts to both expand and link services, where it creates value for consumers and patients to make their health care journey easier and simpler and more intuitive.
We constantly challenge ourselves to develop capabilities, which lead to improved cab better value and a simpler system.
Our sales to clients and partners across all parts of the health system and demonstrate the strong relevance of our innovation and.
And the strengthening of our sales pipeline as a key opportunity as we emerge from the Covid market pools.
A good example of bringing our collective strength together at scale is the Optum home and community care platform through which we care for nearly 10 million people.
This platform includes our well known high School service comprehensive post acute care for smooth transitions to home and integrated primary and behavioral care and Medicare advantage patients who prefer to receive that cash.
Home and community platform services can reduce post acute medical care cost by a quarter and.
<unk> readmissions by up to a fifth.
And hospital admissions by up to 25%.
And Medicaid were addressing consumer needs by expanding our long term collaboration with public housing authorities working with government agencies and community based organizations to identify and address specific health care issues that people, who are hard to reach and support.
And just the past 6 months, we've introduced new partnerships and over 20 community to close gaps in care and address address health equity challenges.
Using data and analytic capabilities, we're able to rapidly identify local health trends and gaps and then work with community partners to inform guidelines training materials processes and create better tools to advance health.
We believe this will result in better health a community members and helped to optimize limited state resources.
These and other targeted initiatives on the social determinants of health are essential elements and illustrative of our natural and longstanding ESG impact.
A recently published sustainability report captures the full range of efforts, we've dedicated ourselves to and areas of crucial concern to all stakeholders.
And more so than advanced and health and health equity.
This agenda is an essential part of our way of doing business.
I'd like to thank our 330000 colleagues from across the company for the passion and diligence. They show every day and helping to deliver improvements and serving our members clients and patients.
I have great confidence that we're emerging from the last 18 months of disruption with an unprecedented set of opportunities to help improve the health system for all of those we can serve.
And now I'll turn it over to President and Chief operating Officer, Ed Mcmahon to provide more detail on initiatives to drive performance across the organization.
Okay.
Andrew and and enterprise with our breadth of market engagement, we have many ways to assess how we're doing I'd like to share some of those metrics with you and picking up on Andrew's commentary on our 3 key strategic themes first collaboration United Health Care's value proposition is rooted and lower cost better outcomes and.
A better experience up and support the value proposition for United Health care, and other health plans with ambulatory services, which patients and their doctors value.
And this quarter, we met the ambulatory surgery needs of over 250000 patients delivering exceptional care and convenient and affordable settings with revenue growth approaching 20% over the non pandemic affected 2019 second quarter.
These centers are meeting higher acuity and more complex needs such as total joint replacement spine and cardiovascular procedures, which are performed at an increasing number of centers.
Our ambulatory settings received a consumer NPS of 92, and we deliver better and more consistent quality outcomes and about half the cost of traditional settings.
Optum care has over 600 clinics and is rapidly expanding virtual offerings to serve patients and settings, where they feel the most comfortable and importantly with their own physician.
Senior served by Optum care under our integrated care approach spend considerably more time with their primary care physicians than seniors and traditional Medicare and as a result spend 1 third fewer days and a hospital.
Second is our strategy to increase the application of technology to improve patient care and health system run better.
We recently announced the partnership with <unk> Health care. Another strong example of how optimum site is helping health systems to expand and scale, our central capabilities, including revenue cycle management, and digital monetization to improve health outcomes and patients' health care experiences.
We expect to continue to add new partnerships like this.
Also at Optum insight, we've been tackling the most resource intensive operations through the deployment of advanced technology and other approaches <unk>.
For example, we have transformed what were once largely manual chart review processes into highly automated operations.
So we have been hard at work advancing our consumer capabilities.
And health care has made significant advances and the management of complex conditions, we're focused on making sure that patients with the highest acute care needs are able to access the most appropriate site of care by assigning them advocates to help navigate the system nearly $1 million and these members are matched with the personal navigator to help them manage and improve their health.
<unk> continues to improve access and affordability of home delivery for patients leading to significant improvements and continuity of care and having already reduced the cost to process and dispense prescriptions by nearly 20% and just the past 2 years.
Also along consumer cost savings lines for those who prefer and in store retail experience. We now offer tools to find the lowest cost prescriptions near them, regardless of the health benefits of their health benefits coverage status.
These tools can save self paying consumers up to 80% on their medications.
Consumer preference is also having an impact and behavioral health already this year. The Optum health behavioral platform has delivered over 500000 and virtual visits.
And option, we initiated in just the last year.
Many consumers and clinicians prefer these virtual and counters since they offer enhanced accessibility flexibility and simplicity.
<unk> and counter is delivered through our dedicated channel had a patient satisfaction of 98%.
These are just a few of the many initiatives we are executing on as we apply technology data and analytics to make our strategic growth agenda come alive. We look forward to updating you on our progress over the quarters to come with that now I'll turn it over to Chief Financial Officer, John Rex. Thank.
Thank you Derrick our first half performance supports the foundation for strong and expanding growth for the remainder of this year and beyond.
Before I review business performance I'll offer a brief perspective on the pandemic driven trends we're observing.
The core takeaway is that our outlook for COVID-19 impact is consistent with our past commentary.
And the second quarter showed overall care activity continuing to trend toward baseline or normalized levels, albeit with variation across lines of business. For example, and commercial market care activity was above baseline at members were willing and able to obtain needed care some of which was deferred from prior periods.
Our public sector markets continued to run below baseline.
Even as we are actively encouraging people to take get the care they need.
We were gratified to see care activity for these populations begin to progress over the course of the quarter ads vaccination rates advanced.
We continue to estimate approximately $1.80 per share of unfavorable COVID-19 impacts for full year 2021 and to expect the majority of these effects to occur in the second half.
Moving to overall business performance Optum health second quarter revenue and earnings increased 46% and 34% respectively year over year.
Revenue per consumer grew by 43%, reflecting the impact of accountable arrangements and are expanding home and community health platform combined with the growing complexity of the needs we're serving.
And the 20 million patients, we serve through Optum care over $2 million or and fully accountable, we're compensated care regiments and increase of 17% from a year ago and we expect this pacing to accelerate strongly in the years ahead.
Optum insight as revenue grew 12% and the quarter and earnings grew 36% with the revenue backlog, increasing by $1.9 billion to $21.3 billion.
Key growth drivers were managed services.
Continued recovery of care activity to more normal levels and further implementations of technology enabled services.
In particular, we are seeing strong sales momentum and the services software and analytics businesses, which serve care providers.
<unk> revenue and earnings increased 5% and 19% year over year and script growth was 8% with this comparison impacted by last year's pandemic affected care patterns.
And our expanding pharmacy care and specialty services continue to grow strongly now comprising just under half of Optum Rx revenues.
Turning to United Health care, we are encouraged by the receptivity to our expanding set of responsive commercial benefits centered around virtual first on demand and physician led offerings.
Year to date, we have added about 150000 members and such innovative commercial offerings, even with the evolving and uneven labor market trends, which impacted second quarter membership.
Medicare advantage membership has grown by 675000 year to date tracking well to our full year outlook.
Our house calls clinicians have been able to provide their vital services to seniors conducting over $1.1 million home visits and the first half more than double the year ago level.
People served and managed Medicaid programs grew by nearly 920000 over the year ago quarter.
And part of the state based Redetermination activities remained on hold.
Our Medicaid offerings continue to deliver a positive consumer experience and demonstrable cost effectiveness for our state government partners and we look for this momentum to build heading into next year.
Our liquidity and capital positions remain strong with second quarter cash flows from operations at $5.5 billion or 1.3 times net income and we ended the quarter with a debt to capital ratio of 40%.
And in early June our board of directors increased the dividend by 16%.
As noted earlier given the strength of our business performance, we've updated our full year adjusted earnings per share outlook to a range of $18.32, $18.80 per share inclusive of the COVID-19 impact incorporated into our full year view.
Within this we expect the pacing through the second half to be fairly level.
Now I'll turn it back to Andrew.
Thanks, John.
What we tried to provide you with this quarter as we do each time is a sense not only of what Unitedhealth group's results saw how we achieve them.
And the examples we've referenced and countless others throughout this enterprise along with the consistent execution by our colleagues.
And underpin our confidence and our long term, 13% to 16% EPS growth rate target and.
And and our ability to help people live healthier lives and health the health system work better for everyone over the years to come.
With that operator, let's open up the call for questions..1 question per caller, please Alan over to you.
Certainly sir the floor is now open for questions. At this time, if you have a question or comment. Please press star 1 on your Touchtone phone may remove yourself from the queue by pressing star 2.
Again, we ask that you limit yourself to 1 question. If you ask multiple questions will only be answering the first question. So we can respond to everyone in the queue. This morning.
The first question, we will take a question from will be Kevin Fischbeck with Bank of America.
Alright, great. Thanks.
I guess you guys reported 2 quarters in a row, but rate guidance, both times by less and the beat.
You singled out a $1.80 headwind and the guidance is there any other kind of major onetime positives or negatives.
And the guidance that we should think about when thinking about this year as a base for how to forecast future numbers and is there anything.
Offsetting the upside and the first half and we should think about and the back half.
Kevin and thanks, so much for the question before I ask John to give a little bit more detail I mean couple of things, obviously still too early to give you kind of real shaping for 2022. So you won't be surprised we won't go there and I would say the overwhelming story for this year is of course, the dynamic of Covid and <unk>.
Terms of the various puts and takes which are taking place under the surface.
And as.
As we've done for the last several quarters, we've tried to kind of dimension that within the $1.80, but as we've also said repeatedly the bulk of that dollars 86 in the rest of the year to year to go between now and the end of 2021 and.
So.
Really really pleased with the momentum and underlying performance of the company and the first 2 quarters of these share but also respectful of uncertainties that remain around the COVID-19 puts and takes and and of course and that all feeds into how we make the judgment on.
And raising the earnings expectation for the rest of the year I think.
And I said I feel great about the underlying performance so far and broadly speaking the COVID-19 dynamic has played the way we would have anticipated more or less but there's still a ways to go and there are uncertainties within that and maybe John you might go a little further and take that $1.8 day part and maybe reflect a little bit on how youll see and those different.
Elements of the driver of that.
Kevin Good morning, It's John Rex.
To get a little further into those so within the $1.80, we still expect about 70% of that to occur within the in the second half of the year. So the vast majority a lot to be seen on how that dollars 80 really plays out and.
Keep in mind kind of the main elements of that comprises the direct treatment and testing cost that we would see offset by elective care deferral that might continue to occur or not and that and the rest of the year that potential for higher acuity for those that have missed their deferred care and at least within 2021 the impact of the current.
<unk> that that occurred last year. So those are all super important components here within those elements the things to play out I would be most around the direct treatment and testing costs and the.
Potential for higher acuity and how much of care care occurs and the back half the other elements within the $1.80, I would say are more steady throughout the course of the year, so that point being around <unk> and 2020 and the related revenue impacts for 2021 dose should be relatively steady and I would say are running in line with the.
And that were set out for you back in December So I don't think we've had a surprise on that element.
Within our outlook and I would say the kind of economic impacts also pretty relatively steady over the course of the year in terms of the quarterly progression. So those are really the elements. We continue to look for the.
And you're right look we saw good strength and a lot of the business growth across the platform.
Really we could point to every business, but its that look out to really understanding how those trends play and the in the second half of the year. Thank you.
Thanks, John and Kevin and thanks very much for the question appreciate it next question.
Well next go to Josh Raskin with Nephron research.
Hi, Thanks, Good morning here with Mr. Percher as well so our question again this quarters around Optum care and I think the question is really how do you think about the capacity constraints for optum care or is that more on the provider side or gaining consumers and the total.
And of Optum health and with all of these sort of new options and what appear to be no options available to physicians how are you convince.
Convincing docs that Optum is the best solution and.
And lastly, and I know I apologize for that last part here.
Is there a and arguments made and optum care and not Optum overall, but just the Optum care segment would be more valuable to shareholders as a stand alone company because of the physician independence issue that comes out.
So Josh thanks, so much for the questions and before.
And I'm going to ask Dr decades, and make a few comments and.
And a minute or 2 but maybe just make a couple of introductory observations so first off.
Youre really starting to see Optum health broadly and.
And within <unk>.
Businesses in particular, Optum care and of course home and community really starting to demonstrate that capacity for growth because of the.
Scale of the footprint that they now established across the country.
And I think you're starting to see these businesses move into a kind of critical mass dynamic that's reflected in its overall growth is also reflected in this very rapid expense expansion of Optum health revenue per consumer up over 40%. This quarter, that's reflective of the quality of services, which are being delivered and the and the perceived value of the day obviously.
Reflect.
So we feel very good about that your question around capacity constraint and so really good question.
We continue to extend rapidly the number of physicians and clinicians and our organization either directly or through affiliation. This year, we expect to add about 10000, and we're well over halfway through that journey, so going super well on that front I would say 1 other key elements there is really making sure.
Those practices as rapidly as possible start to develop the skills to be able to manage capitation and risk, which is really what then drives a tremendous amount of the distinctive behavior and value creation for patients and of course with the system that process. I think is being continually refined as you would be well aware.
And the marketplace people have tried different models that are always work super well and maybe ask Dr. Decker and our second and dive a little bit more detail into some of the work that do and that to accelerate that dimension of capacity because it's not simply having the practices and the clinicians is having that way of working which really drives the change.
And what we're able to do as far as your last question is concerned I actually think that the optum care clinics within the broader Optum and UHC organization, that's where some of the magic really sits here in terms of being able to leverage many different aspects.
And and as you see these elements of Optum health and Optum Cat and particular develop Youre also seeing significant amounts of support and and.
And and help if you will be provided by other businesses across the organization payment integrity. Good example, beginning to be adopted by pulse of Optum care. So.
With all of that I would like to adopt a decade, maybe just to go little deeper on how we.
Move or how do we help practices develop the capabilities, which allow them to deliver the value with I've seen.
Yeah, Thanks, Andrew and thanks, John for the question.
2 to Andrews comment.
We are increasingly bringing our depth and breadth and value based care delivery to new markets that have been historically fee for service and you'll see this unfolding.
Now and over the next year or 2 and markets like the Pacific Northwest and and northeast, where we have considered.
Our acquired and grown considerable clinical delivery assets, but we are now, bringing the expertise and markets like Texas and southern California.
That had been delivering value based and full risk complicated care for years, and so that really is a differentiator for us and the other piece I'd build on Andrew's comment around how we are creating a comprehensive set of offerings that address virtually every aspect of and.
<unk> health care journey from from a focus on primary care, and keeping and healthy and well to post acute care to end of life care and complex care in all environments, virtual home and and and the clinic and that to us as we bring that together and connect the dots is a differentiator and all markets.
Thanks.
Thanks, so much and Josh thanks, so much for the questions next question. Please.
Next we'll go to Ricky Goldwasser with Morgan Stanley.
Yes, hi, good morning.
And then ask and initiatives you are putting in place and the asset that youre, putting together, our leading to lower utilization and Lisa.
Hospital, setting and and move to lower cost setting.
And so keeping this in mind and.
When we see the lower utilization.
Thanks Syed.
Do you still think day 2019, Inc.
And Mike baseline.
Fleet utilization.
Ricky that's a great question.
So you are quite right that a lot of what we focus on is well first and foremost to try and understand what is the very best cash and individual needs and to make sure that they get access to that and 1 other big things. We've been doing this year is trying to get people, particularly senior is back into the system those who may be held back because of the pandemic.
And what you heard earlier, we're glad to see some of that moving and we'll be albeit some way to go.
Now within that we also recognize there are a whole series of places, where frankly, they're all better more effective ways to deliver cash I'm going to pick out 1 very simple example, just to build on what you described if I think about some of the work that's going on and off Tomorrow Rex and within our optimal fusion business, you can take drugs, where perhaps.
$10.15000 per treatment for a hospital outpatient.
Actually the same drug being delivered by Optum home infusion, 3 and a half thousand dollars.
And just that kind of that's the kind of impact that we can deliver through really thoughtful application of location of delivery and the like.
And that's just 1 example, UHC and very much focused on this and much of that guidance and of course Optum is building a variety of different capabilities, having said all of that I think the reality is it's very early days, even for us in terms of change and behaviors.
The overall trend of the health care system. So I think that baseline and of 2019, probably is the right rational piece over time I think these practices will start to bear down on the overall trend of cost but of course that that will happen as we see those capabilities spread more broadly as we see them get more.
The option and they start to change the price point and the marketplace for some of these some of these.
Net treatments or therapies, which are all frankly, overpriced and while our clients are looking for us to do both through Unitedhealthcare and optum or find ways to get great care at low cost and that's exactly what we're focused on doing so ricky. Thanks. So much for the question next question. Please.
Certainly and next we'll go to a J rice with credit Suisse.
Hi, everybody I might just.
Continue to focus on Optum Rx you got good script growth and a pickup and margin.
There are 2 things that are sort of impact a script growth and seems like to me across some of the companies that are reported.
John is how quickly we are seeing the rebound of.
The acute scripts as people start going back to the Doctor and get new prescriptions.
Can you comment on where we're at relative to pre pandemic levels on that and then vaccines and some of the script reporting is having an impact I'm not sure that's relevant for you guys and optimal Rex but can.
Can you sort of parse that out and anyway, and then I guess, just any comments on the selling season <unk>.
For this year going into next that you see.
Yes, no listen that's a great question, a J and before I hand over to Hep C and Franco our head of Optum Rx, Let me just make a couple of introductory.
And I ate.
8% script growth about half of that is we would estimate kind of bounce back from the suppression of this time last year caused by the Covid the.
The initial waves of the COVID-19 disruption, but even having said that the 4% residual growth is great and.
And we feel very good about the performance of the ophthalmology business across the breadth of businesses within the kind of core pbms and but also across.
All of its various other pharmacy services businesses, which the company has been invested and over the last several years, we did about $10 million vaccine prescriptions I think year to day to give you a little bit more detail on that and a little bit further into selling season observation, maybe hand over to Heather as I go ahead.
Alright. Thanks, Thanks, Andrew Thanks, AJ further question and yes.
And as Andrew said, Tim maybe.
I'll take that Scott.
Volume quickly and then anticipate that off and then maybe talk a little bit about selling season and so.
As Andrew said really if you look at.
Whether ours is indicative of other things you've seen.
What I'd say is specific to us what you've seen over the last year as you know about half of that is the rebound from compression and the rest of that is really a little bit of vaccine volume and Andrew gave you the number there, but that really hits volume for us.
More than anything else because of that.
The ratio.
And of revenue to scrip there and then addition to that there is continued double digit growth and the pharmacy services businesses. So that's making up the bulk of the additional growth that youre seeing year over year there.
Or is the.
Split of acute maintenance et cetera, So I guess I would say and we just had this discussion about what baseline is again and again, we're kind of watching this and quarterly progression, but I would basically say that we're seeing second quarter looks more like 19 and it certainly did.
And looking like second quarter of 2020, and we basically don't see anything unique there as far as acute vs.
As far as the key ratio kind of back to what we saw pre pandemic for this quarter and maybe like let me switch quickly to selling season and so we're still in the midst of it this year and Thats, where all segments, that's where employer and health plan and public sector and coalition and I'd say generally same activity, maybe a little different pacing a decision made.
<unk> right now, but really in the midst of it the biggest thing I would say about the selling season is clients are very interested and solutions to address high cost and specialty drugs.
And per and <unk>.
Getting to medications and therapies that really help on the medical and.
The pharmacy side, so for US we're very focused on those solutions and we're finding that our site of care services for alternative sites and alternative therapies like Biosimilars and together with some of our specialty programs that work through Optum health and optimal rack and straddled the medical and pharmacy benefit are really resonating.
Gather with are really.
<unk> clinical and client consulting that we're bringing to the market right now so we're finding that resonating and the selling season, and we think we've got a lot of value and out there. So hopefully that answers your question.
Thanks, Heather really appreciate and I might just thought I might just add a J 1 other dimension that some to have his leadership, which is.
Really pertinent to behavioral health.
And as I think we all recognize that the huge issue across the U S. I think many of US anticipate the COVID-19 pandemic and various impacts from that may well exacerbate some of the trends.
But I just wanted to call out the progress of Genoa pharmacy within a business that came into our organization 2 or 3 years ago.
Going to open 60 more of those centers this year.
Already up to 582 of those centers were well on the way to close to double what we had when they first became part of the organization and the impact that.
Group has is extraordinary both from a consumer NPS score of 95 provider NPS score and the impact they have in terms of helping improve adherence for highly complex patients, particularly those patients who are served through our Medicaid books of business is super important and so that's what I mentioned that alongside the other.
Elements of Optum Rx and the other key Paul to growth and a key part where optimal Rx is really helping our Medicaid business deliver really high quality service with folks who need it next question.
Certainly next we'll go to Justin Lake with Wolfe Research.
Thanks, Good morning, I wanted to follow up on the helpful comments that John gave during the prepared remarks on medical cost trend. So for instance, John you mentioned that.
Commercial utilization was back above kind of typical would love to know how that progressed during the quarter and kind of how far above typical you saw coming out of the quarter, what you're thinking for the rest of the year and then any other commentary on Medicare and Medicaid There and then also if you could give us your view on.
This this new Biogen and Alzheimer's drug in terms of how you think things developed in term of price and terms of pricing and.
Physician take up or patient take up rates and how you think youre going to manage this process would be great as well. Thanks.
Yes, Justin and thanks, so much ill address the Alzheimer's drug issue and the second and first of all I'd like John maybe to pick up on your Youll broader MCR questions.
Jonathan Good morning, and little color, perhaps on how that progression occurred and in the quarter here. So as it relates particularly thinking about the quarterly progression that we saw.
Perhaps not unsurprisingly COVID-19 testing and treatment costs were highest in the month of April.
Actually trending up a little bit from what we saw in March.
And that tracks with the incidence rates and the hospitalization rates that we would have been seeing and then that trending down.
Pretty rapidly and May and June in terms of the number of individuals.
And hospital beds and the treatment costs.
In terms of utilization and commercial populations interestingly that was also the highest in the month of April.
Trending down a bit over the course of the quarter, but still just marginally very marginally above baseline as we as we and June and as we exited June.
And just to give you a little color commentary and how that was how that was progressing.
And that.
That was really the the trending that we saw within that and Andrew I'll turn it back to you.
Great. Thanks, John and the other thing I would say Justin has plenty of noise within those numbers that John just described right. So you see inpatient outpatient physician visit trends different by different books of business.
A more complex pitches and it looks on the surface.
As far as the Alzheimer's drug Samsung and I'm going to and a second I'm going to ask Dr. <unk>, Our chief Medical officer to make a couple of comments.
And this particular thing and.
Overall bottom line from our perspective is this.
This remains obviously a super important area for <unk>.
Patients families to look for progress and we will want to see that progress happen I think from where we stand today, there's still a lot of information that we need to be able to make.
Clear decisions and I think we're not the only ones in that regard looking for greater clarity in this arena, maybe don't make me or you might give a perspective from from the medical perspective fleece.
Yeah.
Yes, Thanks, Andrew and you said it well.
We are encouraged to see meaningful progress being made against this.
This devastating disease and advances and its treatment.
We are continuing to develop our clinical policy as well as our ultimate position on coverage, but in doing so we're looking forward.
<unk>.
Getting the guidance that we need from from Medicare and also looking at that continually.
Contributing clinical outcomes.
Coming from the clinical evidence that comes from the ongoing clinical trials.
But most importantly.
We're looking for the advice from those expert professional organizations.
The physicians who have committed their career.
Helping people with this devastating disease Andrew.
Andrew.
Yes. Thanks, so much Dr make the aura and Justin I think bottom line is I think this has some way to go before we get to a real clarity. So I wouldn't guide you to expect a very rapid decision, making on this piece and not because we don't want to see these.
Good effective treatments might be made available of course, we do.
But it's really important to have a real clear understanding of really how they should be used what that value is and utilization and Dr. Migliore said really well really understand and where CMS get recognized and that the MA population likely to be very significant fraction of utilizes we need to understand.
And where all of us at so I think this is a.
Potentially good news, but it's still early days and we and we are.
A lot more to low before we can be more definitive and that so.
Can't be too much more helpful. At this point I'm afraid adjusted but thank you. So much for the question and next question. Please.
Next we'll go to Ralph Giacobbe with Citi.
Thanks, Good morning, I want us to come to that last question. So it sounds like commercial was marginally above baseline for the quarter, hoping you can give us similar comments on sort of magnitude of how much lower Medicare and Medicaid are and then also if you could provide any sense of magnitude.
Of the rising utilization you embed in guidance at this point for the second half of the year. If you could frame that just in terms of what normal growth would be and maybe what you're embedding our how much higher guidance contemplate. Thanks.
Yeah, and Ralph Thanks, so much I'm going to ask John.
And reflect on the second part of your question in terms of forward looking for the second half a day just to nail this first part though.
The commercial book as you've heard already now from John a couple of times basically right on baseline maybe.
We're above that right there and then the 2 government books of business.
A few percentage points below.
And I won't go further than that but maybe and.
Maybe John you could give some insight into how youll see and things within the next 6 months.
Good morning, Ralph So, yes, so when you blend to a little bit just a little bit below overall right. When you blend the book and you wait our books across in terms of what we're seeing and.
And the second quarter, and then as you might expect that trends up progressively every quarter every quarter, we see rising and that overall and that overall level.
Utilization.
<unk> and the expectations as we head into the to the end of the year and embedded in that is also a view in terms of what happens with with intent.
Intensity.
Judy level with 1 common question that we've often received and what are we seeing currently and acuity levels and progressing part of the impact as we progress and the second half is.
The expectation that you do see rising acuity levels.
And I'll tell you, we haven't observed that yet, but it's still a probably a little bit early to say when we are among the things. We look at we look at new new cancer diagnoses new.
Cardiac diagnoses and those are still running below baseline levels that we'd expect but their view to that could continue to progress as we get into as we get into the.
Back half of the year.
The other element in terms of just thinking about utilization and rising in the back of the year is and ultimately this is 1 of the calls.
And what occurs with Covid testing and treatment costs clearly there has been.
The evidence and the new variance and their impact and other countries and then also moving into the U S and even in our own data, we can see that but I would tell you still.
Fairly.
Fairly limited in terms of impact and as I sit here and look at the number of the members of our members that we have in receiving treatment today and hospital day beds today and you say here this morning.
Still well below the levels, even as we sit here and in mid July what we were seeing and the April levels, but that could be a trend back factor also and the second half of the year as we see that as we see that progression. Thank you.
John Thanks, so much and Ralph Thanks for the question next question.
Next we'll go to Scott Fidel with Stephens.
Hi, Thanks, and good morning.
And just ask a question around Medicare advantage and just interested in terms of what you've been seeing progressing year to date around the risk scores and how and how.
And how thats been.
Yes, Scott. Thanks, so much for the question I'm going to pass that over to a new CEO of United Health care, BT, Btu, and Tim might like to address those 2 points from Scott Beattie.
Sure I'll start.
As a follow on perhaps this is Brian Thompson and thanks for the question too.
To the question around engagement levels I think the piece that I am most encouraged by is the physician engagement levels and in particular and our senior communities. We're really seeing strong receptivity certainly reflective of the vaccination rates and I think that's really giving us encouraging signals overall, not only to 2022, but just the population and health at low.
With that I'll turn it over to Tim to talk a little bit more specifically about any.
Good morning, Scott. Thanks for the question, yes, the revenue for 2021 and the risk scores that support those are totally in line with our excellent our expectation and as John indicated in his remarks and yes, we did receive the midyear payment from CMS, which gives us a more fulsome view.
And to what 2021 revenue is and again that that aligns to our expectations and at this point, we consider 2021 and revenue to be pretty complete in terms of what we'll know about reservoirs.
And thanks, so much Scott Thanks for the question next question.
And the next we'll go to Dave Windley with Jefferies.
Thanks, very much I wondered relative to your conversations about the relative headwinds does your view of your ability to recoup the dollars 80, and 22 is that influenced at all by the timing of when these things hit if they do and the second half of 'twenty 1.
So would be curious about your comments there please.
I'll ask John and effect too.
Give you more on this I mean first off obviously again.
We're not going to be really shine and rely on our expectation for 'twenty 2 yet.
Having said that we also think the majority of the $1.80 headwind will have being utilized this year will essentially be nonrecurring.
Of course that depends on and some assumptions around the pandemic itself remaining under control. So that is and observation, which has to be taken in that context, but as we sit today I think that's a prudent view John you may want to go a little deeper on how each of the elements, perhaps you think about.
Sure.
Factors on that and how timing might might impact, though so maybe just to refresh a little bit on that.
And then did a nice job describing the impacts in terms of the revenue impacts from.
Particularly our Medicare advantage members being able to be seen by their physicians.
We are encouraged by what's going on and our house calls activity.
Very strong receptivity to us BT, just mentioned and encouraged by what we're seeing in terms of seniors and their receptivity day, even going in and seeing their physicians, that's all super important.
And I don't know if timing is so important on that piece. It just needs to occur during the year in terms of when that activity occur so that would be more and the more important factor as it relates to 2022 does it occur in 2021 do they get in and so that that's an important and that's an important factor.
Other factors here I'd say, so theres care that didn't occur in 2020, and probably hasnt occurred in 'twenty, 1 yet that was deferred and needs to occur. So that's more about also an element of does it not occur at all in this year.
Where does it work its way into 2022, and the potential for that and kind of the revenue and impact of whether or not those and increasing acuity are from that from those populations that those are really kind of.
The main elements I would say in terms of that I would call timing related.
The other elements are more just.
Would be around this.
And this concept around the current.
COVID-19 incident, and directory treatment and testing costs, how that progresses over the back half of the year or 2 but but those would be the elements that would be sensitive to timing factors.
Great John Thanks, so much and Dave Thanks for asking the clarifying question appreciate it next question.
Next we'll go to Lance Wilkes with Bernstein.
Yes, maybe.
The comment about the virtual first offering some helping to drive incremental membership growth. This year can you talk a little bit about what the what the digital first Sundar virtual first offerings look like and then is that contribution in 'twenty, 1 or and.
If it is could you talk a little bit about and the sales cycle, how it's looking for uptake and 22.
A great question Lance things I am going to Dirk and a second to make a couple of comments around the overall shift towards digital first virtual first and May also ask doctor decades, and referred to some further what's going on within Optum health is an important around optum virtual.
I'd like made Super clear over the last couple of quarters really elevating our consumer focus is a top priority for the whole company.
And that really speaks to ensure and that we're delivering and simpler more intuitive.
Experiences that we're thinking about the journey of the consumer and the patient and and end to end.
And that we're making it easier for them to make all of the various sequential decisions and we also want to meet the consumer where they want to be met whether that be outside of the facility in a home online or in person.
And we also.
We recognize how the premium the patients and consumers and particular, Paul and being able to talk to the physicians they know rather than rather than just any physician and so how we start to pull all of that together is essentially reflected and many of the different initiatives. We have over the last few quarters, you've seen us build up things like <unk>.
And virtual Doctor Dirk will talk to and a second but things like Optum store, just being rolled out under the optimal Rex organization really starts to bring together a ton of access for consumers in terms of what they're able to do with us with that introduction, Doug love to get your perspective, and then may be why it Doug.
Yeah, Thanks, Andrew and Lance for the question. So of course, we've continued to see telehealth be a broadly desire to consumer access vehicle to the health system, we've seen that grow or we're hoping we get to the sort of the next generation and we think a lot of that begins with like for example, with Optum care physicians being able to.
Deliver that because as Andrew said people have have a good preference to go to their own physician the product with respect to virtual first to answer your specific question and we plan on rolling that out and.
8 and 9 markets and United Health care at the end of this year, what it will basically be as think of it as sort of a virtual PCP with other optum care Doc being the quarterback with United Health care navigate network backing it up for the physical access so.
We're starting to sort of what I would refer to as product ties this and we're hopeful and which will aid to United healthcare and commercial growth. Thanks.
Sure. Thanks, why we'd like to just give a little more on optum virtual and what you've been building inside Optum health.
Yeah.
Thanks Lance for the question.
We are bringing together.
The virtual care experience that we stood up rapidly during the pandemic with over 18000 providers onto as Dirk mentioned, our next generation technical solution that we've created which creates the opportunity to seamlessly onboard and and triage and individual virtually so we make.
Sure they are getting the right care in the right environment, whether that's virtual and physical or a behavioral health care and need.
And we believe that that is a differentiated patient experience and the second which Dirk mentioned, but I'll underscore as a focus on primary care delivery and keeping people tethered to their trusted and known providers.
And as this matures were alive today, and all 50 states to be clear and we will continue to roll. This out in a more comprehensive way to our optum care patients as well as members of UHC and other Payors and look forward to continued conversations about our capabilities here.
And.
Thanks.
Your line is just to close this out.
This is I'm excited about what's being built and Optum health. If you think about this build out of ambulatory clinic facilities and other attendant services, perhaps in the pharmacy space, you think about the home and community agenda really investing to make sure that folks who want to spend as much time at home as possible are able to do that and then you see optum.
Actually essentially pulling all of that together.
<unk> got to think about this as all 3 of those elements essentially all at play at the same time and a very I think it is.
And a very important step forward. It gives us a really significant opportunity to ensure that we deliver much more seamless experience, we're much more responsive to consumer need and we can focus on bringing costs down and delivering better cash. That's what we really believe we can do here. This is this you're going to hear a lot more about this it's an important step up in the energy.
Year round, our Optum health strategy.
We just have time of a free for 1 last question. So Alan if you could ask flow last question. Please.
Sure, we'll take our last question from Matt Borsch with BMO capital markets.
Okay. Thank you.
And I realize you're parsing through.
And we can happen last year, and now day catch up and again this year.
And the perspective.
Yes, and how much of the care.
Why.
On necessary.
What happened.
Bye.
And is not actually going to occur and I guess, you put that into category share that.
You can see and hindsight.
Unnecessary.
Maybe it was necessary and Tom personally know and care.
That was just.
Just on necessary.
Proactively and in hindsight.
Yes, Matt. Thanks, so much for the question. It's a really it's a it's a great question and you would have to expect that the answer is that some of it would've been unnecessary I think at this distance its a little hard to really call out at this point I mean, they're all they're awesome tantalizing signals and some of the trends. So if you look at emergency Department use for example.
It looks pretty sustained down and it doesn't seem to be coming back and certainly if you look at our advisory Board.
The value that we're running with with many many non UHC providers and institutions across the American health care people.
Other people don't expect that utilization to come back now that may be because they would be non necessarily use maybe folks have realized the urgent care centers are a much better option may be virtual and much better option and they can get what they need at much lower cost so whether it's unnecessary whether or not the pandemic is disturbed peoples allegiant.
Certain types of sites of care and people are a little bit more open minded about where to go all of that I think is in play I would say, it's premature to call. It I think we're watching it really carefully.
I could I could build those theories I just shared with you I'm not going to tell you that those are program I think there is tantalizing signals and the data it's going to take another 6 to 12 months before you can really set low how this all plays.
Thanks for the question and we will probably look back on that 1 and again I'm sure.
Listen everybody I want to say thank you for all of your attention today for your participation very much appreciated.
And we hope very much to what you've heard from our team gives you a flavor of why we have such confidence and the outlook for our company and and the ability of Optum and United Health care separately and together to improve the lives of those we serve and the health system overall and with that I'd like to say, thank you very much and to close this morning.
Cool.
And that does conclude today's conference we thank everyone again for their participation.
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