Q3 2021 UnitedHealth Group Inc Earnings Call
Good morning, everyone and welcome to the Unitedhealth Group third quarter 2021 earnings Conference call.
A question 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 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 description of some of the risks and uncertainties can be found in 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 Dotcom infill.
Information presented on this call is contained in the earnings release, we issued this morning.
And in our form 8-K dated October 14th 2021, which may be accessed from the Investor Relations page of the company's website I will now turn the conference over to the President and Chief operating Officer for Unitedhealth Group Dirk Mcmahon. Please go ahead Sir.
Good morning, and thank you for joining us today.
Unfortunately, our CEO and colleague Andrew is not with US. This morning since he had an urgent but straightforward procedure last night for a kidney stone.
All went very well and we expect them fully back in just a few days.
I am quite confident he is listening now so I hope you're doing well boss <unk>.
John Rex and I will be subbing for Andrew This morning, and we have our management team with us as usual to help with your questions.
We're here today to discuss third quarter results and the expanding opportunities we see looking ahead.
As a result of the progress at both Optum and Unitedhealthcare, we have increased our 2021 adjusted earnings outlook to a range of $83.0 to $108.0 per share.
We continue to prioritize three themes Andrew has discussed before which are before which are foundational to the growth of our enterprise.
First unlocking the collaborative potential within Optum and United healthcare for the benefit of all.
Second further developing our technology and data science platform to aid patient care and experience and to help the system run better.
Third strengthening our consumer experience capabilities and value.
I'll briefly highlight a couple of items for you.
You likely have seen the CMS Medicare advantage Star <unk>.
Medicare advantage star quality ratings, showing 95% of our Unitedhealthcare members will be in four star rated plans or better for 2023.
Up from 78% from <unk>.
For 2022, and a new high for our company.
Without them care on behalf of the many payers, we serve 99% of Medicare advantage patients will be enforced our plans are better for 2023.
A second important to highlight in the quarter, we were encouraged by the ongoing strength in our employer and individual business, which has now grown by over 330000 people. This year with revenue up 7% year over year, we continue to see active interest in our product innovations such as our all savers level.
Funded offering and are encouraged by our competitive competitiveness in the market and momentum heading into 'twenty two.
We also elevated consumer connectivity by incorporating fitness offerings from industry leading partners.
Optum health continues to build momentum as well entering the open enrollment period for Medicare advantage, we have more than $4.0 million people served under physician led fully accountable arrangements and expect 'twenty to be another year of record expansion in this key part of our portfolio.
Our broad homebase clinical care initiatives at Optum, and Unitedhealthcare are central to improving near and longer term health outcomes for people with medical behavioral and social needs.
These efforts include optimal hole, which delivers high quality primary care services and the convenience of the home setting and supports recovery after hospitalizations.
Seniors served by our home and community offering experienced a 14% lower rate of hospital admissions and about a 4% higher rate of physician encounters.
In addition to caring for people in their homes, we continued to expand capabilities in other optimal sites of care, including via digital means.
After is distinctively, enabling virtual care for patients using their own primary care physicians and with behavioral explanations for example, a physician engaging in a virtual visit with a patient can easily bring in a behavioral health professional for a real time consultation.
United Healthcare is using options virtual capabilities to introduce a new suite of digital first products offering a near seamless experience between virtual and traditional primary specialty and urgent care.
Yes.
We expect during 2022 and beyond to further build on these opportunities to connect and integrate multiple channels of care.
Simplify the experience for patients and providers and deliver quality care that is affordable and an op Ed in the optimal settings.
Let me now go a little deeper in a few areas to give you an assessment of how we're doing on the themes I mentioned at the outset.
Optimum site continues to drive better clinical and operational performance at the health system level last week, we reached a new multi year partnership with a leading and innovative health system.
In health <unk>, 40000 employees, 33 hospitals and post acute facilities and 300 physician clinics serve the people of Missouri, Oklahoma, Wisconsin and Illinois.
Optimists eight brings real value in helping system strengthen and scale, our central functions, such as care coordination revenue cycle management, and digital monetization all to improve health outcomes and patient care experiences.
These and similar efforts to simplify processes reduce administrative burdens and help our partners focus help our partners focus more attention on their care on their core missions of patient care.
Okay.
<unk> continues to deliver to health system partners, such as its new multi year agreement with point 32, health, which serves more than 2 million people in new England through its founding organizations, Harvard Pilgrim healthcare and Tufts Health plan <unk> will provide integrated pharmacy benefit in specialty <unk>.
<unk> that will enhance services and deliver improved affordability for their plan members.
<unk> is having a substantial impact through its community behavioral health pharmacies, which now serve nearly 700000 people with mental health addiction, and other conditions through more than 600 dispensaries across 47 states.
Pharmacy is deliver a high touch approach to care that contributes to a more than 90% medication adherence rate and lowers our emergency room visits and hospitalizations by 58% respectively.
Driving better health outcomes at a lower total cost of care.
Within our United Healthcare government businesses.
We have increased processing efficiency by 25% over the last year by using Optum technology to improve auto adjudication rates and intelligent work distribution to appropriately skilled channels we.
We have many such initiatives underway across the enterprise and affordability provider experience in product development as we employ advanced technology and data analytics to drive even greater value for the people, we serve and the health system.
Before turning over the call to John a quick word on our pending combination with change healthcare.
We continue to work diligently to satisfy regulatory requests and now believe based on our experience. So far the transaction should close in the first part of 2022.
We are highly energized about the positive impact we can have working working together with the exceptional change team a team aligned with our mission and values and focused on delivering substantial benefits for the health care system.
These benefits will include <unk>.
Helping clinicians by simplifying access to real time, evidenced based guidance as they are serving patients.
Closing gaps in care more rapidly to improve health outcomes and lower cost.
Reducing unnecessary complexity by removing administrative waste an obstruction to make the care process simpler more cost effective and more transparent.
And bringing greater convenience and simplicity to managing consumer health finances, while ensuring care providers get paid more quickly and accurately.
Optum in change healthcare's capabilities fundamentally are complementary and distinct because both companies already successfully serve health plans and state governments care providers and consumers in a highly competitive market. We believe this combination will make the health care system work better for everyone and bring it.
Exceptional value to those we serve.
With that I'll turn it over to our Chief Financial Officer, John Rex.
Thank you Derek.
This morning, we reported third quarter and year to date revenues of 72, and $214 billion, respectively growth of 11% and 12% over last year.
This growth was led by Optum health, primarily our care businesses.
In the third quarter the opt in platform comprised 54% of enterprise operating earnings and continues to show strong growth momentum.
Our performance reflects the diverse and complementary strengths of our business setting the stage for growth in the years ahead.
Our updated full year 'twenty, one outlook includes unfavorable COVID-19 impacts consistent with the expectations, we have discussed throughout the year.
During the third quarter, while direct Covid care and testing costs ran above the expectations, we had nearly a year ago.
We again saw elective care offsetting the impacts of higher case rates.
Much like previous cycles and the pandemic.
This quarter there were approximately 60000, COVID-19 hospitalizations meaningfully above the second quarter with the month of August, peaking at nearly 30000 and then declining in September.
Looking at specific business performance.
Health third quarter revenue and earnings increased 32, and 37% respectively year over year.
Revenue per consumer grew by 30%.
This reflects the increasing impact and number of value based relationships within Optum care.
The expansion of our in home and community health platform.
As well as the growing acuity of the needs we can serve.
Optum insights revenue grew 13% in the quarter and earnings grew 15% as the revenue backlog increased by 12% to $25.0 billion.
We see overall business development sourcing and activity levels increasing.
Particularly with care provider customers and for our software and analytics offerings.
<unk> revenue and scripts grew 6% year over year and earning 5%.
After my are accessing both strong customer retention levels and sales success for the largely completed 22 selling season and early activity for 'twenty three.
Turning to United Healthcare that third quarter showed increasing member growth in our commercial offerings, particularly in employer sponsored benefits.
Increased employment is a broad underlying contributor.
But we are particularly encouraged by the growth we are achieving in our affordable consumer centric offerings.
Medicare advantage membership has grown 745000 this year.
Inclusive of plans, which serve dual special needs members, we expect to add a total of over 900000 Medicare advantage members.
The number of people served through managed Medicaid grew by more than 1 million members over last year as we began to serve people in new regions, such as North Carolina, Kentucky, and Indiana and as state based Redetermination activities remained past.
We were honored to begin serving people in the Missouri Medicaid expansion this month.
Our liquidity and capital positions remain strong with third quarter cash flows from operations at $13.0 billion or one eight times net income and we ended the quarter with a debt to capital ratio up 39%.
As noted earlier given the strength of our business performance. This morning, we updated our 2021 adjusted earnings outlook to a range of $83.0 to $108.0 per share.
Now with the close of the third quarter Youre attention understandably turns to next year.
As is our custom we will offer a few early observations here while reserving the majority of this conversation for our November 30 Investor Conference.
Which we hope will be held in person in New York.
Our businesses are both growing and operating well.
With strong momentum heading into next year.
While the pandemic related impacts remain difficult to predict.
Given the current trends, we would expect a lower unfavorable COVID-19 impact and experienced in 'twenty one.
Still as the dramatic variation over the last 20 months is demonstrated to all prudent management suggests we should offer an outlook respectful of the fact that the current situation is without precedent.
Taking all elements together at this distance, we see current analyst consensus as reasonably beginning to calibrate a 'twenty two outlook.
Envisioning that consensus is being towards the upper end of our initial adjusted earnings per share outlook range.
With the range being similar to that offered initially for 'twenty one.
Okay.
Untapped collaborative potential between Unitedhealthcare and Optum to benefit individuals in the system.
The power of applied technology to advanced care and service.
Improved opportunity in consumer health and experience.
And the passion of our people.
These and so many other elements lead us to believe our performance expectations for the years ahead remain fully supportive of our long term, 13% to 16% earnings per share growth outlook.
We look forward to going into more detail on both our view of 'twenty, two and the many years of growth beyond at our Investor Conference.
With that operator, let's open it up for questions one per caller. Please.
Thank you Sir the floor is now open for questions. At this time, if you have a question or comment. Please press star one on your Touchtone phone you may remove yourself from the queue by pressing star two we ask that you limit yourselves to one question. If you ask multiple questions will only be answering the first question. So we can respond to everyone in the queue. This morning.
So we'll go ahead and take our first caller Mac dorsch with BMO capital markets. Please go ahead.
Alright, thank you.
Clean quarter.
I was hoping maybe you could just talk about how 98 and to the extent you have visibility on others are.
Approaching commercial group group commercial.
Fully insured rate increases for 2022.
Yes, why don't we let Brian Thompson take that question go ahead, yes.
Thanks for the question, Matt certainly as we look forward to 2022. The picture is a lot more clear then as we look at the past 20 months I would say that we feel optimistic not only about our pricing the rationality of the market, but most importantly, the value that we're bringing to customers. So we're optimistic as we look forward.
Thank you Matt next question please.
Next we'll go to Josh Raskin with Nephron research.
Thanks. Good morning, My question relates to the value based care, but more from the United Health care side, and so how does UHC think about the use of value based care providers and maybe some expectations on the movement of membership into fully cap arrangements. In 2022, I think you said 250000 lives in this year, so curious how youre thinking.
About next year, and then maybe as part of that what advantages you see abusing optum care as a partner over some of the others and kind of how you evaluate partners in the markets.
Yes, I appreciate the question, Brian Thompson here again, I would say, we certainly are encouraged by continuing our advanced care penetration with partners Optum care, certainly being one of several when we partner with Optum care, we see not only our highest satisfaction, but our best benefits and overall performance and you heard that in our star quality.
<unk> as well and we're encouraged not only by what we have done by whats, but also by what's on the horizon.
Historically, you've looked at our combinations largely in a traditional Medicare advantage.
Space and you're seeing us expand into complex populations and duals and we're also really encouraged with what we're doing in the commercial marketplace as well, we've got some new offerings coming in that space. So I would say the key takeaway here is breadth and impact we continue to scale and expand in that space and it's important we really see this value based aligned care as a way to drive good.
Value for those we support and serve.
Thanks, PT and Josh Thanks for the question as to Wyatt Decker I would just add that at Optum health and care. We are very pleased to be playing a role in reinventing the U S healthcare system focused around patients as consumers and value based care as a major pillar.
As you mentioned, we've grown by 250000 fully caffeinated lives. This year and we're excited through our partnership with UHC as well as collaboration partnership with over 90 Payors in total to continue to grow our value based care delivery construct the other point I'd make is youll see us increasingly weaving together.
All of our assets and our comprehensive care delivery paradigm that we feel is unique and differentiated in the marketplace. Thank you.
Okay. Thank you for that and why it let's go to the next question operator please.
Yes, Sir next we'll go to Ralph Giacobbe with Citi.
Great. Thanks, just wanted to go to the guidance commentary and I guess just clarify John is.
Is it inclusive or exclusive of the $81.0 headwind from this year. So when you talked about.
Reasonable relative to consensus maybe maybe at the higher end.
Do you factor in the dollars ADR can you just provide some guardrails around how youre thinking about that dollar rate. Thanks.
Yeah, Ralph good morning, so yet or.
As it relates to this year's dollars 80 look our expectation is that will clearly be lower than it was in 2021 as we think about it. We also don't think there'll be nothing.
I can't imagine we hit January one and everything ceases up immediately.
So we don't think that will be the case at all.
So so so inclusive of that when you think about going to that I think I inclusive and as we look at where the where the analyst consensus currently centers.
Seems like kind of a reasonable starting point in terms of how we think about how we think about that and how we would.
Anticipate and be respectful of the fact that we don't know exactly how this will progress as we as we move into the new in the new year.
Thanks Ralph.
Yeah.
Next question please.
Next we'll go to Dave Windley with Jefferies.
Hi, Good morning, Thanks for taking my question coming back to the.
So the topic that Josh touched on value based care with perhaps more often.
Optum care focused I'm wondering if you could talk about.
One the providers within the 53000 that are responsible for.
The $4.0 million fully capitalized.
Does that <unk>.
And then secondly.
If you could talk about the I'll call. It the margin on the global cap revenues. So how how capable are how much impact are those providers, having on consumption of downstream care such that Optum care makes a margin on.
The <unk> revenue.
So yes, it will go to widen that but let me first start by saying of course to all of the all of the providers within Optum care. They are responsible for managing the downstream spend whether it be specialists, whether it be at hospitals are global cap is that and you know one of the key things that we do within Optum care as we made investments in our.
<unk> to absorb take and manage risk right. It's just not a paper transfer it's actually a system, where the providers are fully and are fully aware of the capitation arrangements and they're managing accordingly. So why why don't you add on top of that you are more into details yes. Thanks for the question and.
<unk> mentioned.
We focus relentlessly on the quadruple aim, including lowering total cost of care, providing better outcomes and outstanding patient experiences and we are relentless in monitoring specific data points that help deliver that out those outcomes.
Specifically, what we see is the members that are in fully captive arrangements overall have about a 30% lower hospitalization rate and about 40% lower skilled nursing facility occupation rate than their counterparts in fee for service Medicare as an example.
So we will continue to drive that value proposition and as I touched on in the previous question, but I'll go a little deeper as you think about us with our home and community assets increasingly meeting people in their terms in their homes to deliver components of value based in primary care preventive care.
And wellness care and identify early conditions that otherwise might have led to an ER visit or hospitalization. You'll also see us continuing to bring on board very innovative behavioral healthcare delivery solutions that are integrated with the primary care providers that I'd again identify and treat mental health and substance use.
Disorders by identifying them early and treating them in lower acuity settings. When that's appropriate. So those are just a couple of examples of how we're creating value for those that we serve thank you perfect Thats great.
Thank you very much for the question can we have the next question operator please.
Sure next we'll go to Kevin Fischbeck with Bank of America.
Alright, great. Thanks, I'm wondering if you could provide just a little bit more color about.
The utilization trends in the quarter and maybe do that by byproduct line breaking it out by Covid and non Covid utilization, where you are versus backfire.
Thanks.
Kevin This is John good morning, So yes, a few a few.
Perspectives on that as we think about utilization trends in the quarter and I gave some broad indications just in terms of where we were with COVID-19.
Inpatient stays and Thats for our members maybe.
Maybe you can give a little kind of further commentary so as we sit here today.
About 5000 of our members are in an inpatient setting for a COVID-19 related condition right now and I'd say versus the peak that we experienced during the quarter, that's probably just a little more than 50% of the peak in that zone that we.
<unk> over the course of the period.
That fell across categories, probably categories much like you would have observed in in that.
The reports coming out nationally in terms of the types of individuals who are in these settings.
And average age that was considerably younger than we saw in Pryor that in prior periods for Covid.
So similar to what you would we have noticed across the board.
In terms of broad utilization trends.
Similar to what we would have described in <unk>, where we did describe where we continued to see commercial members.
Be more active in elective care.
<unk>.
Public sector, our government program members.
A little bit less active and so kind of similar just trending at different levels given the prevalence of COVID-19.
It's been interesting over the course of the 20 months there has been a consistent fairly rapid.
Reaction when Covid cases go up Nash nationally in terms of the preference of patients to whether or not to seek elective care.
Again happened this quarter, where it comes in fairly quickly in terms of the hesitation in the system.
To access so broadly kind of similar along those ranges hopefully that provides a little additional color for you and what we're seeing across the full book of business. Thanks for you. Kevin question of operator next question. Please.
Yes, Sir next we'll go to Justin Lake with Wolfe Research.
Okay.
Thanks. Good morning, first let me just follow up there John.
You've talked about I think on the.
Previous calls your guidance assumed about a 100, 102% of normal.
In the back half of this year.
<unk> it sounds like Youre, saying commercial might've been a little higher than Medicare Medicaid a little lower but if you can give us those numbers specifically just so we have kind of a read through to the rest of the industry that might be helpful.
And what you saw in the quarter and then what are your price.
Would it be fair to.
For you to share with you priced for for next year in terms of trend.
101, 102% for next year kind of similar conservatism versus this year.
Yes.
Good morning, Justin.
So a few other elements on that similar broad trends to what we observed in <unk> just shifting.
Just shifting because of the COVID-19 prevalent so downshifting a bit in terms of elective in terms of COVID-19 prevalent.
<unk> been really fully offset by COVID-19, so that as elective down shifting because of Covid prevalence and then fully offset as we saw COVID-19 care become a more important part of the business. So that that that really flowed across the businesses, where those trends across the book like I described in terms of the agenda.
The general outlook on that.
And let me turn to Dirk here to talk about some implications on how we would have anticipated that in our forward pricing, yes, I mean, Justin.
We of course are going to always price to our best estimates of forward trend and we're going to take into consideration all the variables that we've talked about that toggle that John just talked about between Covid and what we expect with abatement.
Don't want to get into the specific details clearly that's competitive but at the end of the day just be aware that we've considered all factors as we priced our forward business within our books.
Thanks next question.
Next we'll go to Lance Wilkes with Bernstein.
Yeah, I wanted to ask a little bit about employer growth and was interested in for the third quarter. How much of that was new wins versus in accounts and then as Youre looking at 'twenty, two and you're getting visibility on national accounts Middle market. If you can just give a little color on those individual segments and what's driving.
Wins in 2022 in particular.
<unk> features or is that all.
<unk> product, maybe just a little more color on kind of why youre getting wins.
Yes.
Okay why don't we.
Extend that question to Bill Goldman who will talk about all three of those not only this quarter, but also why we think we're having some success.
Yes. So thank you for the question. So we're excited about the traction we're seeing in our third quarter enrollment membership growth for the quarter was really attributed to what I would say are three main components. One is in group growth was net positive for the quarter.
Wins versus losses was also positive for the third consecutive quarter and obviously the preferred one acquisition contributed to overall growth.
We're expecting continued commercial growth in 2022 across both our fully insured and self funded segments. We're confident in the value story is resonating in the market and we're getting good traction with our broad product portfolio and so products like bind and care cash in harmony in motion and all savers are all contributing to that growth.
22 for Middle market is obviously a little early.
To predict exactly how all those products will.
Perform in the market, but very confident in our ability to continue to perform well in the commercial market for 2022.
Yes.
I would just add on to what Bill said I mean, the new products are important but one of the fundamental things within the commercial group is clearly affordability and as we sit back we we have.
Good program, where we manage utilization, we managed medical cost initiatives, we work hard on our network contracts. So a lot of things contribute to success in commercial and some product and a lot of affordability. So thanks for your question.
Operator next question please.
Certainly the next we'll go to Scott Fidel with Stephens.
Hi, Thanks.
<unk>.
Interested if you can maybe talk a bit about the labor and staffing environment right now in healthcare and.
One how thats impacting the optum care provider businesses.
Whether you are seeing an impact, whereas the vaccine mandates are going into effect as well.
More broadly as we look at just some of the tightness around labor and staffing and assessed.
How is that influencing your thoughts in terms of where overall health system capacity is right now I mean, it feels like we're pretty much maxed outright and we sort of just shifting between COVID-19 and non COVID-19, but seems like it seems like the system itself is running pretty much at full capacity right now in terms of Bob just the staffing dynamics. Thanks.
Scott. This is Wyatt Decker very key question and as you point out the U S health care market is very tight right now for us in our care delivery assets, we are seeing.
Good both the retention engagement and recruitment of physicians and care providers. A couple of examples like give you we mentioned at the start of the year, our intent to bring onboard 10000 additional.
All physicians to our ranks and we've already brought onboard about 8000 year to date, so just as a high level indicator why and what do we attribute this to and I would say in partnership with Patricia Louis on our human capital team. We are relentlessly focused on supporting our frontline care provider teams throughout the Pan.
And they know this.
And deeply appreciative of it and we work very hard in this precedes the pandemic, but yielded dividends during the pandemic to support them in an environment that decreases clerical burden and allows them to focus on the work they love, which is actually taking care of patients which is what we all want. So so overall, we are managing through this I won't.
Kid you, it's tight and we're keeping a close eye on it throughout all of our operations and our 43 states, where we provide care. Thank you.
Yes.
I'd just say as widespread we're managing through this it from an environmental standpoint, it's not just clinicians. It's all in all workers, but one thing I would say is we had a fairly significant work at home presence before the pandemic even started so sort of our employee value proposition sort of was we had a good value proposition before it started and that sort of carry through.
I think like all employers what we're trying to do is take care of our people do the right things from a reasonableness standpoint and.
We will continue to focus on our mission and that's we're continuing to do so.
I am optimistic that we're going to continue to be able to staff, our operation and provide the services that we need to all of our patients and members across the country.
Operator next question please.
Next we'll go to Ricky Goldwasser with Morgan Stanley.
Yes, hi, good morning.
Just a quick follow up question on the 2022 early comments.
So a couple of variables that one as we think about exchange transaction I think you said you expect it to close.
For the first half of the year.
If you can give us an updated change accretion number I think it was 20% to 50 previously please for 2021, so how should we think about the 2022.
And then I understand that there are a lot of uncertainties around COVID-19 and that dollar 80 in net COVID-19 headwinds.
Previously you quantified about 70 cents is coming from risk adjustments. So should we see that piece at least I could help users.
Next year maybe.
How are you tracking with the annual wellness visits.
<unk> versus where you were last year or where you were in 2019.
Thanks for the question Ricky I think if you components, there and get it I'm trying to get at all of those so just in terms of.
Relates to change in impact I'd, just point out that we don't bring in.
Acquisitions into our outlook until those close.
So my commentary.
It doesn't anticipate change in there and we wouldn't we wouldn't look to bring that until it closes.
When that is complete we have no reason to expect that we wouldn't be trending along the same levels that we talked about prior.
When that does come in it's just a question of when it comes in in year and how the.
How the benefits play that's just timing impacts in terms of that when it would actually closed during the year, but not incorporate not incorporated in that outlook.
As it relates to kind of the.
Dollars 80 that we articulated last year, yes, we broke out a number of different components that were important in that.
And that element.
And frankly my.
My hope would be we're not talking about a COVID-19 number by the time, we get into 'twenty two that we move beyond that and we can do.
Move beyond business as.
As normal as we can while being always ready and.
To address the environment that the hand, but that would be certainly our intent as we step out here that we'd be moving beyond that beyond that view.
In terms of elements and such in terms of elements such as.
Annual wellness visits and things.
BT to comment that Brian Thompson to comment a moment on that also sure Jon as you laid out at the beginning while both our Medicaid and Medicare businesses are running still below baseline on a net basis. We are encouraged by the encounters with the physicians are primary care visits in annual wellness visits as well as in home clinical visits so those have been encouraging.
So I certainly expect less of a headwind in 2022 due to those encounters certainly getting traction certainly compared to 2020.
Excellent. Thank you. Thank you Ricky operator next question. Please.
Next we'll go to Kevin Caliendo with UBS.
Hi, good morning, Thanks for taking my call can.
Can you talk a little bit about elective trends in September and as they moved into October how thats changed at all if you've seen any uptick and also just on your commercial market growth. Your membership growth in the quarter can you break it out between small group versus large group.
Thank you.
So thanks, Kevin I'll, let Brian Thompson address a couple of those sure Hey, Kevin Brian here as I think about elective care, what we've really seen is a pretty steady return to normal.
Don't really see what I'll call as an unnatural suppression, nor have we seen a significant bounce back.
Suggesting a big catch up in fact, when you think about scheduled care. What we have found is that most of that cycles through in about four to six months, we look at things like colonoscopy and joint replacements as good leading indicators and those are running pretty close to baseline obviously with the spike that we saw in September there's a little bit of that that we would expect to flow through.
In the fourth quarter, but thats, a fully accounted for in our outlook and I would just say from a commercial perspective, maybe echoing what bill Bill said, feeling really balanced really across our fully insured growth for the quarter. So just optimistic that that was across not only our group business, but we also saw a return of our non exchange individual growth. So a really good quarter from a full.
<unk> perspective.
Thank you. Thank you.
Operator next question please.
Yes next we will go to a J rice with credit Suisse.
Hi, everybody.
Maybe just to drill.
Drill down a little bit on the optimal racks and what's incorporated in.
22 outlook headwinds tailwind I know, we had the vaccine this year, probably helped script trends a little bit we had.
Some specialty conversions maybe.
That helps and obviously what was the dynamic around <unk>.
Renewal contracts and so forth.
Are you thinking about for 'twenty two for Optum Rx.
Sure Hey, Heather San Franco here. Thanks, a J for the question. So you mentioned, we talked in the second quarter a bit about vaccine, we got little bit of that this quarter growth, but it's proportionately down the last quarter. There was about a third of the growth this quarter, it's down to about call it between 45%.
So youre seeing really our growth first of all in this quarter as a result of.
Modest PVM growth together with continued and membership growth together with continued pharmacy services, Greg when we look at 'twenty two we're going to see that to continue so our pharmacy services growth remember, that's our home delivery specialty infusion the multi dose as well as our direct to consumer community businesses those will continue.
To grow in 2002, we see those students.
Outpacing our growth.
<unk> pharmacy, and I guess I would call out a few things that I think about 2000 tail.
First of all.
We've made those investments and so we're seeing that we talked about <unk> and our community pharmacies.
<unk> talked about this this morning, and how they are growing not just in expanded sites, but our existing sites are continuing to show really strong growth as they expand services to existing members and expand in different types of health Center will continue to see that in 'twenty, two and we think the solutions, we're bringing in an integrated way together with our.
Consumer experience and our rail question make drug.
<unk> therapeutics affordable and easy to access for our members will continue to see that.
Point, you back to our long range growth, where we will continue to be I think stable, but our revenue and earnings growth in 2002, as we work towards our long range plan. Thanks.
Thanks for the question that was great and I think a J what that points out clearly a broad pharmacy portfolio with clearly a laser focus on affordability and laser focused on serving people getting their medications in people's hands, where they need them and basically servicing the entire sort of what I'll call a pharmacy landscape with effective products and services.
Thank you very much for the question next.
Next question please.
Thanks, Lisa Gill with Jpmorgan.
Thanks, very much and good morning, I just wanted to go back to your comments around virtual care and it.
Additional first product in 2022 can you talk about what that will entail first off and then secondly, when you talk about connecting multiple channels of Cara in 2022, I would assume thats, primarily keeping the patient in the home, but can you maybe just give a little more detail around what those programs look like and what the potential cost savings could be.
Yes, So first of all let me let me hit on the.
The virtual products that we have.
I've talked about it before we're sort of getting into from version one diversion to the second version is really not telehealth as a standalone service, but really effectively integrated into physical delivery in total courses of care and so as I think about how we might how we're organizing our products what we would have as a virtual PCP.
<unk> available to some people and many people across the country don't have relationships with Dcp's. So a product based on having virtual PCP, having that PCP manage like a brick and mortar PCB and then manage the downstream expenses being able to refer to digital properties be able to as I said, bringing a behavioral specialist <unk>.
And as we sit and we look at some of the products that we have and we're designing we're expecting probably about 15%.
Price advantage to other sort of similar products in the market. So we're kind of excited about the efficiency of virtual neck in that context.
Okay.
So give me your second question again leased I was focused on virtual.
No.
More around when you talk about connecting multiple channels of care in 2022 should I assume that that's primarily connecting care in the home or is there something that im not thinking about.
No no you are thinking of this multi modality right. Its home it's digital it's what we do in the office and that's one of the things that we're trying to do and I'm glad you hit on that our ability to serve people where they want to be served is something we're really focused on across all three of our lines of business is very important clearly people have different care needs and they are different.
Francis for care, and we want to provide that access across the board.
Within Optum health the Optum care the.
Build out of the home and community platform is one of the more important areas that white and his team are focused on and there's been lots of development. There why it maybe you could add a little color.
Absolutely. So we're very excited.
About bringing virtual care as Dirk said in a differentiated way into People's homes. So that they can access care, we can help triage them and onboard them. We can provide primary care and when needed we can provide care delivery and inappropriate in some instances in the home.
We're leveraging particularly our urgent care platform to provide.
Near by physical care, and then we blended in our virtual and physical behavioral care deliveries as well so.
We're now live in all 50 states, we're serving over 7 million members today and we look forward to continue to expand these offerings. Thank you. Thank.
Thank you operator next question, please and I think we have time for about two more questions here as we approach the bottom of the hour.
Okay next we'll go to Steven Valiquette with Barclays.
Great. Thanks, Good morning, everybody. So you touched on the topic Medicare risk adjuster payments earlier. This was also a little bit more topical about a month ago with the Wall Street journal, putting a spotlight on it.
Im just curious if you have any updated high level thoughts on MRA payments conceptually for the managed care industry overall and do you see any potential reform of MRA near term or do you expect status quo going forward. Thanks.
Okay.
Yes. Thank you very much for the question first let me point to.
The value proposition that Medicare advantage provides I think thats important context. So MA serves 27 million Americans with very high quality care and compared to fee for service Medicare I may cost less is more equitable has better quality access and outcomes and granted greater coverage and benefits with nearly 100%.
Consumer satisfaction, so very very important to take care of that seniors receive and it's important that we preserve the stability of this program that so many people rely on and when we think about the risk adjustment model and the payment system. The <unk>.
Model has been critical to providing broad an equitable access to MAA.
Risk adjustment levels, the playing field and insurers that theres no disincentives to care for the most vulnerable so.
So we really feel that it's an essential part of encouraging the right incentives and the program and think that it's on something to build on and broadly support that we need to think about how to build on these positive elements and aspects of the program for which this is one of them.
Thanks, Tim Operator next question, please and next final question.
Alright, we will take our last question from Stephen Baxter with Wells Fargo.
Yes, hi, thanks.
Wanted to come back to the labor market and some of the things that we're reading about provider financials was wondering what youre hearing from your network partners on this issue and how you think it will or will not influence rate negotiations over the next couple of years.
Yes. So thanks for the question I think what we're hearing from network partners is that.
Their cost of their cost of labor is higher so that comes up in the negotiations and like anything else. It's part of what we negotiate and how we try to.
<unk> worked with our network partners on coming up with the right pricing negotiation negotiating accordingly, yes, where we're hearing that there is obviously their staffing shortages. Obviously many of the many of the hospitals and other providers have to pay more for their input and that's going to be.
Selected and the economics as we go forward and of course all of that is reflected in how we price going forward. So yes that occurs.
Thank you for the question with that.
I would like to close with is as follows.
Thanks, everybody for your time and your questions. Today, We hope you have taken away the impression of a company that is confident in its opportunities and ability to grow.
We are deeply aware of where and how we need to improve and we're fully committed to our mission of helping people live healthier lives and helping make the health system work better for everyone. We look forward to sharing with you more at our November 13th Investor Conference Hopefully in person in New York. Thanks for your time today.
Yes.
That does conclude today's conference we thank everyone again for their participation.
Okay.