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United Health Group The first-quarter earnings call marks the healthcare giant’s first major public comment since a cyberattack on its billing and payments subsidiary Change Healthcare in February that led to the most important disruption within the U.S. healthcare system for the reason that Covid pandemic.
“Everyone looks at United as the pioneer of all healthcare services. This will be different,” said Lisa Gill, managing director and healthcare analyst at JPMorgan.
The data breach on the Change Healthcare unit forced the corporate to shut down its extensive billing and payment processing service. While the corporate has restored service to pharmacies, the outage has continued to affect the operations of healthcare providers across the country.
Change Healthcare is a subsidiary of UnitedHealth’s sprawling Optum division, which incorporates 90,000 physicians under the Optum Care division and one in every of the nation’s largest pharmacy profit managers, OptumRx.
Analysts will examine how the corporate accounts for the prices related to the cyberattack in addition to the impact of the outage on other operations inside Optum’s businesses.
“We will be very interested in the burden that will be placed on them … in terms of how they assess either lost revenue or additional expenses,” said Scott Fidel, chief executive and healthcare analyst at Stephens.
According to UnitedHealth, that is the case provided $4.7 billion in interest-free loans to providers, although the American Medical Association says greater than half of physician groups surveyed in early April said they’d to make use of private loans to remain operational.
One of those doctors, Nashville dermatologist James Allred, said he needed to take out loans to maintain his practice, Wellskin Dermatology & Aesthetics, afloat because he was unable to get claims processed and paid by private health insurers. The last six weeks have forced him to desert plans to expand his practice this yr.
“That a single hack is revolutionizing the entire American healthcare industry … raises a lot of questions about how healthy is this massive consolidation from a systemic perspective?” Allred said.
Larger providers, comparable to B. a provider of home infusion services Health care optionhave also warned that the outage could have an effect on their quarterly results.
Uncertainty about Medicare Advantage
On the medical health insurance side, the timing of the change hack has increased uncertainty for UnitedHealthcare and similar competitors Humana, CVS Health’s Aetna and Heightwhich reports its quarterly results on Thursday.
All Medicare Advantage insurers reported higher-than-expected medical utilization rates amongst seniors within the fourth quarter.
Since the change outage occurred in the course of the primary quarter, it can have turn out to be tougher for insurers to trace medical utilization costs in real time. JPMorgan’s Gill expects most will report adjusted or estimated numbers.
“We’ll have to wait for the second quarter to really get a better idea of what’s happening with medical cost trends for United and most likely the industry,” Gill said.
The delayed medical cost forecast will even increase demands on health insurers as they prepare bids for the 2025 Medicare plan, due in early June. This comes after disappointing increases in government payment rates for 2025 announced earlier this month, that are expected to be a headwind to earnings.
“We have increasing cost trends. We still have…a pretty competitive market,” Gill said. “So they have to get through this.”
