Goodmorning Hospitalogists,

I’m back from ACL in Austin and let me tell you, I barely made it out of there alive. I’m getting an inhaler prescription STAT.

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UnitedHealth Group’s Q3: Built Different

TL;DR: Capitated arrangements and MA member growth drive outperformance. Change Healthcare currently getting integrated. Return to business as usual utilization-wise in 2023.

Is anyone surprised? I’m not sure if UNH has missed on a quarterly earnings report in the past decade. Anyway, UnitedHealth once again reported stellar results across all expected metrics with $81 billion in revenue during Q3. Its Optum segment continues to shine, growing 18.0% year-over-year and Optum Health in particular growing 33.4% YoY given the value-based initiatives in the services segment.

UnitedHealth Q3 Optum growth by segment

Things you need to know from the earnings call:

  • UNH bumped up its adjusted earnings per share guidance to $21.85 – $22.05
  • CEO Andrew Witty started the call by providing an overview of recent partnership announcements.
  • UNH’s 10-year deal with Walmart will start with 15 Walmart Health locations in Florida and Georgia (goal = make more money through addressing social determinants of health – grocery, dental & vision, etc.).
  • Its partnership with Red Ventures, RVO Health, will provide consumers with health and wellness options alongside Optum’s consumer marketplace (goal = more consumer touch points, affordability).
  • They spent $20 billion in M&A this year!!!!! With room for more!!! Wtf.
  • UNH got real excited about the Change Healthcare integration. Lots of jargon on the call about how it’ll improve provider connectivity and monopoli- er, build a strong transaction network by automating its claims transactions and improving claim accuracy.
  • Lots of talk about prioritizing and expanding access to mental health. Even though UNH bought Refresh early in 2022, I wouldn’t be surprised to see another acquisition or more here.
  • Financial highlights: Rev per consumer up 31% in OptumHealth (VBC relationships, higher ASC acuity). Commercial membership up 100k. MA membership up 800k. 81% of MA members in 4-star or better plans (key for 5% quality payout bump). Medicaid membership up 350k, but UNH is worried about eligibility of these members once the public health emergency expires.
  • Pretty interesting tidbit here: UNH execs noted that inflation and the current environment is leading to faster adoption of value-based arrangements. Further, UNH is mitigating costs through virtually enriched offerings. As far as total medical spend is concerned, UNH is expecting a higher than normal year in 2023.
  • Under 15% of OptumCare’s 20 million members are in fully capitated contracts, meaning there’s plenty of room for growth there.
  • UNH expects the public health emergency to end in January, with Medicaid redeterminations to follow at the state level during Q1.

So in summary, United’s major growth engines are, and continue to be Optum Health & transitioning 60k+ physicians to risk-based arrangements, at-home care, and growth in Medicare Advantage plans.

UnitedHealth Group Q3 2022 performance

On OptumInsight’s opportunity given the current operating environment for health systems:

Obviously, health system partners are under a lot of pressure. And we talked about some of them from the macroeconomic backdrop in terms of shifting side of care and labor shortages, wage inflation, things like that. So as we engage with the market, we find that health systems are very responsive because we present an opportunity to be able to address some of those short-term needs, but then really importantly, on the mid- to long term, we become a key accelerant in some of their transformation initiatives, things like their preparedness for value-based care as an example, or how they engage digitally with patients.” – Dan Schumacher

On the Change Healthcare deal:

So really important that you see that and very much taken into consideration as we thought through our work going forward. The other thing I would just also add is that I don’t want to — I think you all understand how important the Change integration is for OptumInsight. This is — it’s a great moment to bring together tremendous complementary skills, capabilities, technologies, perspectives on the marketplace.” – Andrew Witty


Market Movers

Mergers & Acquisitions:

  • Babylon had a VERY busy week. To fund its losses, it announced the sale of its IPA Meritage Medical Network generating $400M in annual revenue (will be an open bid process) along with a private investment for around $75 million at ~$0.41 a share. The capital raise and IPA sale should keep it afloat until profitability, according to Babylon.
  • Walgreens closed its previously announced deal for CareCentrix and also had some very interesting tidbits surrounding its healthcare strategy moving forward in its earnings release. Lots to digest in its earnings presentation and I highly suggest a read-through as it struggles to keep its footing amidst a changing environment for retail players. It’s also on the hunt for a tech asset. Who wants to guess what they might acquire!!
  • Kroger and Albertsons announced their intent to merge in what will create a huge pharmacy presence with just under 4,000 locations.
  • Essentia Health and Marshfield Clinic Health System are exploring a potential merger in what would create a 25-hospital system in the Midwest.
  • Parkview Health System is joining UCHealth in Colorado. As part of the merger for the struggling system, UCHealth will inject $200M in investments into Parkview’s communities.
  • RadNet’s New Jersey joint venture acquired 6 imaging centers with over $40M in revenue and 200k annual scans.

Partnerships and Strategy:

  • BSHS Health has rebranded and is now henceforth known as CoreWell. So…what do we think of the name here? Good? Bad? Indifferent? I’m neutral, but really there have been too many name changes lately.
  • Amedisys and Contessa partnered with the University of Arkansas for Medical Sciences to offer its suite of home care services to residents in central Arkansas.
  • Medicaid-focused virtual mental health company Brave Health raised $40M
  • Froedtert Health and ThedaCare JV’d on new medical campus builds, including ASCs, MOBs, and small-scale micro hospitals.
  • Walmart clinical trials research, launched a healthcare research institute
  • GoodRx launched a new version of its platform tailored for physicians
  • Walmart will start to offer OTC hearing aids (without a medical exam or audiologist) between $199 and $999.

Regulations and Rates:

  • The DOJ is suing Cigna for MA overpayments tied to in-home assessments, which are a key part of the Signify business model that CVS just bought.
  • The FTC is advising against a small hospital merger in upstate NY between SUNY Upstate Medical University and Crouse Health System, a very active intervention on the FTC’s part.
  • Medicare open enrollment is here.
  • HHS extended the public health emergency for the 11th time, but the end is nigh.
  • CMS extended BCPI thru 2025 despite big players like Signify exiting the program
  • The Biden Admin finally fixed the ACA family glitch!
  • Lawmakers are struggling to come up with a solution to prevent Medicare sequestration cuts
  • The AMA released an interesting report on PBM consolidation and vertical integration with health insurers.


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  • Business Insider published (paywall) a list of the 34 most promising women’s health startups in 2022.

Miscellaneous Maddenings

  • What a scene in Knoxville for Tennessee taking down Bama! I couldn’t believe the 40 yard kick made it through the uprights – I’m a former kicker and as soon as I saw the knuckleball, I thought ‘no way,’ but in true poetic, college football madness, the ball traveled exactly 41 yards. What a game!
  • Speaking of kickers, Justin Tucker is the best kicker of all time, and his dispersion stats prove it.
  • RIP to Robbie Coltrane, AKA, Rubeus Hagrid. A legend.
  • I just finished the 1st season of the Rings of Power (Lord of the Rings spinoff) and I gotta say – even though the pacing was off, writing was shaky (and apparently the lore / canon is all over the place), I really enjoyed the ending. Will definitely give season 2 a watch. I’m still a House of the Dragon stan tho.

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Blake Madden
Blake Madden
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