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UnitedHealth projects major revenue boost in 2020 on the back of continued Optum growth
UnitedHealth Group projected it will generate $242 billion in revenue in 2019 and expects to report another 7% to 8% increase in top-line growth in 2020.
The insurance group presented updated figures during its investor conference that kicked off Tuesday with officials saying they expect to increase the company’s 2020 revenue to between $260 billion and $262 billion.
They project between $21 billion and $22 billion in operating earnings in 2020.
In comparison, UnitedHealth Group generated $17.3 billion in profits on $226 billion in revenue in 2018. The company is projecting to report $19 billion in profits in 2019.
The biggest driver of growth this year has been UnitedHealth’s Optum, the company’s pharmacy benefit management and care services group. Optum revenue is projected to have increased by 11% from 2018 to 2019, earning UnitedHealth $112 billion in revenue compared to $101 billion in 2018.Optum is expected to continue to be a major growth driver for the company in its 2020 earnings projection, with UnitedHealth pegging growth to increase again between 13% and 14%. UnitedHealth executives said that Optum is expected to make up 50.5% of the company’s total after tax operating earnings this year..
Optum could also be the key for UnitedHealth to improve its Medicare Advantage business.
“We don’t like being third, that’s fundamentally where we landed for the year,” said UnitedHealth Group CEO David Wichmann, “Over time I think we will continue to grow and outpace the market.”
Executives said that the key to growth is to keep its networks consistent as well as pharmacists and pharmacies consistent for seniors.
“We believe we maintain in the Medicare market a strategic cost advantage because of the capacities we have as an organization,” Wichmann said.
UnitedHealth pointed to the success of OptumCare, the company’s primary and specialty care provider. The highest performing Medicare Advantage plans were in markets that had an OptumCare presence. Wichmann said that growing the OptumCare platform is a majority priority for UnitedHealth over the next seven years.
Dignity Health’s class-action settlement actually worth $700M, workers say
A California federal judge refused to approve a deal in October requiring Dignity Health to pay more than $100 million to settle a class-action lawsuit accusing the San Francisco-based health system of using a religious Employee Income Retirement Security Act exemption it wasn’t entitled to. Current and former Dignity workers argue the deal is actually worth more than $700 million in court documents filed Nov. 25, according to Law360.
Dignity Health allegedly used the religious exemption to underfund its pension plan by $1.5 billion. On Oct. 29, a federal judge in the Northern District of California refused to sign off on a proposed settlement because it contained a “kicker” clause. The clause would allow Dignity to keep the difference between the amount of attorneys’ fees awarded by the court and the more than $6 million in fees authorized by the settlement.
“Although the fact is not explicitly stated in the Settlement, if the Court awards less than $6.15 million in fees, Defendants keep the amount of the difference and those funds are not distributed to the class,” Judge Jon S. Tigar said, according to Bloomberg Law. “The Court concludes that this arrangement, which potentially denies the class money that Defendants were willing to pay in settlement — with no apparent countervailing benefit to the class — renders the Settlement unreasonable.”
Though the judge refused to sign off on the deal, he gave the parties an opportunity to revise the agreement and resubmit it for approval. Workers tweaked the proposed deal in a renewed motion for settlement filed Nov. 25.
According to the motion, the parties have agreed to eliminate the kicker clause.
“As provided in the new settlement, class counsel will apply to the court for approval of a total award of $6.15 million, for attorney fees, expenses and incentive awards,” the motion states. “If the court awards less than the requested amount, Dignity Health has agreed to pay the balance into the plan’s trust.”
The workers also argue that the attorney fee award is reasonable given the value of the settlement.
Under the proposed settlement, Dignity would add $50 million in retirement plan funding in 2020 and 2021.The settlement also requires Dignity to fund the pension plan until 2024 and prohibits the health system from reducing accrued benefits because of a plan merger or amendment for 10 years. For 2022 through 2024, Dignity Health’s cash contributions to the plan will be at least the “minimum contribution recommendation,” an amount calculated each year by independent actuaries.
“Under this settlement, Dignity Health will make substantial contributions to the plan for five years, in an amount we estimate to exceed $700 million,” the motion states.
The court previously noted that plaintiffs did not identify any settlement provisions governing how Dignity Health’s actuaries calculate the minimum contribution recommendation. The plaintiff’s actuary provided more information on the calculation in a supplemental declaration submitted Nov. 25.
The workers are seeking preliminary approval of the new settlement.
10 latest hospital closures
https://www.beckershospitalreview.com/finance/10-latest-hospital-closures-120219.html
From reimbursement landscape challenges to dwindling patient volumes, many factors lead hospitals to close.
Here are 10 hospitals that have closed in the past four months, beginning with the most recent:
1. Dallas-based Steward Health Care closed St. Luke’s Medical Center in Phoenix on Nov. 24. Officials said the hospital closed due to dwindling patient volumes. St. Luke’s Medical Center’s occupancy rate remained below 40 percent over the past two years, President James Flinn wrote in a letter to the local community in October.
2. Nix Medical Center, a 208-bed hospital in San Antonio, closed in November. A few months earlier, Los Angeles-based Prospect Medical Holdings said it was closing the hospital because community demand for acute care at Nix Medical Center has declined over the past year.
3. Southcross Hospital in San Antonio closed Oct. 11. The hospital and its operator, San Antonio-based Arete Healthcare, entered Chapter 11 bankruptcy in November.
4. Haskell County Community Hospital in Stigler, Okla., closed Oct. 2, according to the Cecil G. Sheps Center for Health Services Research. Haskell County Community Hospital is one of several hospitals previously owned by Kansas City, Mo.-based EmpowerHMS that filed for bankruptcy protection earlier this year.
5. Brentwood, Tenn.-based Quorum Health closed MetroSouth Medical Center in Blue Island, Ill., on Sept. 30. Quorum announced in June that it filed an application with the Illinois Health Facilities and Services Review Board to close the 314-bed hospital.
6. East Ohio Regional Hospital in Martins Ferry closed Sept. 27. The hospital’s president and CEO cited mounting financial losses as one of the factors that forced the hospital to shut down.
7. Ohio Valley Medical Center in Wheeling, W.Va., closed in September. Hospital officials said the “unwanted, yet unavoidable,” decision was made due to an unsuccessful search for a strategic partner, lack of interest from potential buyers and a more than $37 million operating loss over the last two years.
8. Hahnemann University Hospital in Philadelphia closed in early September. Hahnemann announced in June that it would close Sept. 6. The hospital pushed back the closure date after a bankruptcy judge approved the sale of its residency programs on Sept. 5.
9. Westlake Hospital in Melrose Park, Ill., closed in August, according to the Chicago Sun-Times. Los Angeles-based Pipeline Health revealed plans to close Westlake Hospital in February, a few weeks after acquiring the 230-bed hospital from Dallas-based Tenet Healthcare.
10. North Metro Medical Center in Jacksonville, Ark., closed Aug. 20, leaving local residents without an emergency room. No notice was given before the hospital shut down.
Vaping Update: Policy Versus Reality
We’ve been covering the news on recent vaping-related lung injuries, and a lot has happened since our last video. Time for an update!
People hate shopping for health insurance
Americans rarely switch to new health plans when the annual insurance-shopping season comes around, even if they could have gotten a better deal, Axios’ Bob Herman reports.
The bottom line: People loathe shopping for health plans, and many are bad at it, for one major reason: “It’s just too hard,” Tricia Neuman, a Medicare expert at the Kaiser Family Foundation, told Bob last year.
Reality check: During any insurance program’s annual enrollment period, most people end up staying with the status quo, if it’s an option, instead of picking a new plan.
- Fewer than one out of 10 seniors voluntarily switch from one private Medicare Advantage plan to another, according to new research from the Kaiser Family Foundation.
- The same holds true for Medicare’s private prescription drug plans.
- Most employers don’t usually change insurance carriers, often out of fear of angering workers, and keep plan options limited.
- Employees, after several reminders from HR, usually default to what they had.
- Fewer than half of people in the Affordable Care Act’s marketplaces actively re-enroll in new plans, even though the market was designed for comparison shopping.
- Medicaid enrollees in some states have no say in the private plans they get.
Between the lines: Buying health insurance — a $20,000 decision for the average family — is more complicated than buying furniture.
- With consumer products, you pretty much know what you’re getting. With health insurance, you’re making an educated guess of how much health care you’ll use, hoping you’ll need none of it.
- Health insurance terms and policies also are confusing, which turns people off from the shopping process.
The big picture: Shopping for insurance is difficult enough for most people. Shopping for actual doctors, tests and services is even more difficult and less widespread, and likely won’t change if prices are unlocked.
5 Things Consumers Want From Healthcare
The healthcare system is not meeting the needs of the people who need it most, according to a new focus group study.
Based on nine focus groups of low-income consumers with complex health and social needs, “In Their Words: Consumers’ Vision for a Person-Centered Primary Care System,” from the Center for Consumer Engagement In Health Innovation (the Center) at Community Catalyst, also reported:
Poll participants reported:
• The primary care system is not meeting the needs of the people who need it most because they do not have the ability to form meaningful primary care relationships and the system does not address the impact that problems like transportation, housing insecurity, mental health issues, and more have on their overall health. “Consumers expressed the desire for a primary care relationship that is not necessarily tied to a credential [e.g., an MD], but rather one that is rooted in empathy for the significant challenges and barriers this population faces in their day to day life,” says Ann Hwang, MD, director of the Center for Consumer Engagement in Health Innovation, a national, non-profit consumer health advocacy organization based in Boston. “These consumers don’t feel that doctors have the time to listen to them, that their stuck on a profit-driven treadmill, regardless of if the institution is for- or not-for-profit.”
• Unhappiness at a system they see as profit-driven.
• Strong desire for supportive services they do not get now, such as:
- An ongoing relationship with a trusted provider;
- Help navigating the complex health and social services system;
- Providers with greater cultural sensitivity and empathy; and
- A centralized place which would include mental healthcare and supportive services in addition to primary care (a “one-stop shop”).
“The healthcare system has been going through major changes that are too often designed without meaningful input from the very people it exists to serve,” Hwang says. “Because primary care is often the first point of entry for a consumer into the larger healthcare system, these focus groups were conducted to capture the perspective of consumers with complex health and social needs about what they need and want from their primary care relationship.”
This reflects the mission of the Center for Consumer Engagement in Health Innovation which is to bring the consumer experience to the forefront of health system transformation to deliver better care, better value, and better health for every community, particularly vulnerable and historically underserved populations, according to Hwang.
“The voices in this report belong to people with complex health and social needs—a group that tends to include some of the highest-need and highest-cost patients.,” she says. “As systems shift toward value-based payment and try to understand and address non-medical drivers of good health (i.e., social determinants of health), this kind of insight is critical to designing and delivering care that actually meets the needs of the people it serves.”
Based on the poll, there are five takeaways for healthcare executives, according to Hwang:
- Consumers want a long-term, trusting relationship with their primary care provider.
- Consumers value a coordinator or navigator who can help them manage their care, connect them to social services and advocate for them when needed.
- Consumers welcome a broader conversation with their primary care provider, not just focused on their medical treatment, but exploring the needs of the whole person.
- Consumers want a “one-stop shop” where they could receive a wide variety of services under one roof, including medical services, mental health treatment and counseling, and social services.
- Consumers hope for a provider who is culturally sensitive, able to relate to their life experience and struggle, and who uses language they can understand.
Physician staffing firm suing patients
An emergency room staffing firm owned by TeamHealth has filed thousands of lawsuits against patients in Memphis in the last few years, ProPublica and MLK50 report.
This is a collision of two storylines: the aggressive billing practices of private equity-backed health care companies, and providers’ decision to take patients to court to collect their medical debts.
- Media reports have, until now, mostly focused on hospitals’ lawsuits, but ProPublica and MLK50’s reporting suggest the practice could be more widespread.
Between the lines: TeamHealth has already been in hot water for its role in surprise billing.
- Emergency room physicians send patients surprise medical bills more often than other specialties, especially physicians employed by TeamHealth.
- These doctors then have leverage to obtain higher in-network payment rates, making the practice lucrative.
- The group is also one of the main funders of the dark-money group that has run millions in ads against what was Congress’ leading solution to surprise medical bills.
- The company was acquired by the Blackstone Group in 2017.
By the numbers: The Memphis subsidiary Southeastern Emergency Physicians has filed more than 4,800 lawsuits against patients in Shelby County General Sessions Court since 2017, per ProPublica and MLK50.
- TeamHealth said last week, after receiving questions from reporters, that it will no longer sue patients and won’t pursue the lawsuits it’s already filed.
Democrats double down on health care prices
Many 2020 Democrats’ health care proposals feature aggressive price regulations, either as a feature or a byproduct — a sign the party has largely given up on the idea that competition alone can keep costs in check.
Between the lines: It’s not just Democrats. As public outrage has grown over prescription drug prices and surprise medical bills, there’s been bipartisan congressional interest in regulating prices.
“The two big trends are increasing out-of-pocket costs to consumers and increasing disparity between public and commercial rates — and therefore consumer and employer pushback on those dynamics — and policymakers are now attempting to respond.”
— Chris Jennings, a Democratic health care consultant
The big picture: “Medicare for All” brings all provider and drug reimbursements under the federal government’s control.
- Sen. Bernie Sanders has been elusive about what those rates would be, but Sen. Elizabeth Warren has proposed massive rate cuts to doctors and hospitals as a way to reduce her plan’s cost.
Even the more moderate candidates’ public-option plans would enroll more Americans in government health care plans that set rates. And some have pitched ideas like limiting how much providers can charge for out-of-network care.
- But supporters of a public option argue that it also enhances competition in the private insurance market, driving prices down across the board without completely abandoning the use of market forces.
All of the leading 2020 candidates have proposed drug policies, ranging from limiting how much drug companies can increase their prices to allowing the federal government to strip the patent from drugs that are deemed too expensive.
- Even President Trump has proposed limiting how much Medicare pays for certain drugs by tying the price to what other countries pay.
The other side: The industry hates all of these ideas.
HENRY KOTULA 