UnitedHealth Reports Profit, Citing Falling Demand for Elective Care
UnitedHealth Group, one of the nation’s major insurers, reported on Wednesday that its earnings actually increased this past quarter, adding that the costs of the coronavirus pandemic were offset by the cancellations of routine medical appointments and elective surgeries for hip replacements and other conditions.
The company’s report provided an early glimpse of how the crisis is affecting the U.S. health care industry, which in many regions has been overwhelmed by emergency and intensive care of patients infected by the virus. Tens of billions of dollars in federal funds are now flowing to hospitals dealing with the crisis as part of the $2 trillion stimulus bill passed by Congress last month.
The company, which operates one of the nation’s largest health insurers as well as physician groups and surgery centers, announced on Wednesday that the coronavirus pandemic had “minimal impact” on its earnings.
UnitedHealth reported earnings from operations increased by 3 percent, to $5 billion, for the first quarter of 2020, compared with the same three months of 2019, on revenue of $64 billion.
The company said it was not changing its profit outlook for the year, but executives emphasized that it was too soon to predict what the final impact of coronavirus would be on its varied businesses. The pandemic began hitting communities in the United States heavily in the last month, and elective procedures only began to decline in early to-mid-March once public health experts and state governmental officials urged hospitals to clear beds for coronavirus patients.
“These are still early days in the response to Covid-19 and we anticipate we will experience and learn more as events unfold in the months ahead,” UnitedHealth’s chief executive, David Wichmann, told investors.
The possibility that overall medical costs could be lower might help allay fears that the crisis could lead to sharply higher insurance premiums for consumers next year.
Mr. Wichmann indicated that employers could see some relief in the rates charged by UnitedHealth if the cost of care for patients with Covid-19 was significantly outweighed by savings in the reduction in other kinds of care so that its overall expenses were lower than it had originally expected. “It remains to be seen whether we can do that and if it makes sense,” he said.
Mr. Wichmann cited various efforts the company had made to help its customers and providers, including advancing nearly $2 billion in payments to hospitals and doctors strapped for cash during the pandemic. The company also said it would not request “any government assistance” as a result of the crisis.
Executives did not rule out the possibility that there could be much higher demand for medical care later in the year, although they were careful to avoid predicting when a potential rebound might occur. “We haven’t seen a cessation in activity like this,” said John Rex, the company’s chief financial officer.
During the call with investors, Mr. Rex took pains to emphasize that the company’s experience with previous events like hurricanes or the Great Recession might not be helpful. “This situation is so different from anything we’ve seen before,” he said.
The high levels of unemployment that have already been recorded in claims may also affect employer plans, resulting in lower enrollment. But executives said they also expected that people without job-based coverage would seek alternative sources of insurance, benefiting the company’s Medicaid and coverage for individual businesses.
The company says many of its customers are already seeking to delay payments on the premiums they owe.
The company, which also offers short-term plans that do not meet the standards set under the Affordable Care Act, indicated that it had already been considering offering Obamacare plans in additional markets. UnitedHealth was among the major insurers that pulled out of A.C.A. markets because of heavy losses.
UnitedHealth also announced that the chief executive of its Optum unit, Andrew Witty, who was also the former chief executive of GlaxoSmithKline, was taking a leave of absence to help lead the World Health Organization’s new initiative for the development of a Covid-19 vaccine.