April 15, 2021 at 06:04PM

As the first major health insurer to release Q1 results this year, the UnitedHealth Group has set the bar high. Across its Optum and UnitedHealthcare units, the company posted revenue growth of 9 percent, totaling $70.2 billion versus last year’s Q1 earnings of $64.4 billion. Earnings per share were announced at $5.31, which trounced expectations in the $4.38 per share range. This marks the fourth time in a row the company has exceeded EPS quarterly estimates.

The group also announced that it has added more than one million new subscribers since the end of 2020. Much of that growth came from new Medicare Advantage enrollees. It also touted the award of a Medicaid contract in Oklahoma as a significant source of growth. That contract will see the company serving Temporary Assistance for Needy Families (TANF), the Children’s Health Insurance Program (CHIP) and other populations across the state.

Medicare Advantage uptake is likely to be a strong growth factor across providers this year. The system, in which the government pays private insurers for care, is showing promise in multiple studies. According to research published on Wednesday (April 14) in The American Journal of Managed Care, after adjusting for age and condition, patients on Medicare Advantage (MA) had a 22 percent decreased risk of hospitalization in the 180 days after discharge from a skilled nursing facility, along with a 24 percent decrease in medical costs, compared to those on a Medicare Fee-for-Service (FFS) plan.

UnitedHealth itself found even more impressive results in research it released last week. That report showed a 40 percent reduction in annual premiums and out-of-pocket costs for those in MA programs versus those on FFS plans. That translates into an average annual spend of $3,558 for MA beneficiaries versus $5,361 for FFS beneficiaries.

According to the Centers for Medicare and Medicaid Services (CMS), national health spending is expected to grow at an average rate of 5.4 percent between 2019-2028, capping out at a total of $6.2 trillion at the end of that range. CMS also says that: “Among major payers, Medicare is expected to experience the fastest spending growth (7.6 percent per year over 2019-28), largely as a result of having the highest projected enrollment growth.” That means insurers offering MA plans will likely continue to see increased revenue from this segment, although competition will remain fierce.

Optum Earnings

The Optum section of the group, which was formed in 2011, was a powerful engine in driving earnings. For example, OptumHealth, the division that provides healthcare services through medical groups and ambulatory care systems, saw year-over-year growth of 31 percent, serving 99 million patients versus 96 million at the same time in 2020. Some of this growth came from expanding local care delivery networks, the company noted. Local expansion was also part of OptumRX, the company’s pharmacy care operation, with community-based behavioral health pharmacies, alternate site infusion services and prescription discount cards cited as recent expansion areas.

“The unique combined capabilities of Optum and UnitedHealthcare and the unwavering commitment of our people continue to help advance the way care is delivered, improving results for those we serve and shareholders,” said Andrew Witty, CEO of UnitedHealth Group.

An expansion of digital capabilities also factored into the strong earnings. In fact, during a call on Thursday morning, Witty said the company is seeking to bring down the barriers between virtual and physical care. “Our bias is toward driving a more simple, seamless, easy-to-access care environment – both for the patient and the provider,” he said. “What that speaks to is avoiding the fragmentation of the interface, and definitely avoiding the fragmentation of the data that sits behind it. We’re leaning very much toward the idea of integrated, seamless care, whether that’s true in the virtual or the physical space.”

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