As Change Healthcare reels from repeated, ongoing cybersecurity breaches, executives of parent firm UnitedHealth Group reassured stakeholders that the company’s overall strong financial performance will eventually mitigate 2024 first quarter losses.
UnitedHealth Group lost approximately $1.2 billion during the first quarter, compared with net earnings exceeding $5.7 billion in the prior-year quarter, according to an earnings report. Sales grew year-over-year by almost $8 billion, or about 8.5%, to $99.7 billion. Although those revenues were offset slightly by higher medical and operating costs compared with last year’s first quarter, net income took a hit with “business disruption impacts” caused by cyberattacks targeting its subsidiary payment management company, Change Healthcare.
“The cyber impacts in the quarter totaled about $870 million or $0.74 per share,” John Rex, president and chief financial officer of UnitedHealth Group, said Tuesday morning during a first-quarter earnings conference call, according to a transcript. “Of the $870 million, about $595 million were direct costs due to the clearinghouse platform restoration and other response efforts, including medical expenses directly relating to the temporary suspension of some care management activities.”
The conference call occurred on the same day as a House hearing during which lawmakers slammed UnitedHealth Group for its response to the February cyberattack, which left Change Healthcare’s claims and billing systems offline for almost a month.
More than $6 billion in aid
UnitedHealth Group has directed more than $6 billion in financial aid toward healthcare providers affected by the outages, CEO Andrew Witty said during the company call Tuesday. He estimated the full-year financial effect related to the cyberattacks would amount to between $1.15 and $1.35 per share, or $1.3 billion to $1.6 billion in total.
“The attack disrupted the ability of care providers to file claims and be paid for their work; we moved quickly to fill this gap,” Witty said. “Fortunately, we were able to bring to bear the substantial resources of UnitedHealth Group to drive the recovery and begin to mitigate the impact. …We’ve made substantial progress and we will not rest until care providers’ connectivity needs are met.”
Optum revenue growth
Meanwhile, the corporation’s two service lines, Optum (which combined with Change Healthcare in 2022) and UnitedHealthcare, saw revenue growth in the first quarter. UnitedHealthcare’s sales grew by almost 7% year-over-year, and Optum’s rose by almost 13%.
“Even as we have devoted significant attention to addressing the Change Healthcare attack, the vast majority of the 400,000 people of this enterprise have remained as usual, intensely focused on delivering for all those we serve,” Witty said. “That dedication is reflected in our overall performance this quarter.”
UnitedHealth Group’s leaders also discussed the Centers for Medicare & Medicaid Services’ recently finalized Medicare Advantage payment rate adjustment for 2025. Many MA insurers have criticized the rate as being inadequate amid high inflation and rising medical costs. A UnitedHealthcare executive had a tempered reaction.
“We continue to believe that there’s opportunities to improve the distribution environment in Medicare Advantage and have been in a dialogue with CMS for several years on how to do that,” Tim Noel, CEO of UnitedHealthcare’s Medicare and retirement division, said during the call. “Some of the elements of the final notice that were published recently are directly in line with some of our recommendations and some of them are relatively consistent, but not totally as we had conceived them.”
The executives declined to comment on ongoing antitrust investigations into Optum’s bid to acquire home health firm Amedisys.
This article originally appeared on McKnights Home Care
