UnitedHealth Group anticipates smaller-than-expected membership growth in its Medicare Advantage business next year, largely as a result of adapting to program funding changes, executives said Wednesday.
At its annual investor conference, company executives provided an update on how the healthcare behemoth has sought to minimize the financial impact of Medicare Advantage rate changes, its progress hiring physicians and its use of technology to improve the patient, provider and payer experiences. The company said it projects 2024 revenue to hit $400 billion, a 9.1% increase over 2023's anticipated revenue, after accounting for Medicare funding reductions. The company's insurance arm expects revenue of $302 billion to $304 billion next year.
Here are 5 things UnitedHealth executives said about how 2023 is shaking out and what to expect next year.
1. Physician hiring frenzy
Optum Health CEO Dr. Amar Desai said the care delivery arm employs 90,000 physicians, up almost 30% from the beginning of the year and exceeding its expectations. The company, which is the largest employer of physicians, did not disclose specific acquisitions. About 40,000 advanced practice clinicians also work for Optum Health. The company confirmed in August that two of its clinics had layoffs. Optum Health 2024 revenue is expected to approach $110 billion, up 16%, executives said.
2. Medicare rate change fallout
The company has spent the past six months reconfiguring its plans to minimize the effects of the Medicare Advantage rate changes on UnitedHealthcare and Optum Health. As a result, the company expects its earnings growth rate to remain stable over the next year, UnitedHealth Group CEO Andrew Witty said. The Medicare risk-adjustment changes have made the company “double down on eliminating waste,” he said, without providing any details.
3. Slower Medicare Advantage growth
CMS has said it anticipates Medicare Advantage membership to grow 7% next year, but UnitedHealth predicts its 2024 growth rate will be 5%, compared with its membership growth of 11% this year. The company expects to cover about 8 million people in its Medicare Advantage plans this year and add about 450,000 to 550,000 members next year. UnitedHealth had expected to grow above the industry growth rate next year, making this a “disappointment,” Gary Taylor, managing director and senior equity research analyst covering healthcare at TD Cowen, wrote in a note Wednesday.
4. New technologies
The company is incorporating artificial intelligence and machine learning to improve the patient experience, lower administrative costs and drive operating productivity. To help patients search for providers, claims data and procedure codes are used to generate a list of qualified nearby in-network doctors for specific needs. Executives did not discuss the lawsuit alleging the insurer used AI to deny post-acute care coverage to Medicare Advantage members and did not comment on its use of technology for prior authorization.
5. Commercial business growth
UnitedHealth expects to add 1.5 million customers to its commercial plans in 2024 to reach 34.4 million people covered, largely through growth in its Surest employer-sponsored health plan. The company next year will integrate more than 20 standalone healthcare programs, includes ones for healthy living, nutrition and cancer care into employers’ benefits platforms. Its employer and individual revenue is expected to be about $84 billion next year.