Great! Well, welcome everybody. I see people still trickling in. So let me just introduce myself and welcome you to the Bernstein Strategic Decisions Conference, our fortieth annual. I'm Lance Wilkes, Healthcare Services analyst for Bernstein. Really, really excited to have UnitedHealthcare, or UnitedHealth Group here, and we've got really the entire leadership team here. So this is wonderful to kind of kick it off in this way. Again, for this event and throughout the three days, we're gonna ask all the most important questions, but we also definitely have a strategic bent to this. So we're gonna really focus also on, you know, some of the long-term drivers of growth, which obviously have been phenomenal for United historically.
You know, our view is United's secret sauce is sort of strategic vision, strategic capital management, how you've gotten into really important businesses. So to kick off, maybe, Andrew, if you could introduce yourself and the team, and then I'll kind of tee it up with a-
Yeah.
A broad strategic question. We'll certainly get into some of the current questions on utilization, pricing, and things like that as well.
Yeah. Lance, thanks so much, and, thank you for the, opportunity to come and talk to you all this morning. I'm joined here by Heather, who runs Optum, President, and CEO of our Optum organization. You've got, Brian Thompson, who is the CEO of UnitedHealthcare, and then I'm sure many of you will know John Rex, who's our CFO and President of UnitedHealth Group. So, really, the leaders of, of the organization, in large part. What I thought I might do just to kick off with, Lance, as you say, is just kind of remind you a little bit around the overall frame of, UHG and what we're focused on and driving toward over the next, three, five, 10 years.
And maybe just ask Heather to reflect a little bit on her early days as CEO of Optum. It's interesting, kind of fresh set of eyes in terms of some of the opportunity that's coming from there, and then we'll kind of, as you say, go into more of the Q&A piece. So just to reiterate from a UHG perspective, as I think many of you will be familiar, we have a long-term goal of delivering earnings per share, adjusted earnings per share at a rate of between 13 and 16%. Historically, we've done very well at that.
Of course, it doesn't happen every single year, in years where there are, different events going on, but as a pattern, that's something we continue to be very much guided by in terms of the ambition of the organization. Obviously, as we've continued to grow, that requires us to do many things, making sure that our core businesses continue to operate and improve and drive operational efficiency in how we drive the business day to day. Making sure we're finding continued business innovation opportunities from different pieces and parts of the organization, and of course, through growth. You know, whether that's through organic growth of our membership and patients, or whether it's through inorganic growth, through deployment of the balance sheet. And John will talk a little more about that piece in particular.
But as we look forward over the next few years, we continue to believe that our model can continue to support that kind of, long-term ambition for the company. Really focused in five big areas for us right now, in terms of how we think about where we can continue to develop really meaningful, aspects of growth. One, value-based care. Very. We believe that is a fundamentally better way, in the long run, of evolving the environment to make sure that individuals, families, members, patients, get better quality care. Decisions are more closely aligned between the, provider and the patient, making sure the physician has a greater voice in all of that.
Greater focus on the outcome rather than the input, so be much more oriented around how do we prevent disease, how do we bring disease under control, rather than simply focused on fee for service. And we think within all of that, not only do we deliver better quality care, better outcome care, but we also believe it's better value for money for the payers and the system. And, and as a by-product, what we often see is less burnout for physicians and the like. So we see a lot of goodness around value-based care. It's a very...
Although it's a topic that's been talked about probably for 30 years, as a theme, I would say really only within UnitedHealth Group and Optum are you seeing value-based care now at a scale and a presence which allows it to operate truly as a business model, and really is able to kind of deploy at scale, which allows us to test different aspects of this and really start to understand what it what works and doesn't work over multiple years of evolution of a way of working. And Heather, I think, will talk much more about that as we get into the conversation during the day. But it's a really important aspect of what's an organizing principle of how we think about what we do in the marketplace. Of course, Optum is a lead within that.
The period we're in right now is a very interesting one because we've seen some shifts, some movements in terms of funding regimes coming from the government, in terms of how they choose to fund particularly the MA program. You've seen that have varying degrees of consequence on different participants in the marketplace, particularly those which were newer, smaller, more emergent, less multidimensional in the way they manage their value-based environments, have more challenges than maybe some of the ones which are more established and have got more aspects to what they do. But that's a huge area for us. You should continue to expect us to invest heavily in that. Going forward, we believe that is by far and away the best way to deliver quality of care at an affordable value.
We still think it's in the early innings as a business model. We think it's in early innings for us, and we continue to be extremely optimistic about its long-term potential for the group. And you see that play through, of course, in Optum Health. Our second big area is, of course, the benefits business. The benefits business that Brian here runs, and is really a, you know, has been a great veteran of building up the UHC benefits business, both in the commercial arena as well as in the government books of business. Very substantial growth we've seen this year through membership, particularly in the commercial marketplace.
I think the bottom line comes from a relentless energy to innovate around the ways in which we offer different programs to whoever the payer is, whether they're employers, small or large, whether that's to government, whether that's the state. It's a highly innovative, highly responsive to the kind of innovation that UnitedHealthcare has been able to bring. You see that reflected in the continued stable performance of the business from an economic point of view, underpinned by really good, strong membership growth, and again, an ability to be able to adjust to the different dynamics. You know, whether we've been dealing with things like COVID over the last several years, changes in reimbursement regimes, I touched on just a second ago.
You know, I think that business has demonstrated a tremendous ability to be resilient through all of those and be able to course correct and make sure that over a period of years, we're able to deliver very strong and stable performance from that business. And of course, UHC creates a very important customer base for Optum. And as you know, Optum is a multi-payer organization. One of its most important partners, not the only one by any means, is UHC. I can tell you, UHC is probably about the most demanding customer that Optum has. It creates a great kind of discipline inside the organization to make sure that all of what we're trying to build in the business is really best in class for the marketplace.
It has to be best in class for UHC to want to use it, and if UHC uses it, then oftentimes you'll see other payers in the marketplace are super interested in that. So there's a really, really positive and strong dynamic which operates there between those two companies. Third area that we continue to invest heavily in is, of course, pharmacy. Pharmacy is the most frequent touch point in healthcare, highest transaction volume that goes on, and of course, we see continued innovation, thanks to the pharmaceutical industry flowing through that sector. Highly complex, highly regulated space. Regulatory complexity is, I think, something which takes real skill to navigate in this environment. It's not a trivial environment to try and navigate through.
But you'll see from Optum Rx in particular, both through the PBM, which very proud of that organization. It's become, I think, a real champion and leader for choice and transparency. And while there are a lot of people who are critical of the PBMs, they are the only mechanism in the system which really acts to negotiate on drug pricing on behalf of the vast majority of participants in the marketplace. Ultimately, rightly, the pharmaceutical companies temporarily are monopoly holders. That's the whole definition of a patent. But during that period of the temporary monopoly position, there needs to be some level of accountability to price negotiation. That's where the PBM aggregates volume to allow that price negotiation to take place in a robust and thoughtful way.
And the degree of value we deliver back to our clients, whether that's delivered through rebate dollars, which is a choice some clients take, or through net price reduction, which is a choice other clients take, that's how we deliver value back into the system. We give choice to the client in how they get paid. We give complete transparency in terms of how we add value to that system for them. And again, I think that really explains why we've seen such strong growth of our PBM over the last several years. Continue to see super robust pipeline, and we feel like we're in a very good spot from a PBM perspective.
Second part of our pharmacy platform are our various direct pharmacy businesses, whether that's behavioral health businesses, whether that's our home infusion platforms, clinic platform, clinic infusion platform, specialty, rare disease, those sorts of areas. And you see those have grown up very actively over the last several years. It's been an area where we've continued to invest inorganically to lay foundations for new businesses. So you'll see continued growth on that. So that's the third of the three big pillars of focus for us. The fourth is around technology and data, and that really houses within Optum Insight, although not solely within Optum Insight. But we see increasing opportunities, particularly actually accelerated, I think, by things like AI, which allows us to start to access understanding of data patterns in a different way to perhaps the past.
Accelerates our ability to understand what's in the information and what we might be able to use from that information. And it's beginning to give us more optimism to figure out ways in which we can fundamentally modernize and streamline a lot of the traditional ways of working across healthcare. And you'd have to be... You'd have to have never worked in healthcare to have a view which says healthcare is simple. It clearly isn't simple. It's complex, and it is complex for a few reasons. Regulatory is one, historic systems is another. Those systems tend to run on very old environments. They are very traditional in the way they operate, and they are ripe for modernization. And so we see that as an area of field. One, maybe just one example to put a punctuation mark on that is really things like, instantaneous adjudication.
So instead of having a claim roll around the system for weeks or even months, can we get to a position where a provider can get their claim instantaneously approved and paid? That's the kind of thing that we're working towards, building towards. We think that's gonna be an important potential innovation in the marketplace, but good, just one example of the kind of thing we're talking about. And then last but not least, is financial services. Optum, for a long time, has been building up its financial service capabilities. This piece intersects a little bit with what I was just talking about in terms of our technology platform. So think again about how payment flows operate through the healthcare system. It's a relatively old-fashioned environment. Still enormous numbers of checks are still cut inside of healthcare.
There's a lot of opportunity for that to be innovated and improved, and you again, you continue to see us invest in that space. We believe, although that's one of our smallest platforms today, we do believe that is one which has great growth potential in front of it. So that's really the overarching kind of five pillars of the business. I'd say two things I would really call out. One, I emphasized at the beginning, value-based care as a business model, kind of north star that we drive toward. And then the second is really consumerizing the business.
So again, one of the slightly strange things about healthcare, I think, is that, of course, it's all about the patient, it's all about the member, but actually, a lot of the history of healthcare has been really B2B dynamics, people doing things on behalf of an ultimate member or on behalf of an ultimate consumer. Not necessarily the case that the ultimate member or the ultimate consumer was part of the decision-making. We think that changes. We think over time, more and more consumers and members will want to be, will take a greater role in some or all of the decision-making associated with certainly how their care is financed, and possibly, you know, all the way through to what kind of care they choose to access in the end.
That's something that takes this industry much more to a more consumer intimate place, and that's an area we've been building up very heavily in terms of skills, capabilities inside the organization. Early days, I mean, I'd say on that, we have a long way to go to be at the level that we aspire to be in terms of leading consumer organization in healthcare. But definitely a direction of travel we're committed to, and one that we've made some very substantial progress on.
And if you look at, you know, simple areas, and Brian may talk a little bit about this, simple areas around the ease of engaging with UnitedHealthcare's commercial insurance now, and the kind of services you can get online, the ability to be able to interact with us in a way which just a couple of years ago was really, frankly, not possible. So that's the overarching piece. So maybe ask Heather just to give you a kind of initial, you know, first three months in of running Optum and your kind of fresh eyes on that, which may also be helpful for folks.
Sure. And maybe what I, I would add to that is, you know, first, it's probably worth a moment, and I think maybe would add even some foundation to some of the questions I think you're gonna even lead into, Lance, and I think there's a lot of questions and interest in even value-based care, so I might take a minute and hit that. But I think it's also, you know, important. I think people really at least have an understanding of UnitedHealthcare generally, and we may spend some time on that. You know, UnitedHealthcare, maybe a more understood part of UnitedHealth Group, although an incredibly dynamic, changing business with a very strong leadership. Under Brian's leadership, we've seen that evolve from B2B, serving multiple stakeholders with an incredibly strong leadership team, you know, leaning into the consumer and evolving in a dynamic environment.
Optum, if you think about that, as sort of that sister company, it's a services business, and if we do our job right at Optum, the way I think about it is we're aspiring to be the best in healthcare delivery, so the best primary care, specialty care, and, you know, delivery service for individuals across the country, where we provide higher quality care, where incentives are aligned, and we're reducing unnecessary medical expense. In addition to that, we should help consumers navigate this healthcare system, with the best in consumer experience, and enabling other members of the healthcare system and stakeholders with those very tools and very, and, and products that we're investing in ourselves, that are the foundation of our own value-based care.
We should be offering those to the healthcare system so that ideally, other companies can take risk, and we're the backbone of that risk. So Optum should help other companies take risk, and that's why we serve at Optum Health over 100+ payers to do just that, particularly in a very dynamic and changing environment where funding can change. We're hopefully that stable partner that can help them take risk. So if I might offer two observations, the first one is, when Andrew talks about value-based care, one of the pillars of, you know, our key priorities, I'd go even further to say, you know, Optum Health has been participating in value-based care, and it's been a journey.
You know, it's been over a decade, I'd say about 15 years of learnings, and we have lots of different models of value-based care, and there's lots of different models in value-based care, many of which have been started through government demonstrations across the country. And I think we've got great examples of aligned incentives and how they can improve outcomes, they can reduce unnecessary costs, and they can improve quality. What Optum Health is really focused on is full risk, and we're the largest sort of participant in full risk. So moving into, you know, at the end of this year, we strive to have about 5 million members, about 5 million patients in fully accountable. So that means upside and downside risks. So taking the full risk for those members, and that means a different level of accountability.
So accountability for, you know, deeper clinical care. And in addition to, you know, just total cost, that means the ability to drive better clinical outcomes, higher quality, a better consumer experience, and a better experience for our clinicians, all of those that we have a direct relationship with. And that's what we strive to provide. And, when you think about that, you know, I think, you know, why do we do that? Again, we do that so that those partners have a stable partner, so that they have... those payers have a stable partner, somebody that they can say, "You know, I think Optum can be our partner to take risk and provide care for our members." Why do we think we can do that and continue to do that and continue to grow?
Because over those years, it's not just the learnings, it's the elements of our care model. It's the incentives, the incentive alignment with our primary care practices, but it's all of those other elements that are important for primary care and specialty care. It's strong referrals to the right site of service, including surgery and specialty. It's the wraparound services like the population health.... and the behavioral health services that many of our patients need, and it's the home-based care that we've invested in, whether it's, home health services, through many of the investments we've made.
It's transitional and longitudinal care, or it's just the really important preventive services and annual home checks that we've done for years that make sure our seniors have what they need at home and engage quickly with the PCP, have medication adherence, you know, and ensure that medication adherence and compliance is key, and then helps identify any chronic disease that needs to be managed. So those, we think, are the key to sustainable value-based care and opportunities to drive, clinical improvement. And then my second observation would just be all those elements and tools, and Andrew hit on this, if we do that right, it doesn't just help Optum Health and Optum succeed, but, but we should also be able to offer that back to the system. And that's really the premise under Optum Insight, which is system enablement.
So we offer that to hospital systems. We offer that through products called Provider Risk Enablement, which helps other providers and hospital systems with those very tools, and so giving back to the health system some of those things that we've learned, whether it's products and services, whether it's risk and quality, or whether it's actuarial support.
Thanks, Heather. I, I think maybe Brian, if I might, I mean, I'm sure on a lot of people's minds, particularly people who are kind of, you know, deep in the space, they're thinking about 2025, right?
Sure.
Obviously, you know, we all know the bids go in next week. We're not gonna talk about detail of that, 'cause... I guess if somebody was crazy enough to rewrite a bid over the weekend, they could still do that. But, I'm sure Lance and everybody else, it's a pretty good place for you to start in terms of just as you're thinking about 25-
Yeah.
Would be good to get your perspective.
Yeah, I think it starts with just a long-term lens. Anytime you've heard us, UnitedHealthcare in particular, talk about the Medicare Advantage space, it's been over a long horizon. And I think last year, in particular, with the new rules around the reimbursement structure with a phase-in over three years, candidly, that played well to our strategy. We've always looked at this as something that needs to be planned for over multiple years. How do we establish stability and the benefits our seniors have come to rely upon, while at the same time, over time, creating a thoughtful innovation pipeline of new capabilities and services, et cetera? So planning over multiple years is nothing new to United, and I think the minute we heard about the new rule set, I started thinking about 2027.
What does our benefit design and business model need to look like to accommodate these changes in the risk, risk adjustment environment? I'm pleased with how we've navigated through year one. I would say our enrollment is a little lighter, perhaps, than I'm used to seeing over the years, but I think it's also a reflection of being pretty responsible in that new reimbursement world, and, a good setup for what we're now accommodating as we go into year two of a three-year march. Thinking about 2027, thinking about growth as an outcome of a responsible product position, and we're encouraged. We're encouraged with, what we've done over the last decade plus, and I remain, encouraged about the responsible product we'll put into the marketplace for next year.
I think we've demonstrated that there is a flight to quality at times of ebbs and flows in this marketplace. I think we're in one of those right now as this marketplace hardens a bit. I hearken back to 2015, post-ACA. UnitedHealthcare thrived in that environment, and I think pacing through both the introduction of the IRA as well as year two of a three-year march on the new reimbursement model, it reminds me much like 2015. So, encouraged by the process, always impressed by the teams. It's a complex process to get these bids in order every year.
I think this year, a few more elements perhaps than normal in terms of year two, as well as the IRA, but encouraged, and, we're one week away, and we'll push the button and hopefully be, very pleased, the market will be very pleased with, what we bring here in October.
That's great, Brian. And maybe the last, and then I promise to let you have the mic back. John, M&A. I mean, the big piece of our growth comes from inorganic investment and, you know, you run all of that, and I think it'd be good for folks just to hear what your contemporary view of that is.
Yeah. Thank you. So as you all know, one of our key pillars in the company for decades and decades has been, really trying to bring together the capabilities or accomplish all this that Andrew, Heather, and Brian just talked about in the system. I think this conference is particularly interesting because it's across multiple sectors of the economy, and I think you'd still be challenged to find a sector, one, that's as large, two, that's as fragmented as healthcare, particularly services, and still is incredibly fragmented, in terms of the way, in terms of the way we face a $5 trillion sector, that's extremely fragmented. It's just... I go across technology, financial services, other areas, everything that you'll be seeing over the course of these three days, it's hard to find one that's still that fragmented.
So the mission of this company has been exactly what we just discussed here. It's how we then amplify, bring together the capabilities we're gonna serve consumers in the way that we think they should be served, 'cause the system really isn't organized that way. Still looks extremely greenfield to us when we look at it, in terms of the organization of the sector. So what we're trying to do is apply capital to help bring more coherence to the consumer experience, deliver better outcomes for the patients we serve. It's part of what we do. It, over time, has generated, as I said, 3-5 points of our earnings growth for the company.
It doesn't look much different today than it looked 15 years ago in terms of those prospects, in terms of again, still extremely fragmented sector, the capabilities that we can bring together to help create that experience. The things that maybe look, feel different to me, the very diverse in terms of the opportunities that we see out there, very diverse. Some of that, I think, is our capability as a company to address those and to actually bring them into the company, and to actually help them be effective in the health system. We're more capable in terms of that aspect. There are a lot more places that we can-
B e effective in making those, work for people and how we bring them together. So that's part of it. Part of it is just where the market sits today, coming off the last few years, where there was a period of a few years of capital allocation being done at just, I'll call it distinctive valuation levels than I had seen in a long time, and where those sit right now. So probably among the most interesting that we have seen as a company, as we look out in terms of our opportunity, and where we see those, that potential.
And again, looking at an extremely fragmented market, you know, I've had the honor of being part of the company probably 12 years at this point, and I'm not sure what inning I thought it was when I came into the company, but it feels very much like top of the third in terms of potential and ability and how the company the opportunities this company has to improve the healthcare system. So that remains live, very much alive, very, very well, and among the most robust and interesting for the people we're serving that I've seen in my time here. Go ahead, Brian.
Well, thanks for, you know, hitting many of the questions I was gonna ask.
Mm-hmm.
So this worked out really well. Let me just fill in the gaps. As I mentioned, you know, I was kind of pitching you guys yesterday as a best idea, the combination of the setup that I perceive in the sector right now, coupled with the long-term opportunities that you guys present. So let me hit on a couple of those to better inform some of the investor perspectives. First thing would be 2024. People are still trying to get their arms around what's 2024 gonna look like? And so any commentary on utilization, the first quarter, now that you're a couple of months past the first quarter, you know, how is utilization looking as far as confidence levels in what you presented in the first quarter?
As trends, are there any changes as far as maybe, one segment outperforming another, expectations, as opposed to another segment, maybe, falling a little behind? So.
So, I mean, I think still very early days, so, you know, we haven't,
Yeah
Closed May yet, of course, so we're still early on, early in the year. I think, first and foremost, not seeing anything that... Sorry, I'm gonna actually kind of rotate out of 2024 just for a second to 2025. Feel very good about where we are in terms of where we're bidding for 2025. So just super important, I think, to—because there's a couple of dynamics here, because obviously, as you just heard, we're right on the shoulder of—
Right
T hose bids going in. So I think we feel good about that. As you look at 2024, I mean, I, you know, and I think a little bit of this, not surprising, you know, we're paying, we're paying pretty careful attention to see what, if anything, might have happened while we temporarily suspended UM back in March, April, on the back of the Change attack. And, you know, that takes a little while to see how that plays through. So just keeping an eye on that, but too early to give you an answer on it, honestly, but I would call that out as an, as a watch area for us in terms of making sure that we keep a track of that.
Now, you know, it, again, it doesn't worry me about 2025, because whatever it, whatever it is or isn't, it's gonna be fenced, right? So I'm not super worried about that. And then maybe one other area where I'd call out is, as you know, we've come through this very sort of prolonged redetermination cycle in Medicaid. You know, making sure that all of those, the utilization and the rates and everything else stay in perfect synchrony through a multi-quarter cycle. As you know, there's probably gonna be some disturbance around that. Again, we're watching that, and I, I'd probably, I'd probably call those two areas out as kind of areas to be focused on for us. But most importantly, nothing from any of that, that reads into our confidence around the bid.
I think we feel solid around what we're putting in the bid, and we've done a lot of work on getting ready for this bid. But, Brian, you, you might want to add or detract from that.
No, I think you said it really well. You know, if there's one difference this year, obviously, when we left the first quarter, there was some claim incompleteness in the system overall because of the Change disruption, and we did our best to make some accommodations for that. We've only closed one month since then, and really, that month was about working down that backlog and getting back to volumes at normal levels and getting those claims from paid to adjudicated, et cetera. So perhaps a little more delayed in terms, in terms of our visibility because of that, but pacing as we had thought we would through that. So I think now, you know, almost to the next month, May and June will be telling for us, and instructive.
But we're thoughtful about the implications of that and how we bid, et cetera. And, you know, thinking about what we did in utilization management and where we paused at, is certainly an insight that is unique to UnitedHealth Group, and, we're pleased that we did that. I think we've got the right tools and analytics to understand the implications of that, but we've got to make sure that we separate that from what I consider core baseline performance as well. Proceeding, May and June will be telling for us, but not a lot of new visibility, I would say, since we spoke last, and as we said, only really one month is closed since then.
Yeah. Great, thanks. Let me turn to follow up on 2025 MA pricing, as we've got a question from the audience and one of our questions. So the two questions here, one backward-looking, the question from the audience, was basically: Well, how did you do a better job than everybody else in pricing for 2024? So maybe this is a process question as far as how you looked at things on a relative basis, you know, what your process is. And then on a 2025 basis, again, kind of looking at the external environment, you got a lot of people who are talking, you have other major competitors talking about exiting counties, cutting benefits. Just interested in what that does from your perspective in the bid?...
and if there are any important things from risk selection or, you know, other opportunities that presents?
Sure. I'll start with 2024, and I can't really comment on our competitors, but I can just tell you what we did. And, you know, 2024 was about really 2027. How do we make sure that we navigate the next three years with as much stability as we can for those we support and serve? And that required a lot of different elements. It required us to really urgently advance our own productivity agenda. It required folks like Heather and I, and our teams to get together and think about ways in which new value can be created in value-based care to offset the impacts of a different reimbursement model.
And it also made us think about benefits that needed to be trimmed in year one as we prepared for year two and year three, and we did so, we believe, in a responsible way. It may have compromised some of our growth relative to some of our competition, but at the same time, I think was the right first step as we have two more steps to navigate. So I think it was about how do we drive stability over the long term, not try to win in the short term, was our strategy for 2024, and honestly, I don't think you'll see much change to that type of strategy as we pace here into years two and three. I'm encouraged by the traction we're getting, some of these ambitions around value creation, around productivity.
I like seeing it in new innovative areas, like how step function changes in our back office around AI, ML, technology changes that have really advanced what we can do from a productivity standpoint, and the call alleviation we're seeing. As folks engage digitally, we're seeing a fall off on the call center engagement, which is an expensive part of our cost structure. So we're encouraged by the ambitions that we really set up long ago, but I would say accelerated a year ago. So 2025 is a lot more of the same. We have said before that this reimbursement model will require benefit cuts over the course of the three-year phase-in. So while you're hearing from others a message of exits and cuts, that doesn't surprise me. Because, again, the reimbursement model is changing meaningfully in addition to the introduction of an IRA model.
Obviously, it's not a time where I'm going to talk about what we're doing in 2025. We'll be filing that in a week, but, it's pretty consistent with the message we've sent since the beginning, which is there is a different reimbursement signal being sent by CMS, by which all of us are doing as much responsible planning to offset the pressures of that to the seniors we support and serve. But nonetheless, there will be pressures to benefits, and there have been, and we've demonstrated that with our actions in 2024.
Great. Let's shift over to Optum Health and value-based care. And again, we perceive that to be the most misvalued aspect of the sector right now, where it seems like-
By miss, you mean under?
Undervalued. Yeah, exactly. That, our perception would be that in this environment, low rates, high trend, that value-based care would be the most important thing to be focused on. And, and obviously, you guys have the most significant value-based care asset that's out there. Can you talk a little bit about maybe, interest and adoption in other segments beyond MA? And then maybe as part of that, you know, if you're seeing accelerated interest from other payers in the MA space. But just overall, what, what's your pipeline look like for, risk beyond the, UHC source of membership?
Yeah. So maybe first of all, just, you know, to the point, we agree that just the value of value-based care, particularly in this environment, and, you know, let's start with the senior population in Medicare Advantage. One, because that's sort of been where the growth has been, where the interest has been from all payers. And I mentioned before, we have about 100 payers that participate with Optum Health today in some form of value-based arrangement, and moving this year towards about 5 million in fully accountable, full risk, across Optum Health. One, I would say the pipeline is stronger today than it was even 12 months ago, and some of that is a result of the environment for particularly in the Medicare Advantage space. And two, I would say that we have capacity to grow.
You know, we have opportunity in our clinics to... You know, we have clinics that still have room to grow in fully capitated lives. So we see continued opportunity there for Optum Health, and, again, we think this model provides an alternative for our payers. And the other thing I would say to that is just, you know, every payer comes to this in a different space. Their geographies are different, their needs are different, and their, you know, their maturity is different. So I would say the thing about Optum Health is, you know, we look forward to engaging with them very differently across their needs, based on our clinic capabilities.
You know, we offer those wraparound services that I mentioned, and, you know, the opportunity to bring them comprehensive primary care with high-quality specialty care, the behavioral health assets of the largest behavioral health network across the country, and direct behavioral health assets available, which have some of the fastest times available. You know, there is a real issue in getting high-quality behavioral health services today. You know, it, on average, takes over 50-60 days to get an appointment for high-quality behavioral health care. We started acquiring our own behavioral health providers to be able to lessen that access issue, to be able to reduce that access issue. And as a result, that's another reason payers, you know, look to our model.
And then you bring those home health services where we serve over 60 million members today. So I would just say we see a robust pipeline, we're serving multiple payers, and we're engaged with a lot of payers in this environment today. With respect to beyond Medicare Advantage, you know, that continues to be an opportunity for us. In fact, this year, you know, more, we have more growth outside of Medicare Advantage than we've had in previous years, so that'll continue to be an opportunity for us. But I'd say it continues to be the majority in the senior population. Just one, it's, you know, it's the largest sector. There, there's the largest need for value-based care. It's the most mature, and-...
You know, as we've talked about before, commercial and Medicaid continue to be a focus for us, but it tends to be geographically specific and employer specific. But, we're interested in it as a growth pipeline, for sure.
Great.
But Lance, your question's a really good one. Still such a nascent area when you look at the-
Yeah, so much opportunity.
When you look at this, you know, that's still... You know, there's still a 4 in terms of how many people, that's so something over 4 million that Optum Health serves in value-based care. That is a very small piece of the population in terms of who can be served by that. And the effectiveness of it, when you look at the models that have been around the longest, how they're performing, the effectiveness in terms of the health outcomes they're delivering for people, it's just... The opportunity is so large, and that this is one where, man, we've been, we've been maybe in this business maybe 15 years.
Mm-hmm.
We've been experimenting with different models, had some time to get our feet wet in it, but this is one of those areas when I referred to kind of how early stage it feels, this stands out. Your question's a good one because of that, in terms of where this should go, and you're right. You kind of mentioned there have been some... Certainly, it's been a sector where there have been some, there's been a lot of experimentation over the last number of years on those. That's, look, good to see. Models will stabilize. You know, we did this with starting into this 15 years ago, certainly not everything we did was a success in that time frame. We had some time to get some experience in it, see what models worked better than others.
But it is just barely getting started in terms of where we should be. I think your point in just different populations that we can serve in terms of getting into Medicaid populations, commercial populations, certainly we've got things going in there, but those are probably as early stage as we were 15 years ago when we were starting out with senior. That's really where we'll be looking, and that's really still a driver for the company. When we think about the next decade for this company, that's probably still one of the most important drivers of the growth of this company that we'll see.
Yeah.
I will say, Lance, in our individual and family plans, our exchange business, our individual business commercially, that's an area where we've made some real strong advances-
Mm-hmm.
Just in the last twelve months, and it's probably the fastest growing area of partnership between Optum and UnitedHealthcare. So encouraged by going to other individual markets outside of MA and really seeing that traction here in this year as well.
Yeah. And, you know, John, just maybe you've just opened me up, and I can just maybe make a plug for it. You know, in addition to that, because I think some of you may be familiar with some of the things we've shared before around, you know, you've probably heard this, some of the outcomes and the improvements related to value-based care. You know, you may have heard that at least in senior populations, you see reductions in cost of 30%-40% in value-based arrangements for, you know, Medicare Advantage. But one of the things that, you know, we're working on right now, we've got some studies in peer review that will show, I think, what we've generally known.
But when you look at, particularly for Medicare Advantage populations, and you look at individuals served between fully accountable, so full risk populations, served by the very same clinicians, compared to in a fee-for-service arrangement, we are seeing across the board not only material improvement on all, on virtually all quality measures, but in addition to that, material reduction in hospitalizations and ER utilization, and they're treated by the same clinicians. It really goes to show when you have full risk and you put value-based care into the model, you get that aligned incentive produces a better outcome. So... it's a real credit to our clinicians.
You know, we are, we are honored to have, you know, those relationships, direct relationships with providers, contracted and affiliated providers across the country, a few self-employed, but mostly direct contracted, and all of those, you know, physicians and APCs across the country, our teams, we're honored to have them. But it's a direct result of them buying into the culture of a value-based care arrangement, and you see better outcomes as a result.
So Heather and Brian, maybe just talk a little bit about, and I think this is sometimes lost, the populations that are served primarily in value-based care right now, and the types of populations you're reaching now that really weren't reached prior, because I think that's sometimes missed in the construct.
Yeah. The most complex in its simplest state, and those that are oftentimes homebound as well, are, I think, our two most advanced areas of support. So it's the most vulnerable in our populations getting the benefit that I think is probably the most amazing part of this advancement here in the last couple of years.
Yeah, I would say that. I mean, when you've looked at that growth, you know, we talk about, you know, average growth, you know, last year, over 800,000 members in that fully accountable construct, and then this year, you know, we hope to approach 750,000. Last year, you know, a large mature portion of that was in those complex members.
Yeah.
Individuals with complex healthcare needs, and in many cases, they were either homebound in rural areas or lacking the resources to really get high-quality care. So Optum Health with many of its payers has, you know, invested in and continue to work and expand into geographies, including rural geographies. But that's why those investments, some of the home-based assets-
Right.
Over the last few years have been so incredibly important, so that it can serve the members, particularly, you know, the largest, you know, payer of, complex members like UnitedHealthcare.
So, I think, Lance, what you can see from all of that, I mean, first of all, a ton of engagement and excitement around it, rightly so, because it's been a long time in build. It's a very big part of how the company thinks and operates, kind of, as I said at the beginning, a driving part of our business model. You've seen a lot of growth, you've seen a lot of inbound payer interest because of what's happening externally in the marketplace. So if you want to delegate, where are you going to delegate to, right? So there's a... And obviously, Optum has a very substantial track record here in many parts of the country on many different types of patients, particularly the groups you've just been hearing a little bit about.
So a lot of that is happening, so it gives us a lot of optimism. The bit I just also want to emphasize and give real credit to the teams, the efficiency of Optum Health, its way of operating its business model, is leaps and bounds ahead of where it was even three or four years ago. So there's a funding headwind, right? We all know, right? We're dealing with. You heard, you know, Brian talk about that in terms of our three-year strategy. We feel very good about how we're dealing with that. We feel good about how we priced for it in terms of making sure we understand within our bids as we look at 2025. We've already touched on it.
But outside of that, you've got this kind of high-demand opportunity, high need, high demand, coming from many different parts of the system. That's driving growth. As we've created more capabilities, that's allowing us to deliver more comprehensive wraparound services, which gets you those qualitative outcomes. People feel better. They have better medical outcome. It costs less. And but inevitably, in the first year or two of having that kind of mix of capabilities, it's not necessarily going to be your most efficient, right? It takes you a while to figure out how to make all those things work quite right, and maybe it works a bit differently for a clinic versus at home. And how do you make that all work? It takes time, but all of those gears are kind of simultaneously moving under the hood at the same time as this growth is happening, right?
Which is why you're seeing, I think, and why you should expect to see, continued very strong growth out of that business. It's, it's starting to... I, I think the Optum Health value-based platform is really just, I'm not, I'm, I'm hopeless at the innings thing because I'm a cricket guy, and there's two innings.
Yeah.
So when he says we're at the top of the third, I'm like, "Well, I was out with two." So anyway, but, you know, I actually feel like we're right at the beginning of this whole story, and although the numbers are big and all the rest of it, it—when you actually look at the capability of what-
Right.
Optum Health can do in value-based care and what else is going to aggregate to it. It still feels... It's super early in terms of its potential.
Yeah. Nowhere near extra time, I guess.
Nowhere near extra time.
Yeah.
Definitely not penalties.
Mm-hmm.
Yeah.
Right.
So let me, we're just about at the end. Let me tie up with one of the things we're really interested in as far as a future opportunity to you, and then, and I'll weave in an opportunity to talk to Change Healthcare, and that's Optum Insight. You know, with investors, one of the things that people have been interested in is: What are the AI opportunities for Optum Insight as it presents to the customers, particularly in the provider universe? And then maybe as you hit that, if you could just give us a quick update on where you are with the Change Healthcare situation.
Let me start real quick on AI.
Sure.
But then, Heather, I want you to talk about Optum Insight, specifically. AI is a big, a big focus for us as an organization. I'm, I'm just going to address it, the administrative side of that, and then I'm going to ask Heather to talk about it more interestingly, I think, from a business perspective. But, but as you might imagine, you know, the a company the scale of UnitedHealth Group, you know, operating the numbers of different platforms that we operate, the complexity, as I said earlier on, a lot of that kind of older world type of ways of working that characterize healthcare, these are all incredibly amenable to rethinking and leverage from AI. So we're running, right now, we're probably running about 500 use case applications of AI across our organization.
It's going to be a significant kicker of efficiency over the next 4 or 5 years in what I would regard as really low-hanging opportunities, not, you know, not Einstein opportunities. These are relatively straightforward. Many of them are already underway. They play out in areas like, you know, allowing call handlers to deal with issues faster than they used to, which allows you to take more calls or have less call handlers, whatever output you might want. Our ability to be able to spot patterns within data-
Mm-hmm.
S o that we can, you know, the key of this whole thing is, who are the few percentage points of folks who are driving outsized cost in the system? How do you find those people? How do you spot those patterns more quickly? All of those areas are very much in scope for how we do it. Now, one thing we're being super clear about, we are not in the business of replacing clinicians-
Mm-hmm.
B y computers. So we have a very strict internal and external governance board around all of what we do in AI, very much focused on making sure there is a human in the loop as you get anywhere close to what you would characterize as clinical, right? So that, that, I just want to separate that. But everything I'm talking about is really how do you make the clock speed of the administrative structure of what is a very substantial administrative machine go much, much quicker. The scope opportunities there are enormous. So that's a big agenda for us right now, and it's—and you're going to start to see that show up in our efficiencies as we roll through over the next 3, 4, 5 years. And then, within Optum Insight, Heather has a-
Mm-hmm.
M uch broader technology agenda.
Yeah. And so maybe just to add on that, and then I'll give you the 30 seconds on Change. So maybe just super quick, so just to add on that, what I would say is, to the point, the, those kind of 500 use cases, you know, they, they inform two things: obviously, the opportunity to kind of propel Optum, UnitedHealthcare, Optum Health, and, you know, we're doing those inside our business today, which, to the point, the safeguards of, you know, ethical, equitable, and safe, human in the center. We have these principles that we want to really ensure the governance that Andrew spoke of, best practices, and platforms. So the ability to kind of reuse what we learn as well, but being incredibly clear about, you know, the, the safeguards around those. We're really focused on two areas.
One is that administrative support, particularly for clinicians, giving clinicians time back. You know, time back, whether it's in the home or whether it's in the office. So that's one area, and then I think the second area I would highlight would be that area to help identify disease progression, or emerging disease faster. And those are use cases that we're focused on as well. So again, can either help in our own Optum Health with our own clinicians, or again, used in the products and services we offer through Optum Insight. We could go deeper on those in other sessions. And then maybe, because I know we're going to run out of time, my five seconds on or 15 seconds on Change Healthcare is, you know, we're sort of essentially past restoration. There's. Most of the large systems are back.
We're focused now on the ancillary products and some hot spots in the system, but for the most part, that's back. We're really focused on business recovery. For us, business recovery means getting back to sort of revenue run rate. Hope to see that back, as we've said very publicly, you know, you see us kind of work towards to do that back in 2025. But what we found is this has helped us accelerate through the Change integration. What we have as a result of that is an Optum Insight powered by more secure and optimized Change Healthcare products and services that now offer inherent redundancy in a clearinghouse.
When you get a clearinghouse through Optum Insight, now you get inherent redundancy in it, where we actually have two clearinghouses, where you get enhanced products and services, and often they're now the foundation of many of those next-generation Optum Insight services that we talked about at our investor conference. Think about real-time settlement, provider risk enablement that I talked about earlier. So that next generation of Optum Insight is actually been, you know, propelled in many cases by our unfortunate experience with the cyberattack through Change. So we look to really, you know, see that as an opportunity for growth, and a contribution to those, you know, kind of 13%-16% long-term, you know, growth targets that we talked about across the enterprise. Optum is a contributor to that, and an important element of that is Optum Insight.
Great. Well, thank you so much for the fireside chat. I hope you have a great set of meetings.
Thank you.
Thank you, everybody, for attending and, and we'll see you over the next three days.
Thank you, Andrew.
Thanks a lot.
Thank you.