UnitedHealth Group (UNH) Q3 2021 Earnings Call Transcript

UnitedHealth Group (UNH 1.61%)
Q3 2021 Earnings Call
Oct 14, 2021, 8:45 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, everyone, and welcome to the UnitedHealth Group's third-quarter 2021 earnings conference call. [Operator instructions] As a reminder, this call is being recorded. Here is some important introductory information. This call contains forward-looking statements under US federal securities laws.

These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the cautionary statements included in our current and periodic filings. This call will also reference non-GAAP amounts. A reconciliation of the non-GAAP to GAAP amounts is available on the financial and earnings reports section of the company's investor relations page at www.unitedhealthgroup.com.

Information presented on this call is contained in the earnings release we issued this morning and in our Form 8-K dated October 14, 2021, which may be accessed from the investor relations page of the company's website. I will now turn the conference over to the president and chief operating officer for UnitedHealth Group, Dirk McMahon. Please go ahead, sir.

Dirk McMahon -- President and Chief Operating Officer

Good morning and thank you for joining us today. Unfortunately, our CEO and colleague, Andrew, is not with us this morning since he had an urgent but straightforward procedure last night for a kidney stone. All went very well, and we expect him fully back in just a few days. I'm quite confident he is listening now, so I hope you're doing well, Boss.

John Rex and I will be subbing for Andrew this morning, and we have our management team with us as usual to help with your questions. We're here today to discuss third-quarter results and the expanding opportunities we see looking ahead. As a result of the progress at both Optum and UnitedHealthcare, we have increased our 2021 adjusted earnings outlook to a range of $18.65 to $18.90 per share. We continue to prioritize three themes Andrew has discussed before which our -- before which are foundational to the growth of our enterprise.

First, unlocking the collaborative potential within Optum and UnitedHealthcare for the benefit of all. Second, further developing our technology and data science platform to aid patient care and experience and to help the system run better. Third, strengthening our consumer experience, capabilities and value. I'll briefly highlight a couple of items for you.

You will likely have seen the CMS Medicare Advantage Star quality rating showing 95% of our UnitedHealthcare members will be in four star-rated plans or better for 2023, up from 78% for 2022 and a new high for our company. Within Optum Care, on behalf of the many payers we serve, 99% of Medicare Advantage patients will be in four-star plans or better for 2023. A second important highlight in the quarter. We were encouraged by the ongoing strength in our employer and individual business, which has now grown by over 330,000 people this year with revenue up 7% year over year.

We continue to see active interest in our product innovations, such as our All Savers level-funded offering and are encouraged by our competitiveness in the market and momentum heading into '22. We also elevated consumer connectivity by incorporating fitness offerings from industry-leading partners. OptumHealth continues to build momentum as well. Entering the open enrollment period for Medicare Advantage, we have more than 2.2 million people served under physician-led, fully accountable arrangements and expect '22 to be another year of record expansion in this key part of our portfolio.

Our broad home-based clinical care initiatives at Optum and UnitedHealthcare are central to improving near and longer-term health outcomes for people with medical, behavioral and social needs. These efforts include Optum at Home, which delivers high-quality primary care services in the convenience of the home setting and support recovery after hospitalizations. Seniors served by our home and community offering experienced a 14% lower rate of hospital admissions and about a 4% higher rate of physician encounters. In addition to caring for people in their homes, we continue to expand capabilities in other optimal sites of care, including via digital means.

Optum is distinctively enabling virtual care for patients using their own primary care physicians and with behavioral clinicians. For example, a physician engaging in a virtual visit with a patient can easily bring in a behavioral health professional for a real-time consultation. UnitedHealthcare is using Optum's virtual capabilities to introduce a new suite of digital-first products, offering a near seamless experience between virtual and traditional primary, specialty, and urgent care. We expect during 2022 and beyond to further build on these opportunities to connect and integrate multiple channels of care, simplify the experience for patients and providers and deliver quality care that is affordable and in the optimal setting.

Let me now go a little deeper in a few areas to give you an assessment of how we're doing on the themes I mentioned at the outset. OptumInsight continues to drive better clinical and operational performance at the health system level. Last week, we reached a new multiyear partnership with a leading and innovative health system, SSM Health, whose 40,000 employees, 33 hospitals and post-acute facilities and 300 physician clinics serve the people of Missouri, Oklahoma, Wisconsin and Illinois. OptumInsight brings real value in helping systems strengthen and scale essential functions, such as care coordination, revenue cycle management and digital modernization, all to improve health outcomes and patient's care experiences.

These and similar efforts to simplify processes, reduce administrative burdens and help our partners focus -- help our partners focus more attention on their care -- on their core missions of patient care. OptumRx continues to deliver to health system partners, such as its new multiyear agreement with Point32Health, which serves more than 2 million people in New England through its founding organizations, Harbor Pilgrim Health Care and Tufts Health Plan. OptumRx will provide integrated pharmacy benefit and specialty offerings that will enhance services and deliver improved affordability for their plan members. OptumRx is having a substantial impact through its community behavioral health pharmacies, which now serve nearly 700,000 people with mental health, addiction and other conditions through more than 600 dispensaries across 47 states.

The pharmacies deliver a high-touch approach to care that contributes to a more than 90% medication adherence rate and lowers emergency room visits and hospitalizations by 18% and 40%, respectively, driving better outcomes and a lower total cost of care. Within our UnitedHealthcare government businesses, we have increased processing efficiency by 25% over the last year by using Optum technology to improve auto adjudication rates and intelligent work distribution to appropriately skilled channels. We have many such initiatives underway across the enterprise in affordability, provider experience and product development as we employ advanced technology and data analytics to drive even greater value for the people we serve and the health system. Before turning over the call to John, a quick word on our pending combination with Change Healthcare.

We continue to work diligently to satisfy regulatory requests and now believe, based on our experience so far, the transaction should close in the first part of 2022. We are highly energized about the positive impact we can have working together with the exceptional change team, a team aligned with our mission and values and focused on delivering substantial benefits for the healthcare system. These benefits will include helping clinicians by simplifying access to real-time, evidence-based guidance as they are serving patients, closing gaps in care more rapidly to improve health outcomes and lower cost, reducing unnecessary complexity by removing administrative waste and obstruction to make the care process simpler, more cost effective and more transparent. And bringing greater convenience and simplicity to managing consumer health finances, while ensuring care providers get paid more quickly and accurately.

Optum and Change Healthcare's capabilities fundamentally are complementary and distinct because both companies already successfully serve health plans and state governments, care providers and consumers in a highly competitive market. We believe this combination will make the healthcare system work better for everyone and bring exceptional value to those we serve. With that, I'll turn it over to our chief financial officer, John Rex.

John Rex -- Chief Financial Officer and Executive Vice President

Thank you, Dirk. This morning, we reported third quarter and year-to-date revenues of $72 million and $214 million, respectively, growth of 11% and 12% over last year. This growth was led by OptumHealth, primarily our care businesses. In the third quarter, the Optum platform comprised 54% of enterprise operating earnings and continues to show strong growth momentum.

Our performance reflects the diverse and complementary strengths of our business, setting the stage for growth in the years ahead. Our updated full-year '21 outlook includes unfavorable COVID impacts, consistent with the expectations we have discussed throughout the year. During the third quarter, while direct COVID care and testing costs ran above the expectations we had nearly a year ago, we again saw elective care offsetting the impacts of higher case rates, much like previous cycles in the pandemic. This quarter, there were approximately 60,000 COVID hospitalizations meaningfully above the second quarter, with the month of August peaking at nearly 30,000 and then declining in September.

Looking at specific business performance. OptumHealth's third-quarter revenue and earnings increased 32% and 37%, respectively, year over year. Revenue per consumer grew by 30%. This reflects the increasing impact and number of value-based relationships within OptumCare.

The expansion of our in-home and community health platform, as well as the growing acuity of the needs we can serve. OptumInsight's revenue grew 13% in the quarter, and earnings grew 15% as the revenue backlog increased by 12% to $22.3 billion. We see overall business development sourcing and activity levels increasing, particularly with care provider customers, and for our software and analytics offerings. OptumRx revenue and scripts grew 6% year over year and earnings, 5%.

OptumRx has seen both strong customer retention levels and sales success for the largely completed '22 selling season and early activity for '23. Turning to UnitedHealthcare. The third quarter showed increasing member growth in our commercial offerings, particularly in employer-sponsored benefits. Increased employment is a broad underlying contributor, but we are particularly encouraged by the growth we are achieving in our affordable consumer-centric offerings.

Medicare Advantage membership has grown 745,000 this year, inclusive of plans which serve dual special needs members. We expect to add a total of over 900,000 Medicare Advantage members. The number of people served through managed Medicaid grew by more than 1 million members over last year as we began to serve people in new regions such as North Carolina, Kentucky and Indiana, and as state-based redetermination activities remained paused. We were honored to begin serving people in the Missouri Medicaid expansion this month.

Our liquidity and capital positions remain strong with third-quarter cash flows from operations at $7.6 billion, or 1.8 times net income, and we ended the quarter with a debt-to-capital ratio of 39%. As noted earlier, given the strength of our business performance, this morning, we updated our 2021 adjusted earnings outlook to a range of $18.65 to $18.90 per share. Now, with the close of the third quarter, your attention understandably turns to next year. As is our custom, we will offer a few early observations here while reserving the majority of this conversation for our November 30 investor conference, which we hope will be held in person in New York.

Our businesses are both growing and operating well with strong momentum heading into next year. While the pandemic-related impacts remain difficult to predict, given the current trends, we would expect a lower unfavorable COVID impact than experienced in '21. Still, as the dramatic variation over the last 20 months has demonstrated to all, prudent management suggests we should offer an outlook respectful of the fact that the current situation is without precedent. Taking all elements together at this distance, we see current analyst consensus as reasonably beginning to calibrate a '22 outlook.

Envisioning that consensus as being toward the upper end of our initial adjusted earnings per share outlook range, with the range being similar to that offered initially for '21. The still untapped collaborative potential between UnitedHealthcare and Optum to benefit individuals in the system, the power of applied technology to advance care and service, improved opportunity in consumer health and experience and the passion of our people. These and so many other elements lead us to believe our performance expectations for the years ahead remain fully supportive of our long-term 13% to 16% earnings-per-share growth outlook. We look forward to going into more detail on both our view of '22 and the many years of growth beyond at our investor conference.

With that, operator, let's open it up for question. One per caller, please.

Questions & Answers:

Operator

[Operator instructions]. So we'll go ahead and take our first caller, Matt Borsch with BMO Capital Markets. Please go ahead.

Matt Borsch -- BMO Capital Markets -- Analyst

All right. Thank you. Squeaky clean quarter. I was hoping maybe you could just talk about how United and, to the extent you have visibility on others, are approaching commercial -- group commercial fully insured rate increases for 2022?

Dirk McMahon -- President and Chief Operating Officer

Yeah. Why don't we let Brian Thompson take that question? Go ahead, BT.

Brian Thompson -- Chief Executive Officer

Yeah. Thanks for the question, Matt. Certainly, as we look forward to 2022, the picture is a lot more clear. And as we look at the past 20 months, I would say that we feel optimistic, not only about our pricing and the rationality of the market, but most importantly, the value that we're bringing to customers.

So we're optimistic as we look forward.

Dirk McMahon -- President and Chief Operating Officer

Thank you, Matt. Next question, please.

Operator

We'll go to Josh Raskin with Nephron Research.

Josh Raskin -- Nephron Research -- Analyst

Thanks. Good morning. My question relates to the value-based care, but more from the UnitedHealthcare side. And so how does UHC think about the use of value-based care providers and maybe some expectations on the movement of membership into fully cap arrangements in 2022.

I think you said 250,000 lives this year. So curious how you're thinking about next year? And then maybe as part of that, what advantages you see of using OptumCare as a partner over some of the others and kind of how you evaluate partners in the markets?

Brian Thompson -- Chief Executive Officer

Yeah, I appreciate the question. Brian Thompson here again. I would say we certainly are encouraged by continuing our advanced care penetration with partners, OptumCare, certainly being one of several. When we partner with OptumCare, we see not only our highest satisfaction, but our best benefits and overall performance, and you heard that in our star quality results as well.

And we're encouraged not only by what we have done by what's -- but also by what's on the horizon. Historically, you've looked at our combinations largely in a traditional Medicare Advantage space, and you're seeing us expand in the complex populations and duals. And we're also really encouraged with what we're doing in the commercial marketplace as well. We've got some new offerings coming in that space.

So I would say the key takeaway here is breadth and impact. We continue to scale and expand in that space. And it's important. We really see this value-based aligned care as a way to drive good value for those that we support and serve.

Wyatt Decker -- Chief Executive Officer, OptumHealth

Thanks, BT. And Josh, thanks for the question. This is Wyatt Decker. I would just add that at OptumHealth and Care, we are very pleased to be playing a role in reinventing the US healthcare system, focused around patients as consumers and value-based care as a major pillar.

As you mentioned, we've grown by 250,000 fully capitated lives this year, and we're excited through our partnership with UHC, as well as collaboration partnership with over 90 payers in total, to continue to grow our value-based care delivery construct. The other point I'd make is you'll see us increasingly weaving together all of our assets in a comprehensive care delivery paradigm that we feel is unique and differentiated in the marketplace. Thank you.

Dirk McMahon -- President and Chief Operating Officer

OK. Thank you for that, BT and Wyatt. Let's go to the next question operator, please.

Operator

Yes, sir. Next, we'll go to Ralph Giacobbe with Citi.

Ralph Giacobbe -- Citi -- Analyst

Great. Thanks. Just wanted to go to the guidance commentary. And I guess just to clarify, John, is it inclusive or exclusive of the $1.80 headwind from this year? So when you talked about reasonable relative to consensus, maybe at the higher end.

Do you factor in the $1.80? Or can you just provide some guardrails around how you're thinking about that $1.80?

John Rex -- Chief Financial Officer and Executive Vice President

Thanks, Ralph. Good morning. So yes, so as it relates to this year's $1.80, look, our expectation is that will clearly be lower than it was in 2021, as we think about it. We also don't think it will be nothing.

I can't imagine we hit January 1 and everything ceases immediately. So we don't think that will be the case at all. So inclusive of that, when you think about going to that, I think inclusive and as we look at where the analyst consensus currently centers, it seems like kind of a reasonable starting point in terms of how we think about that and how we would anticipate and be respectful of the fact that we don't know exactly how this will progress as we move in the new year. Thanks, Ralph.

Dirk McMahon -- President and Chief Operating Officer

Next question, please.

Operator

Next, we'll go to Dave Windley with Jefferies.

Dave Windley -- Jefferies -- Analyst

Hi, good morning. Thanks for taking my question. Coming back to the topic that Josh touched on in value-based care, but perhaps more OptumCare-focused. I'm wondering if you could talk about, one, the providers within the 53,000 that are responsible for the 2.2 million fully capitalized? Like how does that interweave? And then secondly, if you could talk about the, call it, the margin on the global cap revenue.

So how capable or how much impact are those providers having on consumption of downstream care such that OptumCare makes a margin on the capitated revenue?

Dirk McMahon -- President and Chief Operating Officer

Yes, we'll go to Wyatt on that. But let me first start by saying, of course, all of the providers within OptumCare, they are responsible for managing the downstream spend, whether it be specialists, whether it be in hospitals, like global cap is that. And one of the key things that we do within OptumCare is we made investments in our systems to absorb, take and manage risk, right? It's just not a paper transfer. It's actually a system where the providers are fully aware of the capitated arrangements and they're managing accordingly.

So Wyatt, why don't you add on top of that? You're more in the details.

Wyatt Decker -- Chief Executive Officer, OptumHealth

Yes. Thanks for the question. And as Dirk mentioned, we focus relentlessly on the quadruple aim, including lowering total cost of care, providing better outcomes and outstanding patient experiences, and we are relentless in monitoring specific data points that help deliver that -- those outcomes. Specifically, what we see is the members that are in fully capitated arrangements overall have about a 30% lower hospitalization rate and about 40% lower skilled nursing facility occupation rate than their counterparts and fee-for-service Medicare, as an example.

So we'll continue to drive that value proposition. And as I touched on the previous question that I'll go a little deeper. As you think about us with our home and community assets increasingly meeting people in their terms, in their homes to deliver components of value-based and primary care, preventive care and wellness care, and identify early conditions that otherwise might have led to an ER visit or hospitalization. You'll also see us continuing to bring on board very innovative behavioral healthcare delivery solutions that are integrated with the primary care providers that, again, identify and treat mental health and substance use disorders by identifying them early and treating them in lower acuity settings, when that's appropriate.

So those are just a couple of examples of how we're creating value for those that we serve. Thank you.

Dirk McMahon -- President and Chief Operating Officer

Perfect. That's great, Wyatt. Thank you very much for the question. Can we have the next question, operator, please?

Operator

Sure. Next, we'll go to Kevin Fischbeck with Bank of America.

Kevin Fischbeck -- Bank of America Merrill Lynch -- Analyst

Great. Thanks. I was wondering if you could provide just a little bit more color about utilization trends in the quarter and maybe do that by product line, breaking it out by COVID and non-COVID utilization, where you are versus baseline.

John Rex -- Chief Financial Officer and Executive Vice President

Kevin, this is John. Good morning. So yes, a few perspectives on that as we think about utilization trends in the quarter. And I gave some broad indication just in terms of where we were with COVID inpatient stays and such for our members.

Maybe to give a little kind of further commentary. So as we sit here today, about 5,000 of our members are in an inpatient setting for a COVID-related condition right now. And I'd say versus the peak that we experienced during the quarter, that's probably just a little more than 50% of the peak in that zone, probably a little of that we experienced over the course of the period. That fell across categories, probably categories much like you would have observed in the reports coming out nationally, in terms of the types of individuals who are in these settings.

An average age that was considerably younger than we saw in prior to that -- in prior periods for COVID. So similar to what we have noticed across the board. In terms of broad utilization trends, similar to what we would have described in 2Q or what we did describe where we continue to see commercial members be more active in elective care and public sector or government program members, a little bit less active. And so kind of similar, just trending at different levels, given the prevalence of COVID.

It's been interesting over the course of the 20 months, there has been a consistent, fairly rapid reaction when COVID cases go up nationally in terms of the preference of patients to whether or not to seek elective care. That, again, happened this quarter, where it comes in fairly quickly in terms of the hesitation in the system to access. So broadly, kind of similar along those ranges. Hopefully, that provides a little additional color for you in what we're seeing across the whole book of business.

Thanks for your -- Kevin, question. Operator, next question, please.

Operator

Yes, sir. Next, we'll go to Justin Lake with Wolfe Research.

Justin Lake -- Wolfe Research -- Analyst

Thanks. Good morning. First, let me just follow up there. John, you've talked about, I think, on the previous calls, your guidance assumed about 101%, 102% of normal in the back half of this year.

If you could run that by -- it sounds like you're saying commercial might have been a little higher and Medicare and Medicaid a little lower. But if you can give us those numbers specifically, just so we have kind of a read-through to the rest of the industry, that might be helpful, and what you saw in the quarter? And then what do you price -- would it be fair to -- for you to share what you price for, for next year in terms of trend? Did you price to 101%, 102% for next year kind of similar conservatism versus this year? Thanks.

John Rex -- Chief Financial Officer and Executive Vice President

Good morning, Justin. So a few other elements on that. So similar broad trends to what we observed in 2Q. Just shifting because of the COVID prevalence.

So down shifting a bit in terms of elective, in terms of COVID prevalence, but then really fully offset by COVID. So that is elective downshifting because of COVID prevalence and then fully offset as we saw COVID care become a more important part of the business. So that really flowed across the businesses with those trends across the book, like I described in terms of the general outlook on that. And let me turn to Dirk here to talk about some implications of how we would have anticipated that in our forward pricing.

Dirk McMahon -- President and Chief Operating Officer

Yes. I mean, Justin, I mean, we, of course, are going to always price to our best estimates of forward trend. And we're going to take into consideration all the variables that we talked about. That toggle that John just talked about between COVID and what we expect with abatement.

I don't want to get into the specific details. Clearly, that's competitive. But at the end of the day, just be aware that we've considered all factors as we priced our forward business within our books. Thanks.

Next question?

Operator

Next, we'll go to Lance Wilkes with Bernstein.

Lance Wilkes -- Sanford C. Bernstein -- Analyst

Yeah. I want to ask a little bit about employer growth and was interested in for the third quarter, how much of that was new wins versus in accounts? And then as you're looking at '22 and you're getting visibility on national accounts and middle market. If you can just give a little color on those individual segments? And what's driving wins in 2022 in particular? Is it product features? Or is it the All Savers product? Maybe just a little more color on kind of why you're getting wins. Thanks.

Dirk McMahon -- President and Chief Operating Officer

OK. Why don't we send that question to Bill Golden, who will talk about all three of those quarter, not only this quarter, but also why we think we've been having some success.

Bill Golden -- Chief Executive Officer, UnitedHealthcare Employer and Individual

Yeah. So thank you for the question. So we're excited about the traction we're seeing in our third-quarter enrollment. Membership growth for the quarter was really attributed to what I would say our three main components.

One is in-group growth was net positive for the quarter. Our wins versus losses was also positive for the third consecutive quarter, and obviously, the PreferredOne acquisition contributed to our overall growth. We're expecting continued commercial growth in 2022 across both our fully insured and self-funded segments. We're confident in the value story.

It is resonating in the market. We're getting good traction with our broad product portfolio. And so products like Bind and Care Cash and Harmony and Motion and also areas are all contributing to that growth. 1/1/22 for middle market is obviously a little early to predict exactly how all those products will perform in the market, but we're very confident in our ability to continue to perform well in the commercial market for 2022.

Dirk McMahon -- President and Chief Operating Officer

Yeah. And I would just add on to what Bill said. I mean, the new products are important. But one of the fundamental things within the commercial group is clearly affordability.

And as we sit back, we have a good program where we manage utilization. We manage medical cost initiatives. We work hard on our network contracts. So a lot of things contribute to success in commercial and some product and a lot of affordability.

So thanks for your question.

John Rex -- Chief Financial Officer and Executive Vice President

Operator, next question, please.

Operator

Certainly. Next, we'll go to Scott Fidel with Stephens.

Scott Fidel -- Stephens Inc. -- Analyst

Hi. Thanks. Good morning. Interested if you can maybe talk a bit about the labor and staffing environment right now in healthcare.

And one, how that's impacting the OptumCare provider businesses, whether you're seeing an impact as the vaccine mandates are going into effect as well. And then just more broadly, as we look at just some of the tightness around labor and staffing in the system. How is that influencing your thoughts in terms of where overall health system capacity is right now? I mean it feels like we're pretty much maxed out, right? And we sort of just shift between COVID and non-COVID, but it seems like the system itself is running pretty much at full capacity right now in terms of just the staffing dynamics. Thanks.

Wyatt Decker -- Chief Executive Officer, OptumHealth

Scott, this is Wyatt Decker, very key question. And as you point out, the US healthcare market is very tight right now. For us, in our care delivery assets, we are seeing good, both the retention, engagement and recruitment of physicians and care providers. A couple of examples I'll give you.

We mentioned at the start of the year, our intent to bring onboard 10,000 additional physicians to our ranks, and we've already brought on board about 8,000 year-to-date. So just as a high-level indicator, what do we attribute this to? And I would say in partnership with Patricia Lewis and our human capital team, we're relentlessly focused on supporting our frontline care provider teams throughout the pandemic and they know this and have been deeply appreciative of it. And we work very hard, and this precedes the pandemic but has yielded dividends during the pandemic to support them in an environment that decreases clerical burden and allows them to focus on the work they love, which is actually taking care of patients, which is what we all want. So overall, we're managing through this.

I won't kid you, it's tight, and we're keeping a close eye on it throughout all of our operations in our 43 states where we provide care. Thank you.

Dirk McMahon -- President and Chief Operating Officer

Yeah. And I would just say, as Wyatt said, we're managing through this. From an environmental standpoint, it's not just clinicians. It's all workers.

But one thing I would say is we had a fairly significant work at home presence before the pandemic even started. So sort of our employee value proposition sort of was -- we had a good value proposition before. It started and that sort of carried through. And I think like all employers, what we're trying to do is take care of our people, do the right things from a reasonableness standpoint.

And continue to focus on our mission, and that's what we're continuing to do. So I'm optimistic that we're going to continue to be able to staff our operation and provide the services that we need to all of our patients and members across the country.

John Rex -- Chief Financial Officer and Executive Vice President

Operator, next question, please.

Operator

Certainly. Next, we'll go to Ricky Goldwasser with Morgan Stanley.

Ricky Goldwasser -- Morgan Stanley -- Analyst

Yeah. Hi, good morning. Just a quick follow-up question on the 2022 early comments. So a couple of variables there.

One is we think about the change transaction, I think you said you expect it to close in the first half of the year. If you can give us an updated change accretion number, I think, it was $0.20 to $0.50 previously, at least for 2021. So how should we think about for 2022? And then I understand that there are a lot of uncertainties around COVID and that $1.80 in net COVID headwinds. But I think previously, you quantified about $0.70 is coming from risk adjustments.

So should we think that these at least are going to reverse next year? And maybe how are you tracking with the annual wellness visits completion versus where you were last year or where you were in 2019?

John Rex -- Chief Financial Officer and Executive Vice President

Thanks for the question, Ricky. I think a few components there, and we'll get it -- try to get at all of those. So just in terms of the -- relates to change in impact, I'd just point out that we don't bring in acquisitions into our outlook until those close. So my commentary doesn't anticipate change in there.

And we wouldn't look to bring that in until it closes. When that does complete, we've have no reason to expect that we wouldn't be trending along the same levels that we talked about prior when that does come in. It's just a question when it comes in and year and how the benefits play. There's just timing impacts in terms of that, when it would actually close during the year.

But not incorporated in that outlook. As it relates to kind of the $1.80 that we articulated last year. Yes, we broke out a number of different components that were important in that element. And frankly, my hope would be -- we're not talking about a COVID number by the time we get into '22.

That we move beyond that and we can move beyond to business as normal as we can while being always ready and to address the environment that's at hand. But that would be certainly our intent as we'd step out here, that we'd be moving beyond that view. In terms of elements and such, in terms of elements such as annual wellness visits and things, I'll ask BT to comment -- Brian Thompson to comment a moment on that also.

Brian Thompson -- Chief Executive Officer

Sure, John. As you laid out at the beginning, while both our Medicaid and Medicare businesses are running still below baseline on a net basis, we are encouraged by the encounters with the physicians, the primary care visits and annual wellness visits, as well as in-home clinical visits. So those have been encouraging. So I certainly expect less of a headwind in 2022 due to those encounters, certainly getting traction certainly compared to 2021.

John Rex -- Chief Financial Officer and Executive Vice President

Excellent. Thank you, Ricky. Operator, next question, please.

Operator

Certainly. Next, we'll go to Kevin Caliendo with UBS.

Kevin Caliendo -- UBS -- Analyst

Hi. Good morning, Thanks for taking my call. Can you talk a little bit about elective trends in September and as they moved into October? How that's changed at all, if you've seen any uptick. And also just on your commercial market growth, your membership growth in the quarter.

Can you break it out between small group versus large group? Thank you.

John Rex -- Chief Financial Officer and Executive Vice President

So thanks, Kevin. Let's let Brian Thompson address a couple of those.

Brian Thompson -- Chief Executive Officer

Sure. Kevin, Brian here. As I think about elective care, what we've really seen is a pretty steady return to normal. We don't really see, what I'll call as, an unnatural suppression nor have we seen a significant bounce back suggesting a big catch up.

In fact, when you think about scheduled care, what we have found is that most of that cycles through in about four to six months. We look at things like colonoscopies and joint replacements as good leading indicators. And those are running pretty close to baseline. Obviously, with the spike that we saw in September, there's a little bit of that that we would expect to flow through in the fourth quarter, but that's fully accounted for in our outlook.

And I would just say from a commercial perspective, maybe echoing what Bill said, feeling really balanced really across our fully insured growth for the quarter. So just optimistic that that was across not only our group business, but we also saw a return of our non-exchange individual growth. So a really good quarter from a fully insured perspective. Thank you.

John Rex -- Chief Financial Officer and Executive Vice President

Operator next question, please.

Operator

Yes. Next, we'll go to A.J. Rice with Credit Suisse.

A.J. Rice -- Credit Suisse -- Analyst

Hi, everybody. Maybe just to drill down a little bit on the OptumRx and what's incorporated in '22 outlook, headwinds and tailwinds. I know we had the vaccine this year probably helped script trends a little bit. We had some specialty conversions maybe that helped.

And obviously, what was the dynamic around renewing contracts and so forth? What are you thinking about for '22 for OptumRx?

Heather Cianfrocco -- Senior Vice President, Business Development

Hey, Heather Cianfrocco here. Thanks, A.J., for the question. So you mentioned -- we talked in the second quarter a bit about vaccine. We saw a little bit of that this quarter in growth, but it's proportionately down.

The last quarter, I think it was about a third of the growth. This quarter, it's down to about, call it, between 20% and 25%. So you're seeing really our growth first of all, in this quarter as a result of modest PBM growth, together with continued and membership growth, together with continued pharmacy services growth. When we look at '22, we're going to see that to continue.

So our pharmacy services growth, remember, that's our home delivery, specialty, infusion, the multi-dose, as well as our direct-to-consumer community businesses. Those will continue to grow in '22. We see those sorts of outpacing growth of the rest of OptumRx pharmacy. And I guess I'd call out a few things when I think about '22.

First of all, we've made those investments. And so we're seeing that. We talked about Genoa and our community pharmacies and Dirk talked about this morning and how they're growing, not just in expanded sites, but our existing sites are continuing to show really strong growth as they expand services to existing members and expand in different types of health centers. We'll continue to see that in '22.

And we think the solutions we're bringing in an integrated way, together with our consumer experience and our real push to make therapeutics affordable and easy to access for our members will continue to see that. And I just point you back to our long-range growth where we'll continue to be, I think, stable with our revenue and earnings growth in '22 as we look toward our long-range plan. So thanks for the question.

Dirk McMahon -- President and Chief Operating Officer

Yeah, that was great. I think, A.J., what that points out, clearly, a broad pharmacy portfolio with clearly, a laser focus on affordability and laser focus on serving people, getting the medications in people's hands where they need them and basically servicing the entire sort of what I'll call a pharmacy landscape with effective products and services. Thank you very much for the question. Next question, please.

Operator

Next, we'll go to Lisa Gill with J.P. Morgan.

Lisa Gill -- J.P. Morgan -- Analyst

Thanks very much and good morning. I just want to go back to your comments around virtual care and a digital-first product in 2022. Can you talk about what that will entail, first off? And then secondly, when you talk about connecting multiple channels of care in 2022, I would assume that's primarily keeping the patient in the home. But can you maybe just give a little more detail around what those programs would look like and what the potential cost savings could be?

Dirk McMahon -- President and Chief Operating Officer

Yeah. So first of all, let me hit on the virtual products that we have. I've talked about it before, we're sort of getting into from version one to version two. The second version is really not telehealth as a stand-alone service but really effectively integrated into physical delivery and total courses of care.

And so as I think about how we might -- how we're organizing our products, what we would have is a virtual PCP available to some people and many people across the country don't have relationships with PCPs. So a product based on having virtual PCP, having that PCP managed like a brick-and-mortar PCP, and then manage the downstream expenses. Being able to refer to digital properties, be able to, as I said, bring in a behavioral specialist where needed. And as we sit and we look at some of the products that we have and we're designing, we're expecting probably about a 15% price advantage to other sort of similar products in the market.

So we're kind of excited about the efficiency of virtual in that context. Yes. So give me your second question again, Lisa, I was focused on virtual.

Lisa Gill -- J.P. Morgan -- Analyst

No. Just more around when you talk about connecting multiple channels of care in 2022. Should I assume that that's primarily connecting care in the home? Or is there something that I'm not thinking about?

Dirk McMahon -- President and Chief Operating Officer

No. No, you're thinking of this multi-modality right. It's home, it's digital, it's what we do in the office. And that's one of the things that we're trying to do, and I'm glad you hit on that.

Our ability to serve people where they want to be served is something that we're really focused on across all three of our lines of business. It's very important. And clearly, people have different care needs, and they have different preferences for care, and we want to provide that access across the board.

John Rex -- Chief Financial Officer and Executive Vice President

Yeah. So within OptumHealth or OptumCare, the build-out of the home and community platform is one of the more important areas that Wyatt and his team are focused on. There's been lots of development there. Wyatt, maybe you could add a little color?

Wyatt Decker -- Chief Executive Officer, OptumHealth

Absolutely. So we're very excited about bringing virtual care, as Dirk said, in a differentiated way into people's homes so that they can access care. We can help triage them and onboard them. We can provide primary care.

And when needed, we can provide care delivery, in appropriate, in some instances in the home, or we're leveraging particularly our urgent care platform to provide nearby physical care. And then we blended in our virtual and physical behavioral care deliveries as well. So we're now live in all 50 states. We're serving over 7 million members today, and we look forward to continuing to expand these offerings.

Thank you.

John Rex -- Chief Financial Officer and Executive Vice President

Operator, next question, please. And I think we have time for about two more question here as we approach the bottom of the hour.

Operator

OK. Next, we'll go to Steven Valiquette with Barclays.

Steven Valiquette -- Barclays Investment Bank -- Analyst

Great, thanks. Good morning, everybody. So you touched on the topic of Medicare risk adjuster payments earlier. This was also a little bit more topical about a month ago with The Wall Street Journal putting a spotlight on it.

So I guess I'm just curious if you have any updated high-level thoughts on MRA payments conceptually for the managed care industry overall. And do you see any potential reform of MRA near term? Or do you expect status quo going forward?

Dirk McMahon -- President and Chief Operating Officer

Yeah. Thank you very much for the question. First, let me point to the value proposition that Medicare Advantage provides. I think that's important context.

So I may serve 27 million Americans with very high-quality care. And compared to fee-for-service Medicare MA costs less, is more equitable, has better quality access and outcomes and greater coverage and benefits with nearly 100% consumer satisfaction. So very, very important to the care that seniors receive, and it's important that we preserve the stability of this program that so many people rely on. And when we think about the risk adjustment model in the payment system.

The model has been critical to providing broad and equitable access to MA. Risk adjustment levels of playing field and ensures that there's no disincentive to care for the most vulnerable. So we really feel that it's an essential part of encouraging the right incentives in the program, and think that it's something to build on and broadly support that we need to think about how to build on these positive elements and aspects of the program for which this is one of them.

John Rex -- Chief Financial Officer and Executive Vice President

Thanks, Steven. Operator, next question, please. Next and final question.

Operator

All right. We'll take our last question from Stephen Baxter with Wells Fargo.

Stephen Baxter -- Wells Fargo Securities -- Analyst

Hi, thanks. I wanted to come back to the labor market and some of the things that we're reading about provider financials. Was wondering what you're hearing from your network partners on this issue and how you think it will or will not influence rate negotiations over the next couple of years?

Dirk McMahon -- President and Chief Operating Officer

Yeah. So thanks for the question. I think yes, what we're hearing from network partners is that their cost of labor is higher. So that comes up in the negotiations.

And like anything else, it's part of what we negotiate and how we try to work with our network partners on coming up with the right pricing and negotiating accordingly. Yes, we're hearing that there's -- obviously, there's staffing shortages. Obviously, many of the hospitals and other providers have to pay more for their input, and that's going to be reflected in the economics as we go forward. And of course, all that is reflected in how we price going forward.

So yes, that occurs. Thank you for the question. With that, what I would like to close with is as follows. Thanks, everybody, for your time and your questions today.

We hope you're taking away the impression of a company that's confident in its opportunities and ability to grow. And we're deeply aware of where and how we need to improve, and we're fully committed to our mission of helping people live healthier lives and helping make the health system work better for everyone. We look forward to sharing with you more at our November 30 investor conference, hopefully, in person in New York. Thanks for your time today.

Duration: 49 minutes

Call participants:

Dirk McMahon -- President and Chief Operating Officer

John Rex -- Chief Financial Officer and Executive Vice President

Matt Borsch -- BMO Capital Markets -- Analyst

Brian Thompson -- Chief Executive Officer

Josh Raskin -- Nephron Research -- Analyst

Wyatt Decker -- Chief Executive Officer, OptumHealth

Ralph Giacobbe -- Citi -- Analyst

Dave Windley -- Jefferies -- Analyst

Kevin Fischbeck -- Bank of America Merrill Lynch -- Analyst

Justin Lake -- Wolfe Research -- Analyst

Lance Wilkes -- Sanford C. Bernstein -- Analyst

Bill Golden -- Chief Executive Officer, UnitedHealthcare Employer and Individual

Scott Fidel -- Stephens Inc. -- Analyst

Ricky Goldwasser -- Morgan Stanley -- Analyst

Kevin Caliendo -- UBS -- Analyst

A.J. Rice -- Credit Suisse -- Analyst

Heather Cianfrocco -- Senior Vice President, Business Development

Lisa Gill -- J.P. Morgan -- Analyst

Steven Valiquette -- Barclays Investment Bank -- Analyst

Stephen Baxter -- Wells Fargo Securities -- Analyst

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