UnitedHealth Group Incorporated
Q4 2011 Earnings Call Transcript

Published: 19 Jan 2012

[Operator:]

Good morning. I will be your conference facilitator today. Welcome to the UnitedHealth Group Fourth Quarter and Full Year 2011 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 U.S. Federal Security (sic) [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 filed 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 amount is available on the financial reports and SEC filings section of the company's Investors 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 January 19, 2012, which may be accessed from the Investors page of the company's website. I would now like to turn the conference over to the President and Chief Executive Officer of UnitedHealth Group, Stephen Hemsley.

[Stephen J. Hemsley:]

Good morning, and thank you for joining us as we wrap up 2011 and discuss the potential we see to better serve our customers and markets in 2012. We're committed to continuing to elevate our performance this year as we outlined in our Investor Conference just about a month ago. 2011 was a strong year across a wide range of performance factors. Continued focus on fundamental execution improved service and value for our customers. Financial performance was driven by revenue growth across all of our businesses, including from new business relationships and strong retention of our established clients. Relentless cost management and continued business simplification were prevailing themes in 2011, and innovation and development activities for new markets advanced steadily throughout the year, as we strengthened key capabilities to respond to emerging growth opportunities. For many years now, we have focused on the combination of fundamental execution and practical innovation to yield value and performance from our assets for the benefit of those we serve. We concentrate our efforts on 2 market-facing business platforms

[Operator:]

[Operator Instructions] Our first question comes from Matthew Borsch with Goldman Sachs.

[Matthew Borsch:]

I wanted to just ask about the moving parts in the quarter on medical trend. And in particular, the -- it looks like the -- that you had a significantly favorable variance on the public sector side, if we infer that correctly. Can you talk to that and how much was Medicare versus -- sorry, MA versus Medicaid versus PDP?

[Stephen J. Hemsley:]

Yes, Matt, as you can appreciate, we addressed more this on a broad basis for UnitedHealthcare but maybe, Dan, you want to respond to that?

[Dan Schumacher:]

Good morning, Matt. This is Dan again. So first, in terms of the quarter, we are obviously very pleased with the performance, and I guess I would probably talk to it in terms of the medical loss ratio. Our loss ratio across UnitedHealthcare was up, but it was better than our expectation that we laid out at Investor Day. As you look at the commercial business, we saw an increase in our loss ratio, and that was largely due to less favorable development on a year-over-year basis plus also the incorporation of premium rebates under reform. And I think it's important to remember on the commercial side in particular, we had very low comparison periods in 2010, in the third and fourth quarter in particular. On the government side of the business, we saw a reduction in our loss ratio year-over-year, and that reduction was largely due to more favorable development on a year-over-year basis.

[Matthew Borsch:]

Got it. And on the commercial trend, did that still come in at about 5.5% for 2011? And can you just give us the reference point for what it was for 2010?

[Dan Schumacher:]

Our -- from a trend perspective, it came in generally where we had expected, at around 5.5%, and it was lower in 2010.

[Operator:]

Our next question comes from the line of Charles Boorady with Credit Suisse.

[Charles Andrew Boorady:]

I'd love to get your view out of the big picture question that wasn't addressed very much by the Street generally or your investor, and this is on bundled payments for Medicare. It seems like there's been a tremendous amount of interest by the industry, and I'm just wondering how we should think about the impact to UnitedHealth Group of the adoption of bundled payments by Medicare. For example, in the Optum products that you sell that enable bundled payments and any pickup in demand you're seeing, but also what it means for your Medicare Advantage and potentially, your commercial business if providers do embrace bundled payments for Medicare.

[Stephen J. Hemsley:]

Yes. So I think we think about this broadly in the category of kind of changing our approach to payments. So it's performance-based. It is basically any of the variations that we see that are different than a -- let's say, a fee-for-service approach, and we approach it and have been for some time in UnitedHealthcare in terms of how we have been driving performance-based relationships and contracts. And as you know over the last, probably the better part of 2 years, beginning to work with the delivery community in terms of enabling them to begin to ready themselves and engage in a way that they can effectively use these kind of payment methodologies in the conduct of their own business. But I'll start with Gail with respect to the UnitedHealthcare side, and then I might ask somebody from Optum to respond to how we're working on the delivery side.

[Gail K. Boudreaux:]

Good morning, Charles. It's Gail Boudreaux. I think Steve hit it. As we think about bundled payments or all ways we're going to compensate physicians in the future and delivery systems, we're looking at a broad spectrum. And today, we have everything from fee-for-service to full capitation. We're experimenting with different bundled payments already in both our commercial and our Medicare business, and I think it's right now a bit early for us to comment on the full adoption of that, but we think it's going to -- 2 things are going to be really important. One, clinical integration in addition to the payment methodology is going to drive our performance in terms of bringing overall cost and quality. And at this stage, getting the bundles right, I think, is really important in aligning those bundles appropriately to the right incentives and our clinical programs. So those would be the 2 things, but we have a number of pilots in place already around bundles and it's a bit early, but encouraging.

[Charles Andrew Boorady:]

The CBO suggested a 10% savings on a certain cardio-related procedure for bundled payments. Can you share any experience you've had with what percent savings you might expect on a unit cost from the adoption of bundles?

[Gail K. Boudreaux:]

Charles, I think -- well, that was a very specific test run, and I think it's a bit early for us to be declaring savings. We think in cardiac and oncology, we're seeing some interesting results around oncology bundles. In particular, we rolled out a payment methodology there last year. Again, fairly early, but I don't know that we'd yet declare on what we think the total savings would be because it's not just about the bundles. I think it's about the integration to care, the incentives and the plan design. There's a whole number of other factors that come into play, and we see that both in our commercial business, as well as our Medicare Advantage business.

[Stephen J. Hemsley:]

And I would expect that's going to run a wide range across the spectrum of service lines. So how about on the Optum side?

[Larry C. Renfro:]

Charles, this is Larry Renfro. In general, I'd agree with everything that both Gail and Steve said. And we're, as you know, pursuing this in our delivery system. I might ask Dawn Owens to comment on this one more specifically.

[Dawn M. Owens:]

Sure. If you think about the role that we've had with respect to bundled payments, there've really been 2 areas. One, in our specialty network solutions where there are categories of clinical care that are high cost, high variation and where we work with the care provider community already today to create bundled payments for those services, transplant is a really nice example of that, where it's a lot less about the unit cost but more about the total cost of care, alignment to quality, to protocols and so forth, where we deliver strong returns for patients and the system overall. Obviously, it's also a really important piece of the work we're doing in partnership with the delivery system in our Collaborative Care business, where we're taking total cost and total quality responsibility for the patient populations that we're serving. That's in Medicare, but also in commercial models as well. And so learning which models and which markets work most effectively in a skill set, there are a lot of factors and dynamics that come into play to create a successful model on that front.

[Stephen J. Hemsley:]

I might just add by saying, broadly, what we see the benefit of a variety of different alternative payment approaches to the marketplace, and if we recognize that it is a widely ranging marketplace, as a result, these approaches are going to vary significantly. But over the course of time, we're committed to changing the way healthcare is paid. We do believe these approaches will be a better -- will produce better outcomes, better use of resources and will be better for healthcare, and we're going to be committed to doing our part along those lines.

[Operator:]

Our next question comes from the line of Josh Raskin with Barclays.

[Joshua R. Raskin:]

Just getting back to the MLR differences, I think we calculated them, what you call noncommercial all other, and acknowledged there's a lot in there. We had those up somewhere around 50 basis points for the first 3 quarters and then down almost 110 basis points. And that translates into almost $200 million of sort of change in cost. And I think Dan said earlier that, that was mostly due to changes in favorable development. So should we assume that the change in the noncommercial business was driven by a $200 million swing in development? And then any color on whether that was Medicare Advantage or Medicaid or even Med Sup or Part D would be helpful.

[Stephen J. Hemsley:]

I think Dan is going to kind of be restating what he said before, but I also don't think we're going to get into specific math in this kind of environment.

[Dan Schumacher:]

Sure. Josh, it's Dan. We saw favorable development in all 3 of our UnitedHealthcare businesses in the fourth quarter and on the full year. In the fourth quarter of this year, it was more weighted towards our government programs. And in the fourth quarter of last year, it was more weighted towards our commercial businesses, and that's what I'd say with respect to kind of where it's falling along the business continuum inside UnitedHealthcare.

[Joshua R. Raskin:]

Okay. Maybe I can ask a different question, and I'm sorry. Can you talk a little about hospital unit pricing and contracting and any changes? A couple of your peers last quarter stated that they were seeing some change in of those trends. I'm just curious if you are seeing any differences in the actual unit cost on the hospital side.

[Dan Schumacher:]

Josh, it's Dan again. On the unit cost side, it continues to be the most significant driver of our trend. So it's an area of intense pressure and intense focus for us as a business, and I would say that's been relatively consistent. And underneath that, the inpatient setting is the most pronounced.

[Joshua R. Raskin:]

But no change?

[Dan Schumacher:]

No fundamental change. It continues to be a pressure point for us.

[Operator:]

Our next question comes from the line of Tom Carroll with Stifel.

[Thomas A. Carroll:]

Just in looking over your fully insured commercial enrollment for the last few years and then also taking into account the prepared remarks on your enrollment this year, do you think that the economy is having less of an impact on employer health benefit decisions than say a couple of years ago? So maybe said differently, as the economy -- is it perhaps improving and employers are not being as restrictive on their health benefit plans as perhaps they were back then?

[Gail K. Boudreaux:]

So in terms of the economy, I don't think that the economy per se has had an impact on the restrictiveness of employers in their offering of benefits. What we are seeing, though, is employers are very focused around value-based benefit design, things that encourage health and wellness, trying to get real value out of the plans that they put in place. So we've seen significant interest in the narrow-network value-based offerings that we put in the market. As we look at our growth, particularly in the fully insured side, that's where we've seen a pretty significant uptick. Consumer-based health plans have done very well in this marketplace. Plans that have more consumer responsibility and transparency are selling really well. And I think employers want to see consumers engaged in health and getting value for it, as well as the money that they put in. So that's really the -- probably the bigger shift than employers fundamentally changing their perspective based on the economy.

[Operator:]

And our next question comes from the line of John Rex with JPMorgan.

[John F. Rex:]

Just turning to Optum unit here. So back at Investor Day, you talked about a doubling of the ROC, I think, and from that unit over the next 5 years, so I think between now and 2015. And also kind of I think you've kind of repositioned that breaking it down into 8 different markets, and what I wanted to get is kind of a flavor, what you think about that growth trajectory. So I took those 8 markets that you were looking at, at Investor Day. Can you spike out -- so if I take it down the market segment and instead of kind of the way it's configured right now, can you spike out the 2 or 3 that would be the biggest contributors to that doubling?

[Stephen J. Hemsley:]

Larry, you want to comment?

[Larry C. Renfro:]

John, it's Larry. I'm going to start and then I'm going to have John in trends [ph], kind of pick this up and maybe go a little bit broader than the question that you asked. If you look at what we're trying to do from now until 2015, there's kind of 2 key areas of focus

[John S. Penshorn:]

Got it. I think I'd just build on that, Larry. I think, as Larry mentioned, we -- of the 8 markets, we're in the right markets, they're large and they're growing. We're getting good market response for all of them. The key focus areas, as he mentioned, were the organic growth, health information technology, clinical services analytics and the PBM market. So I think we're in the right markets, and we're growing in those markets. And you got 2 effects

[Operator:]

Our next question comes from the line of Sarah James with Wedbush.

[Sarah James:]

I had a question on OptumRx. Specifically, I wanted to see if there was any update on the response that you've been getting from employers, any feedback they've been providing or any update on RFPs that you are looking at this year. And then going back to the prepared comments on revenue growth driven by higher-revenue specialty pharmaceuticals, if you could just speak to the size of the growth opportunity that you see there for the mid- and long term.

[Stephen J. Hemsley:]

I think we will broadly -- we don't -- we won't comment on customers or specifics along those lines, never have. But beyond that, I think we can respond more broadly, Dirk?

[Dirk McMahon:]

Yes. So I think we have good relationships with consultants in the national account space. We're going to leverage those to continue to gain access to sales. We have a really good -- we're building our administrative platform and infrastructure. We think that'll improve our future competitiveness. We're working hard on our value proposition, which we talked about at Investor Day. It's all about improving total cost and quality by optimizing across medical and pharmacy. And we grew it out that last year.

[Stephen J. Hemsley:]

2 million, right?

[Dirk McMahon:]

We grew, yes, to 2.1 million members and 767,000 of those were external.

[Stephen J. Hemsley:]

And then I think the response in terms of the marketplace is that there is an appetite for a new, more innovative competitor in that marketplace, and I think we're in the mix on all the RFP activity, right?

[Dirk McMahon:]

Yes, we're definitely in the mix.

[Sarah James:]

Okay. And just on the specialty pharmaceutical growth opportunity for the mid and long term?

[Dirk McMahon:]

Well, look, we -- I've read a bunch of stuff and we looked at some of the projections. We're -- probably 40% of the drug spend by 2014 across medical specialty, across medical and pharmacy benefits would be specialty drugs. We think we're well positioned for that market, specifically in the area of our clinical programs and our ability to handle and monitor the use of those drugs. So I think we're very well positioned to participate in the growth of the specialty market.

[Stephen J. Hemsley:]

And we do all our own specialty. Larry, do you want to comment?

[Larry C. Renfro:]

I just wanted to make an additional comment on what Dirk said earlier. When we began the year this year, we decided to put an announcement out of the Optum leadership team. And in putting that announcement out, one of the areas that -- and people that we wanted to bring over and to strengthen and deepen the organization was a person by name of Mike Matteo. Mike is the head of UHC's National Accounts, or he was the head of UHC's National Accounts prior to this move. He's moving into Optum to be the Chief Growth Officer. And Mike's background, he has tremendous relationships, both internally and externally. He's been experienced in business growth, business expansion, as well as executive sales leadership. And Mike is going to be working with OptumRx and Dirk's team to really put together a robust sales plan, and I just wanted to comment on Mike so that you would get his name. I don't know, Gail, if you have any thoughts on Mike?

[Gail K. Boudreaux:]

No, thanks, Larry. I'd just add that we had a tremendous growth trajectory in our National Accounts business and I think Mike, from our perspective, brings that skill to the pharmacy business, and we think it will be a great addition to Larry's team. And we have a very strong bench, so it's a good move.

[Operator:]

Next question comes from the line of Christine Arnold with Cowen.

[Christine Arnold:]

You talked about provider stewards and bundling in the narrow network products. A couple of questions there. Could you tell us how much of your membership on the commercial side is in these narrow network products and kind of your expectations there? And could you also put some meat on the bones in terms of your ability to steer volume to more efficient providers, so say X percent of our hospitals are considered high performance and they get Y percent of our volume or the same kind of metric on the doctor's side?

[Stephen J. Hemsley:]

I think we can respond to that. Gail?

[Gail K. Boudreaux:]

Christine, let me take it in a few parts because I see a couple of different questions embedded in there. First in terms of the value-based products, less -- roughly 15%, a little bit less of our membership right now is in value-based type products, and that is an area that continues to grow, as I mentioned at the beginning of my comment. In terms of the -- I think your second question related to steerage to high-performing hospitals and physicians. Let me sort of step you back. We've had a premium designation in place for a number of years, and we originally began to introduce that to the marketplace in terms of just cost and quality and information and transparency. Over the last several years, we've began to build that into our basic design of our networks, whereas before it was -- it is still available to everyone, but we've also now embedded it in our networks. So that's part of that 15% members that come through that, but everyone has access to those premium designated physicians. In terms of our pay per performance on the hospital side, that's an area that's growing. And I think what I shared with you at Investor Day was that we are taking our premium increases and putting those into -- or rather our rate increases, and putting those into pay per performance. So that's how facilities earn a base rate and then they earn their incentive based on a very specific set of outcomes that we work with them on based on the facility but on a universe of probably 10 standard areas; for example, reduction of readmission rates, improvement in overall quality scores, things of that nature. From that perspective, the percentage there is roughly about 12% to 15% of spend would go through that model.

[Christine Arnold:]

If you think about how much these narrow network membership and the steerage is going to change, and presumably you're steering to the lower-cost, higher-quality and more-efficient providers and that lowers overall trend. If you think about all these factors together, is your hospital pricing in 2012 -- ignoring utilization because it's always a question what's going to happen there, but is your hospital pricing decelerating in 2012 relative to 2011? And what did it do in '11 versus '10?

[Gail K. Boudreaux:]

Well, I think Dan addressed that when he talked about trends. There's still a significant pressure on unit cost at the hospital level. And year-over-year, that's one of the most significant issues in our trends, so that's one of the reasons we're trying to shift the overall distribution of unit cost to more pay per performance. But in 2011 and '12, when you look at the details of our trend buildup, unit cost at the inpatient hospital side is still significant.

[Christine Arnold:]

So you expect the unit cost to increase on the hospital side and that drives the increase in 2012 medical trends?

[Gail K. Boudreaux:]

We expect it to be stable year-over-year in terms of the percentage increase.

[Stephen J. Hemsley:]

I'd just comment one thing about the term steerage. I think it's important to recognize that the products that are really moving in the marketplace today are enabled. And one of the reasons I think they're getting traction is because they're enabled by much better information, they're enabled by much better, more personalized technology. And as a result, the consumers are actually in a position of making an assessment, being able to make a choice, so the -- it is less steerage. It is more about providing information, aligning incentives, and that works on both the consumer side and care providers side to make the marketplace more efficient. So I think that's -- that is why you're seeing that kind of performance across those products. You get great outcomes, you get high-quality access, and you get the opportunity to get in more control of your health and manage the economics because of the tools and the designs that are now in the marketplace. And I think that's fundamentally different than what I would call the historic notion of steerage.

[Gail K. Boudreaux:]

The one thing that I'd add to this comment, as you know, we launched the treatment cost estimator tool. We showed that -- I think we shared that tool in Investor Day. It is now available to our members, and it does provide much greater transparency for consumers to take control of that decision and have a real understanding of cost and quality among providers and plans. And I think that is having a big impact in the market as well.

[Operator:]

Our next question comes from the line of Peter Costa with Wells Fargo Securities.

[Peter H. Costa:]

I can see the commercial MLR in the fourth quarter was better than you thought it would be back in November based on your full year guidance, but I’d still like to explore the 190-basis-point increase year-over-year. If you could kind of comment on how much of that is tied to sort of medical trend versus pricing as opposed to how much is due to PPD last year. You said that there was more in the commercial side a year ago. And then how much is due to rebates this year? And also -- and perhaps most importantly from my perspective, how much is due to the sort of increase seasonality of the business from higher deductible health plans? And how will that change in 2012?

[Stephen J. Hemsley:]

Touched them all, so, Dan, go through it.

[Dan Schumacher:]

Peter, how about this, I'll rank them for you in terms of contribution to increase year-over-year. The first is stable to favorable development, so the change in that on a year-over-year basis. The second is the introduction of the premium rebates and then the balance is that relativity between yield and trend.

[Peter H. Costa:]

And what about seasonality in terms of the change from more people in higher deductible plans? That changes the seasonality of your costs from Q1 to Q4.

[Dan Schumacher:]

Seasonality was pretty stable on a year-over-year basis. The challenge is you don't see it because the baseline was so low in 2010 when you compare it.

[Operator:]

Our next question comes from the line of Justin Lake with UBS.

[Justin Lake:]

I wanted to follow up on the questions around Optum and that expectation of return on invested capital nearly doubling over the next 3 years. Just from a timing perspective, first, do you expect that to be fairly ratable between 2012 and 2015, or do you expect that to be more heavily weighted early on versus later or vice versa?

[Stephen J. Hemsley:]

I'll have Larry answer this, but I -- because it will tie into the elements of what he had just said, but my expectation is that it's -- it is going to be a steady acceleration, where we'll continue -- I mean the framework, and I think you should bear in mind, and I think the OptumInsight is a good example of it, is that we're building these businesses. And as we build them, they'd become more integrated, more mature, the expectation for margin expansion is established, the cost of building these becomes less and the profitability reveals itself. Larry?

[Larry C. Renfro:]

Yes. I think I'm going to go back, and I'll probably be doing this many times over the next few quarters to those 4 elements. I think if we focus on or if you are looking at this from an organic growth standpoint, what we're doing in the developing of health IT and clinical services, as well as the program with our in-sourcing at the PBM, I think those are very strong elements for you to pay attention to. I think in addition to that, just so you know, that we're operating off of a 5-year plan. And so when we're walking through this, obviously there are changes that you have to make based on changes in the market. But I think we believe that we have a very strong start to 2012. We'll see a solid performance, but we'll be able to measure that. And then I would also go back to what we talk about with OptumInsight because that answers the questions around acquisitions. It's a model that we're going to have a strong, strong discipline around in terms of making sure that we have selected capabilities that we're looking at, and we kind of have a strategy of bill partner or invest, and we're going to have a strong, strong discipline around that. So I do believe this will give you line of sight into some of the things that we're doing. And we'll be developing this and talking about it over the next quarters.

[Stephen J. Hemsley:]

And I think it's kind of important to recognize that I think this is principally around execution. We're in the right markets. The businesses are well positioned in those markets. We brought additional resources to bear, and this really is a function of execution, really, over the next couple of years, right?

[Larry C. Renfro:]

Right.

[Justin Lake:]

And just a quick follow-up on M&A, as you mentioned, the -- when I look over the last couple of years, you spent, if I include Excel Health, probably in the neighborhood of $5 billion or nearly 10% of your market cap on acquisitions. And there hasn't been a ton of visibility in terms of the levels of accretion or expected performance from an earnings benefit perspective. Is there any way you can help us flush that out given the significance there in terms of what that's going to add up from an earnings perspective over the next couple of years?

[Stephen J. Hemsley:]

Justin, I don't know how to respond to that because we'd have to basically -- is begin the process of almost reviewing acquisition by acquisition with you. So I think we'll try to do that as we discuss these results. I would say that I think Excel will be more on the benefits side than it will be on the services side. But I think maybe the best way to do that would be to maybe discuss our kind of return on invested capital in more depth with you in the future settings. But we're really not prepared to discuss it today. I do think that the acquisitions that have been made have been very prominent in terms of the growth of the Optum businesses, and I would say that we're very pleased with all of the acquisitions that we made and I'll just leave it at that.

[Operator:]

Our next question comes from the line of Carl McDonald with Citigroup.

[Carl R. McDonald:]

In the commercial business after you allocate for favorable development, can you talk about how the trend changed over the course of the year relative to the 5.5% trend for the full year? So basically what I'm trying to get at is as we exit 2011, are you at that 5.5% trend now, or do you think you're closer to the 6%, 6.5% trend that you're assuming for next -- for 2012?

[Dan Schumacher:]

Carl, it's Dan Schumacher. The trend in the commercial business increased progressively through the quarters of the year, and it was more pronounced in the third and fourth quarters in particular because of that slow baseline in 2010. In terms of where we're operating at today, 5.5% is reasonable.

[Stephen J. Hemsley:]

I think we perhaps only have time for maybe one question or so. So the next, please.

[Operator:]

Our next question comes from the line of Doug Simpson with Morgan Stanley.

[Doug Simpson:]

Steve, could you just talk a little bit about the duals, how you guys are thinking about that in terms of timing and potential investment around that and maybe just remind us sort of the states that most interest you and the ability to scale the capabilities you all have into those different markets, talking about the cave footprint, the steps, that kind of thing.

[Stephen J. Hemsley:]

Sure. I would suggest I'll have Gail, and then I think Dan will probably run through a couple of our other parties here today. I would suggest that this is not new for us. This is an area we have been focusing on for some time, even dating back to the Evercare business, the INSPIRIS business, et cetera. And so this has been a market segment that we recognize is in need of management, has significant cost, has significant challenges, so we've been building these capabilities for some time and already have a pretty good base of business. This is really just emerging in a more national profile, particularly from a policy point of view about just what the challenges really are to these businesses. So I think we're really well positioned in Excel Health, gives us a great position in that. In terms of -- you can come at this from 2 directions

[Gail K. Boudreaux:]

Sure, I think Steve hit the major points. One, as we mentioned at our Investor Conference and in our breakout sessions, we do see it as a major opportunity. We think we're uniquely positioned because we have significant presence in both the Medicaid and Medicare space. We've been at this business for a long time. We have experience in managing clinically complex and long-term care populations, and Excel brings some additional capabilities to us, which I think will be really important. And again, I think experience and the depth of experience that we have really matters in this market. Not a whole lot has changed since we met in New York in terms of the timing of what is happening. We are engaged. I might ask Jack Larsen who leads our Medicaid business to maybe comment a little bit about what we're seeing in this space in particular.

[Jack Larsen:]

Hey, Doug, Jack Larsen. So I think Gail said it right, not much on the surface has changed in terms of having a different point of view on timing. CMS in a number of the 37 states who have submitted letters of intent are collaborating towards CMS's published goal of 1 million individuals and fully integrated programs by January of 2013. I guess still where we're at, we think all these states that have shown interest have interesting aspects where we could perhaps add value. We continue to work with states where we participate in the underlying Medicaid programs and offer dual special needs plans, as well as other states where we don't have but has developed presence and really trying to work with them as they develop their own unique approaches as to how they're going to get after that integrated Medicare and Medicaid cost structure, which is just an extraordinary opportunity I think I shared with you in New York in December. So...

[Stephen J. Hemsley:]

Thank you. I think in terms of time, we are -- we need to close this. So again, we thank you for joining us on the call today. We hope what you heard is that our heads are totally into the game for 2012. We intend to serve people well. We intend to elevate our performance even further this year. And we will keep building and growing our businesses and our capabilities for both benefit and for services. And we look forward to speaking with you again next quarter. Thank you.

[Operator:]

Thank you, ladies and gentlemen. This does conclude today's conference call. You may now disconnect.