Jan 21, 2010
Operator
Good morning. I will be your conference facilitator today.
At this time, I would like to welcome everyone to the UnitedHealth Group fourth quarter and full-year 2009 earnings conference call. All lines have been placed on mute to prevent any background noise.
After the speakers' remarks, there will be a question-and-answer period. (Operator instructions) As a reminder, this conference is being recorded.
This call and its contents are the property of UnitedHealth Group. Any use, copying, or distribution without written permission from UnitedHealth Group is strictly prohibited.
Here is some important introductory information. This call will reference non-GAAP amounts.
A reconciliation of non-GAAP to GAAP amounts if available on the financial reports and SEC filings section of the company's investor page at www.unitedhealthgroup.com. This call contains forward looking statements under the US Federal Securities laws.
Such 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’ve filed with the Securities and Exchange Commission from time to time, including the cautionary statements included in our current and periodic filings.
Information presented on this call is contained in the earnings release we issued this morning, and in our Form 8-K, dated January 21, 2010, which may be accessed from the investor page of the company’s website at www.unitedhealthgroup.com. I would now like to turn the conference over to the President and Chief Executive Officer of UnitedHealth Group, Mr.
Stephen Hemsley.
Stephen Hemsley
Good morning and thank you for joining us. Today, we will focus our commentary in three key areas, 2009 financial performance and our early 2010 outlook, our progress against some key market facing themes discussed with you over the last two years, and lastly some thought about market needs and requirements going forward.
The results from Massachusetts on Tuesday may have affected the legislative outlook, and we're not going to comment on the outcome of health reform today. Whatever the result, we continue to believe that the heart of the issue is a need to thoughtfully stage comprehensive efforts around controlling costs, and modernizing the health systems in order to expand and sustain access to affordable health.
We will do our best to make whatever changes, which may be enacted successful, to appropriately control costs, modernize and simplify the system and to improve access to affordable quality care in this country. As you read in our release this morning, the performance momentum that steadily progressed over 2009 continued in the fourth quarter.
We reported solid fourth-quarter results with earnings per share of $0.81 and operating cash flows of $1.3 billion. All key performance metrics for the quarter were in line or improved, relative to our expectations.
Full year 2009 results included just over $87 billion in revenues or 7% year-over-year growth. Earnings of $3.24 per share and cash flows from operations of $5.6 billion improved year-over-year by 10% and 16% respectively.
Cash flows were 1.5 times net earnings. We managed through many unforeseen obstacles to achieve these results, including significantly higher unemployment trends, anemic short-term investment yields, the H1N1 outbreak, slower buying behaviors in the market for health services, COBRA benefit extensions, and unexpected state actions on insurance premiums and more.
The performance drivers in the quarter were consistent with those throughout the year, discipline in commercial pricing supported by better product positioning market to market, steady and effective management of medical and operating costs, strong membership growth and market share gains across public and senior products in markets, and double-digit percentage revenue growth in our services businesses. We see many of these performance drivers carrying forward into 2010.
While we are pleased to have exceeded our financial commitments in 2009, we are equally encouraged by our advances throughout 2009 in key areas, where we are demonstrating our ability to better serve people, which enhances our potential for growth in 2010 and beyond. In 2009, the satisfaction levels improved meaningfully for every key constituency, consumers, physicians and care providers, employers and benefit sponsors, brokers and consultants.
Our proactive engagement with regulators, medical societies, and elected officials also had a meaningful and positive impact in 2009. Service and response metrics, processing and response accuracy all improved steadily each quarter.
Integration efforts advanced. Some 93% of our total commercial, public and senior membership now resides on end-state operating platforms.
That percentage should be 95% by the end of 2010. These are impactful advances and we’ll continue to be unrelenting in our dedication to service and fundamental execution discipline.
Our commitment to practical innovation over the past year and more resulted in the introduction of the Diabetes Health Plan, The Consumer Activation Index, the Personalized Health Score, and integrated eSync personalized care platform, and our Connected Care Telehealth Program. We had advanced our clinically integrated premium networks across 20 clinical specialties in the vast majority of our markets.
We are piloting new types of physician incentives to support improved care and developing medical home programs in more settings than any other payer, including the government. UnitedHealthcare is benefiting from its work to more effectively translate local market insights to national level initiatives, and conversely national imperatives into more effective local market execution.
The results include stronger local market relationships, more effective local market deployment of new products, better recognition and response to serving local market needs and variations, all while steadily advancing national scale, productivity and cost advantages. We are consciously nurturing a more mature, externally oriented culture and expanding our social responsibility agenda.
You can see these reflected in our own employee engagement levels, advancing 600 basis points over the past 24 months, which portends [ph] well for continuing to improve performance. Our health services businesses continued to steadily diversify.
We edged into the next set of market adjacencies, including revenue and claim cycle management, consumers health change consulting services, global employee assistance, and prescription decision support in Europe, while strengthening our position in electronic health records software. Through these efforts individually and as a whole, we believe we are steadily elevating the value we bring to our customers and markets, and meaningfully strengthening the reputation of our company and our relationships with the people we serve.
These efforts will continue. Collectively, they are our fundamentals.
We are committed to consistent execution and continuous improvement in these fundamentals, quarter-by-quarter as we have been emphasizing for nearly two years. Our financial position also continues to strengthen.
We have reduced our debt-to-total capital ratio by more than eight percentage points over the past 18 months to 32%. We recently announced $750 million debt tender offer for a portion of our notes.
This debt repurchase is expected to further improve our financial flexibility, while reducing our net debt service cost in 2010. Before we discuss our respective health benefits and health services businesses, as we begin this new decade, it is worth looking back briefly.
When we entered 2000, UnitedHealth Group revenues were just over $19 billion. On a gross revenue basis, our business was about 60% commercial benefits, 35% public and senior benefits, and 5% health services.
Entering 2010, we see over $90 billion of revenues with roughly 40% of growth revenues in commercial benefits, 40% in public and senior benefits, and 20% in health services. And over the next decade, we see opportunities to naturally diversify further into healthcare IT services, healthcare financial services, the deeper integration with primary care, the pursuit of international market settings and more.
The scope of our business model is unique, and allows us to look at healthcare market opportunities very broadly. This includes our view of the coming healthcare modernization era, where we will pursue an opportunistic path and help enable change.
In 2009, combined revenues in our health services businesses grew to $21.8 billion, a 13% year-over-year increase. Earnings from operations of $1.6 billion increased 20% over last year.
The prime contributor to this growth was Prescription Solutions, where revenues reached nearly $14.5 billion, a 15% year-over-year gain, and pre-tax earnings grew an impressive 98% to $689 million. Ingenix also grew strongly even in a challenging economic environment.
Ingenix increased revenues 17% in 2009 to $1.8 billion and earnings from operations to nearly $250 million, and this is after investing significant amounts in start up efforts around payment and revenue cycle management, comparative effectiveness research, international markets and electronic health records. OptumHealth revenues grew by 6% in 2009, and delivered the best overall external growth year in its history.
The continued decline in the UnitedHealthcare commercial enrolment obscured that external market growth. It continued to impact OptumHealth’s margins.
New business from public sector customers tends to have lower margins than commercial risk products. That business’ mixed dynamics should reverse as the overall commercial risk market strengthens.
As we look across our health benefits businesses, 2009 played out largely in line with our original expectations, albeit somewhat weaker than commercial enrolment levels as national unemployment trends were more severe than we had anticipated; more than half of our 2009 commercial membership decline was driven by attrition. For the fourth quarter, our commercial enrolment was slightly ahead of our Investor Day outlook, posting an underlying growth of 40,000 members before employment-related attrition.
The full-year commercial decline was offset by stronger than expected growth in the Medicare and Medicaid markets, and we're positioned to expand our services in the military in early 2011. In total, health benefit revenues increased 7% to more than $81 billion.
We effectively managed both medical and operating cost trends. These cost containment capabilities are becoming more mature and consistent, particularly as our benefit businesses become more integrated and simpler, using more shared services and common clinical care management processes.
Turning to our early outlook, momentum from 2009 is carrying through in our earliest 2010 indicators. We expect first-quarter commercial membership to be slightly stronger than our Investor Day outlook.
We should be flat to slightly positive in first-quarter fee-based business even after attrition. On the risk-based side, we should come in slightly favorable to our prior guidance of a decrease of about 500,000 members in the first quarter.
Attrition continues to run at a high level, and will be a concern all year in this economy. Across our Medicare portfolio, with 8 million consumers choosing UnitedHealth group Medicare product in 2009.
Recent enrolment period demonstrated once again the value of privately managed Medicare products for America's seniors. Going into the enrolment period, there was considerable uncertainty about the Medicare Advantage program caused by benefit reductions, premium increases, plant closures and the ongoing healthcare reform debate.
In spite of that uncertainty, demand for Medicare Advantage plan industry-wide remains solid. Our Medicare Advantage business is expected to grow nicely for 2010.
We attribute that growth to a focus on affordability, managing our portfolio of benefit offerings with a steady long-term view, and our ability to adapt our plan offerings to the challenging rate environment. Seniors continue to recognize the real value of our Medicare Advantage products, and have voted their convictions by trusting their healthcare to our plans and our strong network of quality providers.
We expect first quarter net growth to be above 100,000 CVS in Medicare Advantage with strong mix towards the network-based products and 225,000 Part-D standalone participants. That is a stronger start than we originally expected in this sector, and the Health Net Northeast acquisition will add further to our totals.
First quarter Medicaid membership should grow in the area of 100,000 to 125,000 people in line with our 2010 plan. Our services businesses are all stronger as we move into 2010 than when we entered 2009.
We are on track to achieve 2010 revenue growth plans here as well. We expect consolidated 2010 revenues to grow above $90 billion.
We have reconfirmed our 2010 earnings outlook at $2.90 to $3.10 per share. That outlook does not include any proposed federal healthcare reform elements that could potentially be faced in this year.
We believe this earnings range to be appropriate given the Medicare and Medicaid rate pressures, the loss of Part D performance pricing of Prescription Solutions, ongoing COBRA costs, and lower commercial membership levels going into the year. These headwinds will be strongest in the beginning of the year before any mitigating efforts can get full traction, and this pattern does not appear to be fully reflected in the first quarter consensus earnings estimates.
For 2011 and beyond, we will factor in business and market changes driven by healthcare reform and modernization, whether incremental or comprehensive. We believe coverage will expand and increasing healthcare costs will continue to make our work to promote access to quality care even more important.
No matter what form change ultimately takes, there will continue to be very strong market demand for affordable, quality care, demand that will create the next generation of growth in our markets. That future includes new ideas and committed actions around payments and incentives for quality care, development of integrated accountable care capability, transparency around quality and performance, and paperless end-to-end defect free service, further innovation around product designs to achieve lower price points, a much stronger commitment to drive outcome based payment arrangements, and a clear need in the seniors market for continuous improvement in total cost and values, which will encompass both operating and medical costs performance gains.
There will be companies who will – who can and will respond to these needs, and we intend to be one of them. Doing so will require the focus on fundamental execution and intelligent adaptation we described in Investor Day last month.
We see that more than 300 million Americans will continue to need to get care, and that this care needs to be intelligently coordinated, financed and delivered and documented across the system. Our goal is to be involved in that process through both our services businesses and our benefit businesses.
In total, there is an exceptional opportunity to build an enterprise to successfully serve these important social needs. We are interested in your questions this morning, with the understanding that the health reform situation is very fluid and sensitive.
As usual, we will ask that you limit yourself to one question topic today in deference to time, and I thank you for your interest in UnitedHealth Group, and we will turn it over to the operator.
Operator
(Operator instructions) Our first question will come from the line of Scott Fidel with Deutsche Bank.
Scott Fidel
Good morning. Can you just provide an update on the pricing environment that you are seeing at this point for commercial for both the risk-based market and then the ASO [ph] market, just in terms of the level of price competition you saw for 2010 renewals relative to last year?
Stephen Hemsley
Gail.
Gail Boudreaux
Sure, good morning Scott. Let me start with the risk-based market.
That market continues to be competitive, but I think as we’ve talked about we have seen some firming in that market for the last couple of quarters, and we would expect to continue to see that type of activity. We had a very disciplined approach, and I think our ability to keep our medical cost trend very consistent and predictable, and our ability to manage our medical costs has helped us with that level of consistency.
On the self-funded side, again that market over the last several years from a fee-based perspective remains very competitive, and again I think the story there is the same. We had a very consistent approach and have not done anything traditionally different.
As we look to 2010, based on the fee-based membership that we reported, and we think it is going to be slightly positive and up in the first quarter. That is a fairly significant improvement for us year-over-year from 2009 to 2010.
So, that is some very good moment for us, but from a pricing perspective, pretty consistent for us year-over-year.
Scott Fidel
And Gail, how would you just characterize the blues on the risk pricing side for 2010 relative to 2009?
Gail Boudreaux
In terms of the blues, I think the answer is pretty consistent to what I said on the risk side that we are seeing some pockets of rate increases, obviously as they take their base rates up. But it is different geography to geography, but overall there is some firming going on there.
Scott Fidel
Okay, thank you.
Stephen Hemsley
Next question please.
Operator
Our next question will come from Christine Arnold with Cowen & Co.
Christine Arnold
Good morning. Your PDP in Medicare enrolment are all poised to be better than you thought they would be at Investor Day.
It is that your fee-based revenue is going to be up; your commercial enrolment is going to be better than anticipated. Can you help us understand, what offsets those, such that you are not increasing guidance or is this just conservatism?
Stephen Hemsley
Well, I would point out that it is January, and let me then reaffirm kind of what I would say those headwinds are. This is kind of an economic environment that is unparalleled in our lifetime.
We have meaningful rate pressures in the Medicare and Medicaid environment. We have the loss of lock in pricing in the Prescription Solutions business.
We had a number of unforeseen obstacles at this time, when we entered 2009, and we have no sense of what will be coming down the road. So, I think it is quite early for us to offer any indication other than that environment hasn't changed from about a month ago when we had our Investor Day.
And that environment is quite challenging, and I think that that is the – what we need to be conscious of. We have a lot of work to do in 2010 to hit the guidance that we have offered.
Christine Arnold
Okay, thank you.
Operator
Our next question will come from the line of Carl McDonald with Oppenheimer.
Carl McDonald
Great. Thank you.
Some of the smaller private plans that I’ve talked with over the last couple of weeks have suggested that in their commercial business, they think utilization is rising. So, when you look at your business, excluding to the extent you can the flu, COBRA expenses, do you think the underlying base utilization, based on your recent claims data is unchanged up or down, any noticeable trend there.
Stephen Hemsley
No, maybe they should answer that kind of in an enterprise wide level. So, maybe Mike, maybe you could, and then if the other businesses want to add some color.
Mike Mikan
You know, we really haven't seen any real change in underlying utilization. I would tell you though, we continue to be very focused on our clinical management programs.
We have been talking about them for several years now, and we are really starting to see traction there. So, our utilization continues, if you just look at commercial as an example to be flat to down, and we are seeing other favorabilities in the Medicare and AmeriChoice Medicaid work as well.
So, I don't know what the rest of the market is seeing, but our underlying utilization continues to be stable to down, especially on the inpatient side.
Carl McDonald
Great, thank you.
Operator
Our next question will come from the line of Kevin Fischbeck with Banc of America/Merrill Lynch.
Kevin Fischbeck
Okay, thanks. Good morning.
Q4 favorable development for the current year looked higher than normal compared to prior years, did that favorably impact the quarter or did you reaccrue, and I guess what came in better for the first nine months than you were thinking, and does that have any impact on your cost trend outlook?
Stephen Hemsley
Let me try to answer it this way, let me give you some context on our view of reserve development. First, as we have said for some time, our reserving methodology and processes remain consistent with prior years.
Second, we continue to be proud of our ability to predict cost and estimate actual usage, and I think that is evidenced by our prior year development in 2009. For 2008 and prior years it was one half of 1% of prior year medical costs, which we think is well within a normal range of variation.
With respect to current year true ups, there are several factors that have impacted our initial estimates between the quarters in 2009. First of all, we had significant growth in the government business, as you know, about 300,000 additional Medicare Advantage lives, 565,000 additional Medicaid lives.
We’ve continued to see advancements, as I just talked about in our clinical programs that as the data trues up, that starts to prove out to be favorable. The operational advancements that we’ve talked about over the last several quarter at our investor conference, you know, we've seen some of the best performance we have seen in the history of UnitedHealth Group, and as that performance continues to improve, as the data catches up to that, we have seen favorability, and then frankly, just the volatility with the abnormal flu season has created a fair amount of volatility in our reserve debt.
That is just to name a few, but overall, we feel we’ve got good data and insight into all these items, and are very comfortable with our 2009 full-year estimate, and with your last question with respect to trends, we wouldn't change our outlook on trend at 8%, plus or minus 50 basis points.
Kevin Fischbeck
Okay, thank you.
Operator
Our next question will come from the line of Matthew Borsch with Goldman Sachs.
Matthew Borsch
Hi, yes, thank you. Could you just talk a little bit about the AmeriChoice business, and if you can give us any sense geographically how that is running and what markets, you know, you are finding challenging or you expect to be challenging, particularly challenging in 2010 versus where you are having better results?
Stephen Hemsley
Yes, I would be happy to. I would point out that they have actually had perhaps their strongest year and really well positioned.
So, Rick.
Rick Jelinek
Matt, we're coming off a very strong year as Steve mentioned, and one of the strategic positioning points that we started on a couple of quarters ago was to diversify our portfolio so that we're not over-reliant on any single customer or product line. So, from an outlook standpoint, we feel really good about our current positioning and the breadth of our state, and while some states will continue to face challenges going forward, we are working closely with those states on rates for the coming years.
Today, we have about 40% of our 2010 calendar year rate locked in, and so we have got little ways to go to get clear visibility on some of those other markets, but generally, we feel relatively comfortable across the board. There are a couple of markets that we will watch closely in terms of assuring that revenue is meeting the medical trend requirements, and if they are not, we will take a closer look at working with the state on benefit designs or other structural changes to assure that these programs are working for the long term, and in particular 2010.
Matthew Borsch
Okay, thank you.
Operator
Our next question will come from the line of Justin Lake with UBS.
Justin Lake
Good morning. My question is on the impact reserves from the Health Net acquisition.
You outlined in the earnings release that $250 million increase in medical cost reserves due to the acquisition, and I'm curious as to the driver of that. It is my understanding was that Health Net was going to be responsible for the run of claims cost in that business.
Stephen Hemsley
Justin, without getting too much into the devise [ph] on the transaction, that is a balance sheet, as we acquired the legal entities, we assume the balance sheet obligations. It gets trued up through a purchase agreement adjustment that they ultimately take the claim cost, as long as it is on their book.
So, it's a balance sheet transaction, which ultimately gets trued up and we feel comfortable with that process.
Justin Lake
Okay, so there was no impact to the quarter specifically from any kind of increase or decrease in Health Net’s reserves as you brought that on?
Stephen Hemsley
No. That would – it would net to 0.
We don't see any benefit or detriment to that.
Justin Lake
Okay, thank you very much.
Operator
Our next question will come from the line of Charles Boorady with Citi.
Charles Boorady
Thanks, good morning. I wondered if you could comment a little bit on capital deployment, you alluded at the Investor Day to the potential, you know, increase the dividend, and you've brought that to cap down 600 bps in the year and have significant cash as apparent.
So, we're clearly out of the credit crisis so I am wondering if you can characterize for us how you plan to deploy the cash this year.
Stephen Hemsley
Well, I think we described at the investor conference that we were through the course of 2009 really evaluating financial flexibility, and that's kind of been our path. I think we have made some meaningful inroads in our math.
We have made acquisitions also through the course of the year, and we like to make sure that we are maintaining our financial flexibility, not only to invest internally in our business, but also for acquisitions. So, I don't think there really has been any kind of change in our thinking along those lines, including as we said there, you know, really evaluating whether a change in our dividend policy is appropriate and we said we would take that up as kind of the reform situation clarified that it is still in the mix obviously, but we expect there will be some clarity on that early this year.
So, Mike, do you have anything further? Did that get to your question?
Charles Boorady
Yes. So, the debt-to-cap at around 32%, I mean, should we think about it as being closer to 40% by a certain period of time or you know, at one point you're more comfortable with a high leverage ratio?
Stephen Hemsley
No. I would just say broadly kind of on a more middle-of-the-road kind of environment, you know, 35% something like that as a kind of a middle-of-the-road suggestion.
That can vary meaningfully between 30% and 40%.
Mike Mikan
Hi, Charles, it's Mike. You know, we are comfortable with the business given the – in its current state, again health reform not trying to predict either way on impacts of health reform, but in its current state as we said before, we think that the businesses – our diversity, the growth aspect, the risk profile and support, a higher debt leverage than where we're at today.
We've talked about that over time. We put out annual guidance based on what we know of, you know, ending the year somewhere between 30% and 33% debt-to-total cap and we are comfortable with that in, you know, with our current expectations.
Charles Boorady
Great, thanks.
Operator
Our next question will come from the line of John Rex with JP Morgan.
John Rex
Thanks. A question back on the UHC book, and I'm thinking particularly about yields on both the risk and non-risk businesses.
And so, I guess just first it looks like the commercial risk yield continued to strengthen in the 4Q, and I guess as I am thinking about the 2010 should we expect the effective yield, so that it is kind of net of kind of product mix shift and such to continue to strengthen like we're seeing throughout 2009, maybe not at that pace, but continue to come in above that level, and then specifically on the ASO book, you know, one of your competitors last week talked about lower PMPMs in the ASO business for 2010 as employers eliminate some specialty products, I am wondering if you're seeing that impact on your ASO book.
Stephen Hemsley
Gail?
Gail Boudreaux
Hi John, let me start with the premium yield question first. We are pricing on our risk business to our forward view of medical cost trends, and we look at our premium yields and you commented, those are tracking in line with our expectations, and I think the best judge of that is looking at the fidelity of the medical loss ratio as we’ve discussed over the last couple of calls, once you adjust for COBRA and H1N1, which obviously were not predicted when we set that.
So, I think you know, our philosophy and our approaches remain very consistent around our pricing, and I think ultimately our yields and bottom line our medical cost ratio.
John Rex
So, would it make sense we should expect those yields to continue to rise in 2010 then like they've – kind of this trajectory we've been seeing in '09?
Gail Boudreaux
You know, again we are pricing to what we believe is the forward view of cost. So, our – again it is the stability of the medical cost ratio that we are really tracking to, and I would point you back to you know, our medical cost ratio that we shared with you at Investor Day at 83%, 83.8% plus or minus 50 basis points, and I think within that range it gives you a good sense of our expectations.
John Rex
Okay.
Stephen Hemsley
You know, and John I would actually say that we've seen some really good market response to the kinds of services that you're referring to, maybe Dawn could comment on that.
Dawn Owens
Hi John, Dawn Owens, OptumHealth. You know, when we look at the employer market, we've had our strongest year ever 2009-2010 selling season with not only pipeline activity up in that market across the board in all the services we offer financial, clinical care management, wellness, behavioral health, but we’ve translated that at a higher rate in to close, actually with a 25% conversion rate on closure.
That is both in partnership with UnitedHealthcare on an integrated basis as well as an independent cross carrier externally focused agenda. So, we're actually seeing very strong demand for the services and a marketplace that is interested in productivity, health, wellness in ways that we can offer.
So, we feel actually good about that market and have diversified well into it.
John Rex
So, net-net on your ASO book, would you expect you know, PMPM revenue to, you know, not be worse than flat in 2010 over 2009, when you think about. So, it sounds like you are saying, you are seeing attrition of those specialty products.
So is that a fair assumption?
Gail Boudreaux
Our expectation is our revenue would be relatively flat. So, our penetration rates have remained fairly stable.
John, this is Gail Boudreaux.
Dawn Owens
And John, (inaudible) that we are talking about two different businesses. So, OptumHealth’s direct employer business also has different – an additional revenue streams in a large employer marketplace, which would account for this additional external growth that we talked about within OptumHealth.
John Rex
Okay, great. Thank you.
Stephen Hemsley
And Optum had more external, it's external growth here as 2009 was probably its best, and its pipeline is probably at strongest level. Next question please.
Operator
Our next question will come from the line of Ana Gupte with Sanford C. Bernstein.
Ana Gupte
Hi, thanks. Good morning.
While I understand you cannot comment on the outcome of reform as you are doing your scenario planning internally, has that changed or would it change your view on the various portfolio businesses that you have. So, health benefits you know, versus health services, domestic versus international, MA [ph] commercial relative to Medicaid and then consolidation for capabilities relative to horizontal consolidation.
Stephen Hemsley
That's a really – it's an excellent question, but I set back a few years and put kind of reform to the side, and say if you really look at the market in terms of what the compelling needs of the markets are relative to benefits and relative to services, and how the market needs to be brought along to a more kind of what I'd say modern state, and the demand for more services and a more seamless integration of services all thrown in with the kind of consumer trends that have actually been building over the last 10 years. That's what we have been responding to.
That's how we have positioned our existing portfolio of businesses, and there are common you know, core elements of what reform is trying to get at. So, if you just put that aside and just focus on the core fundamental market needs, that's what we are responding to.
They align with reform because of the same issues and challenges. So the answer to that is we wouldn't change at all.
We think that the construct has been really built for that kind of response, which is why we feel we could, we can position ourselves somewhat differently, and we're going to continue that pattern. So, you have seen over the course of the last year steps into natural market adjacencies, and I think you can expect to continue to see that.
Ana Gupte
Okay, thank you.
Operator
Our next question will come from the line of Doug Simpson with Morgan Stanley.
Doug Simpson
Hi thanks. Good morning.
Steve, could you just talk a little bit about given the challenging economy, you know, health care costs continue to clip along you know, ahead of wage growth and given the unemployment situation, what are you guys seeing from customers in terms of pressure to help deal with rising cost. Has there been a heightened awareness of it and I guess along those lines, how do you guys think about impatient pricing strategy and, you know, looking out a year or two, any read on potential direction of benefit structures more broadly?
Stephen Hemsley
Well, it is all about cost and there is you know, business operators are looking at, they are committed to the benefit. They are looking at optimizing those benefits and staying with them and trying to get a better cost outcome that's actually been partly why there has been a good response in terms of more of the care management programs, the dedicated kinds of programs like diabetic health plans, et cetera because those are effective tools of getting at in an appropriate way, better of cost outcomes for their dollars.
So that is really where they have really been working, they have been to the extent they have a broad portfolio of different benefit types across their companies. They've been trying to rationalize those benefit types.
They've been just trying to manage their programs and get at cost and to engage their employees, because they also recognize that it is the consumption patterns that is driving a significant portion of their trend and they think that they can influence those consumption patterns in a very positive way, and a positive way for the health of their people. That's really where it is, those discussions are very, very consistently company to company, and that is why we’ve been really driving our clinical programs, as Mike talked about utilization, management and so forth.
These companies want to see demonstrated performance along those lines and that's where our themes have been. Gail.
Gail Boudreaux
Just adding to Steve's comments, I think there are three core themes that our largest customers and across our book are looking at one, is managing their total cost. I think it has been very important to them this year.
The second is improving the health status of their members. So, getting more value for the dollars that they spend, and the third I say is getting consumers more actively engaged in their program.
We have had some very good momentum in the marketplace, because our programs directly address that. Things like our Consumer Activation Index that we shared with you.
On the provider side, we are very focused on making sure that we are paying for cost and quality. So, our premium designation network where we are trying to steer more of our members to plan, design and incentives.
The second area that I would point to is we have a number of initiatives around patients at medical homes, where Steve said in his early comments have more of those than anyone else in the country, including the government. And we are tracking the results of those very closely.
The Diabetic Health Plan would be the third I would point to. We had – we introduced that a little less than a year ago and have seen wonderful up-tick from our customers, because it is a very focused program that drives results in a targeted population.
So those are really the themes that employers are looking at, and again it's around managing total cost for driving better quality and outcomes for their health, for the population of their employees.
Doug Simpson
Thank you.
Stephen Hemsley
Did it get to your question?
Doug Simpson
Yes.
Stephen Hemsley
Okay, thanks. Next.
Operator
Our final question will come from the line of Brian Wright with Colin Stewart.
Brian Wright
Thanks. Is there any potential impact on the – on your bank from the deposit tax, the proposed deposit tax?
Stephen Hemsley
We don't think so. We don't think that those accounts have – are subject to that tax, but we will – you can sense of lack of surety here.
So what we will do is we will follow up and make sure that we get back to you with a more confident answer.
Brian Wright
Great, thank you.
Operator
And at this time…
Stephen Hemsley
Yes, that concludes our – the questions in line. In closing, we'd like to just quickly sum up that we think UnitedHealth Group delivered a relatively strong financial performance in 2009 despite a difficult economy.
In addition to meeting our financial commitments, businesses continue to steadily advance in service, innovation, scale, national scale, and local responsiveness and continued to diversify. We are entering 2010, we think as an operating enterprise much stronger than the beginning of 2009.
We are respectful of the challenges that we are facing in 2010, and we think we are really positioned well for the next generation of growth over the next several years to come. So, thank you very much for your attention this morning.
Operator
And ladies and gentlemen, this does conclude today's teleconference. You may all disconnect.