Editor's Note: This research note was originally published March 18, 2014 by Hedgeye’s Healthcare Team. For more information on Hedgeye please click here.
Is Patient Traffic Really Down 6%?
We Doubt It
A widely followed physician office visit data series has been showing dramatic declines in doctor visits in the negative -6% to -7% range over the last two months. The implication (which we disagree with) is that UNH and other managed care companies have a meaningful tailwind in Q114.
We do not find, when comparing this medical utilization series to any of UNH's cost trend metrics, or those of other managed care companies, a meaningful positive relationship. We also fail to find any relationship to this series to any of the historical company data sets in our database.
We do find, as it relates to UNH's cost trend, several alternative data items that do appear worth following. The most interesting of these to us is the trend in the Personal Consumption Expenditure for Medical Laboratories (PCE: Med Labs, charted above) which has a positive correlation of 0.83 across multiple durations between 2008 and 2013.
The PCE: Med Labs trend agrees with our recent physician survey work where, after posting very strong patient volume metrics in Q413, January patient volume turned very weak. However, February volumes have rebounded, particularly in the Midwest, where weather headwinds were likely worst.
Right here, we don't see a reason to change our negative view.