UnitedHealth’s cyberattack costs to surpass $2.3Bn in 2024
MINNESOTA, UNITED STATES — UnitedHealth Group announced that the financial impact of the cyberattack on its subsidiary, Change Healthcare, will exceed previous estimates, reaching between $2.3 billion and $2.45 billion this year.
This new projection is approximately $1 billion higher than initially forecasted, underscoring the severe repercussions of the February ransomware attack.
Significant hit to UnitedHealth’s finances
The Minnesota-based healthcare giant reported a second-quarter profit of $4.2 billion, a significant drop from the $5.5 billion recorded in the same period last year. This decline is largely attributed to the escalating costs associated with the cyberattack.
Despite this setback, UnitedHealth’s revenue increased by nearly 7% year-over-year, reaching $98.9 billion for the quarter.
Extensive disruption and data breach
The ransomware attack on Change Healthcare, which processes a substantial portion of the U.S. healthcare industry’s billing operations, caused widespread disruption.
UnitedHealth’s decision to shut down its IT systems in response halted reimbursement processes for many providers.
The company paid a $22 million ransom, but this did not prevent the exposure of patient data, which affected an estimated one-third of Americans.
Addressing the cyberattack aftermath
UnitedHealth managed to restore most of Change Healthcare’s services. However, the costs of notifying consumers about the data breach and other ongoing recovery initiatives are expected to inflate the total response costs.
Change Healthcare plans to send out notification letters to affected individuals by late July.
UnitedHealth’s insurer division, UnitedHealthcare, is also grappling with rising medical costs. The medical loss ratio, which measures spending on patient care, increased to 85.1% in the second quarter, up from 84.3% in the previous quarter and 83.2% a year ago.
This rise is partly due to the temporary suspension of utilization reviews and prior authorizations following the cyberattack.
Regulatory scrutiny and future outlook
UnitedHealth is currently under investigation by the Department of Justice and the Federal Trade Commission for potential antitrust violations and business practices that may increase drug costs.
Despite these challenges, the company remains committed to addressing the fallout from the cyberattack and ensuring the continued provision of healthcare services.
