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Centene CEO addresses how yearly COVID vaccinations could impact its business model

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Centene, the multi-line managed care enterprise, topped Q4 earnings estimates. Michael Neidorff joins Yahoo Finance Live to weigh in on the company’s latest financial results.

Video Transcript

JULIE HYMAN: Medical insurance company, Centene, reported its earnings yesterday morning. $0.46 a share was the earnings per share number. When you're talking about health insurers, you got to pay attention to something called health care or medical care ratio. That's the percentage of premiums that get paid out to associated costs.

And I want to talk about that number for Centene with Michael Neidorff, who is the chairman, president, and CEO of the company. Michael, it's good to see you. So your medical loss ratio was the same in the fourth quarter of last year as it was the prior quarter, in the prior year. That is the fourth quarter of 2019. How are you going to work on getting, I know there were some sort of pandemic effects that affected your costs.

MICHAEL NEIDORFF: Right.

JULIE HYMAN: What does that look like throughout the year? And how much control do you have over being able to get that down?

MICHAEL NEIDORFF: Well, I think it's two things. One, it's going to be choppy again. I mean, it's just the nature of the pandemic. And we're finding that when the pandemic costs are up, the standard utilization is down. So we continue to work on it, influence it. I tell people we control our cost, influence medical expense. And we have a lot of systems and technology now we're applying to it, that I think over time, will start to continue to bring down the costs.

JULIE HYMAN: That's right. You've talked about, or I know you've made a lot of acquisitions on that point as well in terms of technology that we have talked about here in the past. What about the balance of people not getting as many procedures right now with on the one hand, with COVID costs. Testing and the like, on the other hand. And also, how concerned are you about sort of a balloon effect or a delayed effect from people who did not get the care that they needed during the pandemic? Is that going to be an upward influence on your cost this year?

MICHAEL NEIDORFF: I think that's been mitigated. Most hospitals that I've talked to, their presidents, CEOs and individuals, they now have really bifurcated their hospitals. We've done that with our own hospitals in England and in Spain, where you have the section that's for COVID and you have a section that's for normal utilization. Individuals that have something they need, they have a cancer, they have an appendectomy or whatever they have, they're getting that care now.

What we're seeing delayed are elective things. In the case of a colonoscopy, an endoscopy, women with their mammograms, things of that nature. And so while that can have some effect long, long term, these aren't being delayed past more than one cycle. So I don't think we're going to have as much pent up as some people think. People are adapting to it. The system's adapting to it. The one area we're watching carefully is the outpatient services, the physicians. Because they have been trying to restrict how many people in their office at one time. But even that I think will pick up the second half of the year.

MYLES UDLAND: Michael, on the call you guys made a quick mention of sort of the ACA provision that's within the COVID relief package that is currently being proposed. And I'm curious, as you start to think about what the next couple of years of health care policy might look like, do you think it's going to be more moves like this where Congress leverages the existing ACA to fill in the gaps rather than try to come in with some massive overhaul of the health care system?

MICHAEL NEIDORFF: I don't see any massive overall. People like the ACA. When you look at how people have stuck with us, they like it. And I think what we're seeing is a commitment to try and get the uninsured insured. And they're really doing it in a way that is making it affordable. So we're finally, we're going to get more subsidies with the new act that will make a difference. It's going to allow people to keep our plan instead of searching for the cheapest plan.

And those that have tried to come in on a price basis, we're going to find with a narrow network, are going to find people gravitating to our plan, larger network, more comprehensive, and at no cost to them. So I think it's really good. And I think it's going to allow us, we're going to contain costs, we're going to help them. And they're going to end up with higher quality. So I think we're headed the right direction. I believe the administration is committed to building on the ACA.

BRIAN SOZZI: Michael, curious on your thoughts on the vaccine itself. Do you think this is something that we will have to get every single year? And if that's the case, does that have an impact on Centene's business?

MICHAEL NEIDORFF: I think we will. The groups I've been talking with are saying you're going to get two injections a year. I mentioned it earlier to Julie. You're going to get your normal influenza, and you're going to get the COVID-related one. Now, what's important is and what you saw really means, how are they going to get the testing.

Well, normal influenza is done in a laboratory. They're not going through three phases of testing. We're going to see every year they're going to try and determine which is the COVID, and we're going to see a vaccine developed very quickly. And we'll get two injections a year. And I don't think, it's going to have no impact on us. There may be a COVID season here or there, there may be something, but it's going to be like influenza. You may have some elevated costs in a particular season. But I think the COVID people will be very serious about it, more so than influenza.

What we're working on, I'm concerned about historically now, is that mothers not, who developed concerns about vaccines, move away from the normal measles and other things that they normally give children. And we're doing some public service announcements now developed, so as to avoid that. So there's, I think vaccines are here to stay.

JULIE HYMAN: Yeah, that's a great point about the sort of knock on effects for other vaccines. Michael, what about vaccination of your work force? Are you all, it has largely not been a private effort. It's largely been a state and federal effort. But are you doing things to help your employees get vaccines?

MICHAEL NEIDORFF: Yes. What we're doing is, we have asked our people to talk about we are kind of the quasi essential workers, and we do have nurses and people who are seeing people that, how do we do that, and how do we get it the earliest possible stage. We're doing a lot of testing. We now have the ability to do rapid CPR testing in our clinic here in St. Louis and other locations. So we're doing that. We're creating a work environment they can get back to safely.

But we're trying to determine, can we mandate you take the vaccine. Because right now, there's still deeming it to be experimental. So there is a legal issue that's been raised there. But we're helping people understand that the vaccine protects you from needing oxygen and dying if you do get the flu. And that's what's so key. Even a J&J with 72% will protect you, keep you alive, and you will probably go to the hospital. So just that movement alone should be enough, and we're educating employees to that fact.

JULIE HYMAN: Sticking with employment for a moment, I don't know if you saw on the news this morning about Salesforce and its plans for bringing people back and not bringing people back, that they're going to offer a pretty wide options for people to work from home. What about you guys? You were telling me in the break, what, you have 70,000 employees working at home. What's the plan? Are you going to, and how long are they going to be working from home?

MICHAEL NEIDORFF: We've told them, don't plan to come back before September. We have put these partitions, Plexiglas partitions between every booth. We have the temperatures automatically checked when people come in. And there's all kinds of things of that nature so when they do come back. We are scheduling them back, and we will do some modifications.

You may come in for a four-day workweek. You may, and how you come in, you make him in one week, stay at home one week. It's going to be a function of the job. We have to get people back in the office. We're an innovative company. We need to help people develop. And you don't, you're not innovative when everybody's working at home. So our plan is to in the fourth quarter, God willing, everything settles down with the COVID, we don't have a lot of new strains, we expect to start to bring the workforce back on a very planned, methodical basis.

JULIE HYMAN: You can have all the technology in the world, there's no substitute for talking to people in person, is there, Michael, still? And hopefully, eventually, we'll see you in person as well. Michael Neidorff is the Centene CEO. Thank you. It's always great to see you.

MICHAEL NEIDORFF: Likewise, look forward to it, and thank you for having me on.