Universal American Corp. (UAM)

UAM 
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Universal American Corporation (UAM)

Deutsche Bank Securities Health Care Conference Call

May 30, 2013 04:10 PM ET

Executives

Richard Barasch - Chairman and CEO

Analysts

Scott Fidel - Deutsche Bank

Presentation

Question-and-Answer Session

Scott Fidel - Deutsche Bank

Alright thanks. Scott Fidel, managed care analyst with Deutsche Bank. We are delighted last but not least to be able to encore out the healthcare conference with Universal American. Here from the company, we have the Chairman and CEO Richard Barasch, we will just do a Q&A session and certainly want to solicit the questions in the audience if you have them but Richard I don’t know is there a comment or two that you wanted to make to start or?

Richard Barasch

I am just happy to answer your questions. It’s the end of a long day that started with the 6 AM shuttle, so I am very happy to have the incoming as opposed to me saying the same thing that I said already 10 times today.

Scott Fidel - Deutsche Bank

Perfect, then why don’t we get right into it and actually maybe we could consider this a two part discussion on Medicare, we actually just had Humana up on the podium right before this session so we were talking quite a bit about the Medicare business and I thought maybe we can start just sort of following up on that conversation and clearly, I wanted to ask a question just first Richard just on your thinking around as the MA bids are due in just a few days.

And while each company has their own considerations they need to make about, their own cost structures and market positioning, each company also has to think about where the industry’s thought process is overall and particularly relative to the question on maintaining a growth trajectory in the business as compared to potentially wanting to maintain the margins at a level they have been running at it.

As you think about some of the game theory dynamics and you sense somewhere the industry is headed right now. Because you sense that your competition generally is going into this bid process with a view that they do want to continue to grow the business even if it requires taking margins down somewhat or that companies are willing to step back from markets and focus on retaining margins?

Richard Barasch

Before I answer that question what did Humana say?

Scott Fidel - Deutsche Bank

They said they want to grow the business in 2014.

Richard Barasch

Yes look I think that the macro for us and I think the correct macro is that Medicare Advantage is here to stay. I think one of the things that the, all the 45 day letter issues proved is that the politics around Medicare Advantage are very positive. And in long haul it’s going to be, it is and it’s going to be a successful program.

I think it’s not crazy to think that in three or four years 50% of seniors will be in some sort of (captivated) program. I think what we are doing in the ACO is, it’s kind of interesting too and where that fits we can talk about also. ’14 presented a lot challenges even before the 45 day letter. The challenges were reduced correctly I think by CMS. But still it was going to be challenging in all the issues that we are all facing.

The companies kind of knew that they existed six-eight months ago and hopefully prepared and we are thinking about it. We said that you said bid will and try to predict what your competitor, trying to predict what the government is going to do in years out, trying to predict what your competitors are going to do in this year. It’s complicated, it’s tricky, and there is game theory.

And you look at it market-by-market, circumstance-by-circumstance. In Houston, we look at and think a lot of that, think elsewhere. In New York we think more about United and some of the blues and kind of trying to figure out what, trying to decide what they are thinking. It’s complicated, but Universal American has a pretty good history of bids both in Part D, and now in MA for a long period of time and we, you know, our bids are done we are going at the CMS over the weekend and I am, first of all happy it’s over and I think I am pretty happy with where we are.

Scott Fidel - Deutsche Bank

And as you thought about where you think the heads are of those other companies, where do you think they are? What’s your best sense on that?

Richard Barasch

Look my gut is that, this is me, this is not a Universal American comment. I think people like the business; they want to keep their market share.

Scott Fidel - Deutsche Bank

And then just thinking about UAM more specifically and clearly the business now is primarily composed of three primary segments in MA. You have got the Northeast business network base and a pretty good positioning, the Southwest Texas business, which has been in excellent positioning and then some of the non-core which is some of the world (privacy insurance) that’s left and I guess some other stuff.

Richard Barasch

Right.

Scott Fidel - Deutsche Bank

And as you think about those three components and then maybe talk a little bit about how in thinking about the 2014 context, how you the positioning is for each of those three and from a geographic and products positioning whether you can maintain or are there certain elements of each of those markets that where you do need to make some rationalizations?

Read the rest of this transcript for free on seekingalpha.com