Elevance Health, Inc. (ELV) Earnings Call Transcript & Summary

We've got our Anthem presentation coming up. I'm going to turn over to the Anthem team, who will introduce themselves in a moment. Did want to do a couple of housekeeping items at the beginning here. Again, I do want to introduce myself to anybody who I haven't met before. I cover all the health care services companies. Anthem, amongst my top picks, my initial top pick when launching about 4 years ago. Before that, about 20 years in the industry, heading business development and M&A at a few other companies. [Operator Instructions] And with that I want to welcome Anthem. We've got Chris Rigg, Head of Investor Relations. I'm sure all of you know. Then we've got Pete Haytaian, who's the president of the Commercial business before that, the president of the Government Business. So he is very well-regarded in the industry. I had a disruptor conference where one of the attendees probably took 15 minutes just talking about what a great operator Pete is. So I don't know that I've passed that along, Pete. But -- so with that, what I'd like to do is hand it over to you, Pete, to do an introduction and to talk a little bit about not just you, but what's the background, the vision and the strategy of the company to kind of set it for all the folks who -- your portfolio managers and are -- who are broadly looking at the company. We'll go through a series of questions from there and certainly taking more and more investor questions, but let me turn it over to you, Chris, and to you, Pete.

All right. Well, thanks, Lance, I really appreciate it. And yes, I appreciate the compliment you gave me. You haven't told me that, but it's nice to hear. And also, I want to compliment you and the whole Bernstein team on this conference. So far, you guys are doing a phenomenal job. I know this is different for all of us. And the way that you've organized this today has been really great. As it relates to me, a quick bit of background for those that I haven't met. I came to Anthem in 2012 via the Amerigroup transaction. At that time, I was focused on the Medicaid -- really reverse integration of that business and focused on that for the first several months of being on board. We also, at that time, as a company, really split the P&Ls between the Commercial and Specialty Business division and the Government Business Division. And soon after working on the Medicaid reverse integration, I was put in charge of and led the Government Business Division, as Lance said, did that for about 6 years. And really, did that in a period of tremendous growth. So it was an exciting period for all of us. We took that book of business from a $19 billion book of business to over a $55 billion book of business. And so pretty significant growth years that was in the time of Obamacare and Medicaid expansion as well as a pretty significant Medicare turnaround for us and situating the company for growth. When Gail Boudreaux came on as the CEO about 8 months in, she asked me to move over to the Commercial business and try to create a new growth dynamic in the Commercial business. I've been in this role for 2 years. I'm very pleased with the progress we've made thus far, saw a strong organic growth last year and led the industry by a nit on organic growth, but then this past year, pre-COVID had really strong performance and led the industry from an organic growth perspective and an overall growth perspective in the commercial business. So definitely pleased with where we're headed. I think there's a lot of still opportunity for improvement in areas where we can further accelerate our business, but of course, a lot of that was pre-COVID. And when COVID hit, some things have changed from that kind of momentum and that perspective. As it relates to Lance's point on how does the company is strategically positioned. And again, I'll sort of position this pre-COVID because I'm sure we're going to get into a whole bunch of questions related to COVID, but Gail -- when Gail came on board, she really did lead an effort on transforming the company into a growth organization. And I'd say at the top of the mountain, was a real emphasis or continued emphasis on our government programs business. So like I had said, we have gone through a Medicare turnaround, and we were well situated for growth. And since she's been here, we've seen growth that's far exceeded on the Medicare side, the national averages, and that continues to play through -- it played through in the first quarter of this year, pretty handily. You see industry averages of 6%, 7%, 8% and we're in the mid-teens, double digits for a while as well as, I think, exceeding that this year. So a real emphasis on that and an area of opportunity in Medicare that was really untapped for us, but a great opportunity moving forward is the group retiree business. And so expanding that as well. On the Medicaid side, we had a best-in-class asset, became a real leader at managing specialized populations, had forged really interesting and unique relationships with other Blue partners. And so really continue to emphasize that as an opportunity. The pipeline is very rich in Medicaid and continuing to see a growth trajectory in Medicaid was critically important. And again, at the tip of the spear, regarding that opportunity is really new and specialized populations in the areas where states experience a lot of budgetary pressures. And so government programs continuing to be a major emphasis for us. As it relates to the Commercial business, as I said, when I was introducing myself, Gail really wanted to see us transform into a growth organization, but it was across a couple of different dimensions. I mean, one was -- and this was sort of against the grain, but a belief that we could further grow our fully insured business. And at the time, that was really based in large part on looking at ourselves relative to other Blue partners and seeing that other Blue plans, while we had some of our 14 markets, as an industry leader and significantly penetrated. There were many that we were not, even if we were 1 or 2 in those states, we still had a wonderful opportunity for further penetration in the fully insured business. So that was a real focal point. As it related to our ASO business, while we're a market leader on the ASO side and even most recently, continue to really outperform the market on the national business side. We definitely had an opportunity to improve our margins on the ASO self-funded side. And that's when we talk about, and Lance has talked about it a lot with us in the past, improving our margin profile and our operating gain contribution in the ASO business relative to the fully insured business at a ratio from 5:1 to really getting that down to 3:1 or better. And a whole series of initiatives we were deploying to improve that across our portfolio. So a real focus from that perspective. I mentioned the group retiree business in Medicare, but I'm actually -- commercial business is actually the ones responsible for growing that. So we're growing it, and the Medicare organization is actually managing that business from an operating perspective. So I view the commercial business as where there was a lot of profitability for the company, has an opportunity to improve that profitability, to grow the business and to fund a lot of the growth initiatives across the company that we were seeking to engage in. Other major strategic components of our strategy that are playing through right now and are big contributors to our growth is obviously pharmacy. That was a major overhang for us from a negative perspective for years. We were at a great disadvantage. And so with the launch of IngenioRx and the accelerated launch of IngenioRx, that's created a great opportunity for us in my book of business and in the government side from an affordability perspective, obviously, from an operating gain improvement perspective and an overall growth perspective. So -- and importantly, as it relates to pharmacy and where the puck is going in pharmacy from an affordability perspective around things like specialty, having greater management and oversight of that is super important into the future. And then another major pillar for us is re-situating the Diversified Business Group. And for those that are not familiar with the assets that we have there in, that's were where we house care more, that's where we have Aspire, that's where we have Beacon. That's where we have our AIM asset. And think of it strategically as attempting to be best-in-class really at managing the chronically ill in large part. And that's really been the focal point of Dr. Prakash Patel, who's leading that now, and we're seeing great improvements in that regard. So a lot of wonderful improvement there. And then lastly, I'd say, and while we didn't necessarily talk about this as a pillar in Investor Day, we talked a lot about it, and that is the transformation that we're attempting to go through from a digital perspective. And that only -- that does not only come through as it relates to differentiated products and services and consumer experience, but also how we create a more viable infrastructure internally and a greater efficiency internally by enabling digital and really focusing in on processes end-to-end in a real differentiated way, where in the past, there was a lot of manual intervention in our business. How do we begin to use AI and leverage digital to a much greater degree, again, not only to create more affordable products, but to have a much more viable, scalable infrastructure, both from an efficiency and a speed perspective. So I don't -- we're on a really strong path prior to COVID. You saw our growth. We grow -- we grew more coming into this year than we have in a decade with well over 1 million member growth, and I think outperforming the industry. So really pleased with where that was going. And I think that, that will continue to play through. It's just we're going to have to pivot in the short-term as it relates to COVID. I hope that's helpful, Lance.

Yes. No, I think that's spot-on. And what I'm going to do here, and again, for investors to see here, putting some questions into pigeonhole, which is great. My initial question is really going to get focused on COVID, on the recession and on 2021, 2022 pricing impacts. And then I am going to carve out some time and pivot to some of the strategic initiatives you hit on them or a number of them upfront. So I want to make sure we get a chance to ask a little bit on each of those. So hopefully, we can cram all that into a short period in time here. So first question is really on COVID. If you could talk about the combination of the magnitude of the avoided costs, what you're seeing on the ground right now as far as avoided cost in the system and maybe balance that a little bit with an understanding of the expanded benefits, of some of the actions that you've been taking. So we kind of can get a little sense of what's being safe and what's the outlook for that as well as effectively what's being spent?

Yes. No. Obviously, a highly relevant question. So as we stated in our earnings, and we're seeing that play through, about 30% to 40% of our spend are in these deferrable elective procedures. And in the month of March, obviously, COVID hit sort of in the middle to the end of the month. So began to see that play through in March, but in April, really saw that play through to the extent that I just described. And then month-to-date in May, not a great deviation from that, quite frankly, a real continuation of what we saw in April. We're seeing very modest spike backs, but nothing worth mentioning or material in any way. As it relates to the actions we took out of the gate because of this, obviously, our near-term focus as a company, and I really commend Gail, while it wasn't, I think, highly publicized, I think you probably saw her at the White House meeting with the President and the Vice President out of the gate, but she's really at the tip of the spear and making sure that there were no barriers to care out of the gate, especially as it related to COVID. So we immediately made the decision to waive all cost sharing. We extended that to all other associated costs with COVID with the deregulation around telehealth, but importantly, even before that, pushed to create greater access from a telehealth perspective, so that's not only telehealth, like you think of in terms of video connectivity. That's also literally telephonic for folks that aren't able to digitally connect. And then we also created access around other virtual connectivity with the provider community, for example, through our Sydney Care app, creating the ability to text and chat with a physician and access care in that way. So immediately created relief in that regard from an access to care perspective. From a provider perspective, out of the gate, I think you saw the Blues come together nationally, and I'll talk about this as it relates to all the Blues, but deployed over $3 billion in value across all the Blues nationally to help support the provider community and create relief there. Obviously, we're a subset of that, but we immediately out of the gate generated relief there. And then as it related to the employer side of the business, we were highly sensitized to actually affordability and the maintenance of coverage, et cetera. So we went through deep analytics out of the gate plants, really understood our group dynamics on an industry code basis. I mean, immediately out of the gate, broke that up into categories of high risk, moderate risk and low risk, interestingly enough, and not -- this is indeed a surprise for anyone that tracks our company, but we did have a lot of our business in the moderate-to-low risk because we serve a lot of public sector business, grocery chain business, Government Business, et cetera. So a lot in that category. And then began to offer solutions and tools to the broker and employer community understanding their book of business. So from brokers, we didn't just say, here are a series of things that we're going to enable, be it special election periods or grace periods around premium relief. We actually provided virtual playbook and toolkits that were customized to a particular broker and was able to represent where their risk was, and what potential solutions were for them in the short term. And so all that we could do from that perspective, I think that we've done. And then as we look forward and as we track utilization and where utilization is going, I think you're going to continue to see us down a path of creating relief for our employers, again, to bridge coverage in the short term. And so some of the things that you'll see soon are premium credits on our medical business on the specialty business, you will also see premium credits. I mean, for example, dental and vision have fallen through the basement in terms of utilization. You'll see premium credits deployed there. We are looking at and working with the Feds on how we can potentially accelerate MLR rebates. So typically, you would get that cash back to employers and individuals in the September time frame. We're seeing whether or not that can be accelerated. That doesn't have an operating gain impact on us as much as getting cash flow into our employers and individuals hands. So we're considering all that and managing that through. So really, the vision is what can we do in 2020 to support our provider partners and our employer partners. We do not want to see a windfall, obviously. We want to bridge the difficulty that's occurring in 2020 and then as we get to 2021, not have some rate shock event. And how do we thread the needle in that regard is something that we're very focused on.

Got you. And I guess related to that and turn a little bit to '21 pricing. How -- what are the tools you have at your disposal in order to try to manage earnings, manage premium level or affordability level, 2021, '22? And how should we be looking at those time periods because obviously, there's going to be some -- there's shocks this year and different sort of things next year?

Yes. So I'll talk about -- maybe I'll talk about pricing, and then I'll talk about products. So as it relates to pricing, fortunately, the great majority of my book doesn't renew until January 1. So I do have a little bit more time. And obviously, we're really sensitized to utilization. And when it comes back and what degree do all the services actually come back, do some get canceled indefinitely? What comes back in the second half of the year. Our models are obviously assuming that it comes back in the second half of the year, but to what degree? And attempting to build that into pricing again so that we can thread the needle on, maintaining discipline, so that we price appropriately in 2021, but also don't screw it up and quite frankly, have a shock event, like I talked about from a pricing perspective. Because we want to obviously have an affordable dynamic for our clients going into next year where a lot are experiencing a lot of difficulty. As it relates to our product portfolio, I think you know this, but for the broader audience, we spent -- and that's why I think we've had a lot of success in the last couple of years creating a broad product portfolio and real focus on affordability, tying those to high-performing networks and being able to generate 10%, 15%, 20% discounts off of products that clients may currently have. As it relates to what happened with COVID, we have had a series of things that we were working on around recession planning prior to COVID. We were -- we actually -- I had the commercial team convene mid last year. And we, quite frankly, were planning for a recessionary period after the presidential election. And so we're considering a whole series of product alternatives. Not that we didn't feel like we had the necessary tools, but felt like we could supplement it. So on the individual side, for example, not only having an individual ACA product, but also having products that have comprehensive coverage that are look-alike to ACA. So what you've seen in some of the short-term duration products, but where we can generate pretty significant savings for clients around products like that or alternative individual products that are nontraditional in nature, that are really speaking to the gig economy or to the uninsured or highly underinsured populations. And not offering products that really look like what you're seeing today in the open market, but products where maybe subscription-based and are price points that are materially less than what you're seeing in your core offering. So what I mean by that is not seeing $600, $700 premiums, but maybe seeing subscriptions that are $25 to $150 a month. And creating new incremental opportunities for us and also playing that through in the small group market. So we're very strong, obviously, in the ACA market. We've got a legacy book in small group, but we've also spent a lot of time around MEWAs and Association Health Plans and also on level funding to make sure that we have a really strong portfolio of options there. And then on the large group side, Lance, you've heard us talk about high-performing networks, but we work collectively with the Blues to create a national high-performing network that's being launched in 2021 that's generating a 10% to 15% discount opportunity. And again, I think it's off the pole now in light of what's happening with the COVID. We're beginning to see a real acceleration and interest in that, not necessarily large national employers that want to significantly reduce benefits more, we're open to higher-performing alternative networks.

So as you look at '21, and I'll pivot to recession in a moment. But as you look at '21, and we're sitting here just about June 1, are you pushing back point to which you're setting pricing? Is the market kind of pushing itself back with respect to that? And at this stage, maybe with larger middle market accounts or larger accounts in general. Have you seen any trends as far as the sorts of product sets that they're more interested in and/or some of the elements that are more important to them?

It is still early in terms of what we're seeing from a pressure perspective around rates. We are -- we're beginning to -- I'm beginning to review a lot of this information with the teams. Again, I have the luxury of some time here before we have to set those rates. If I had to make a decision today, we have taken the demeanor to be really disciplined about it. So based upon all the information that we know today and based upon our assumptions around when utilization comes back, we're going to be -- we're going to maintain that discipline. I think if we're super shortsighted about this, and we go for growth and don't maintain that discipline, I think we could have a much longer-term negative impact on the overall portfolio. So that's the approach that we're taking in terms of our overall posture on rates. I'm hopeful that some of the utilization will come back, quite frankly. I think it's important that it comes back for the chronically ill, for example. We've been doing a lot of outreach in that regard and making sure that folks with chronic conditions and other needs are getting access to services. And again, we're making an assumption that in the second half of the year, we'll see more of that utilization come back. As it relates to product portfolio, like I said, I mean, we continue to see in the small group market, for example, real interest in MEWAs and Association Health Plans even before COVID. We are beginning to see more interest in PEOs. So that's an interesting sort of dynamic as well in talking to some of the experts there in my segments; it goes both ways, but we are seeing some smaller employers very interested in going back to focusing in on their business and being able to create simplicity and maybe going the PEO route. So that's a real opportunity that we're focused on, and we're growing the PEOs. On the large group side, not yet in a position to suggest that I'm seeing an inclination to a certain product or approach. We've talked about in some of your prior meetings, does the environment change? So I think there's 2 things that could happen, and we're trying to actually accelerate what I'm about to talk about, and that is how Anthem can be a single source solution, for example, on the ASO side and really accelerate our 5:1 to 3:1 goal, right, of offering additional services in the short term, bundling products and services, creating the appropriate incentives and having Anthem be more of a solution for our clients versus the other end of the spectrum, right, where they say, we're going to halt on the brakes right now. We are going to push on the brakes right now. Having a lot of change right now doesn't make sense. Just put in front of us the most affordable options you can, but fundamental sort of dynamic change is not going to happen in the near term, we'll consider that later. So again, we're -- I'm not in a position to say, I'm seeing it lean one way or the other. We're certainly trying to create a dynamic in which we're viewed as a single source solution to a greater extent.

Got you. And obviously, this is all mixed together, but thinking about the recession specifically. What are you seeing so far, as far as impacts in membership kind of within your -- within the commercial, looking over to looking over to government as well? And then what do you see as maybe the expected impacts to things like small group or lower end of middle market, which might be theoretically more fully insured, maybe a little more -- certainly a little more profitable business point?

Yes. So as it relates to what we're seeing overall right now, we're all seeing the 36 million plus folks that are unemployed. We would have probably thought before that we would have seen a deeper acceleration in commercial membership loss at this time. We have not seen that play through. I'll tell you what we are seeing, Lance, in terms of our commercial book right now. We are seeing an acceleration of furloughs, which I think is contributing to the fact that we have not yet seen the dislocation we expected. We do think the PPP relief, the federal relief that came through is helping for the 500 and under. The profile of our business, as I said, from an industry co perspective, being to the lower to moderate risk, I think, has helped in the short term. So those are all contributing to the fact that we're not seeing a significant acceleration and loss of membership out of the gate. Interestingly enough, on the sales side and the retention side, while we're seeing a little bit of a decline relative to what we expected, we're not seeing a big decline, again, in the near term. So what I mean by that is our sales number -- this is stuff that we were working on for the last few months, right, that were even pre-COVID, and we're seeing that come through. And executing on those sales. And on the retention side, we're seeing decent retention in general, not massive dislocation from that perspective. Where we are beginning to see activity is in in-group change. So and again, it's not a massive deterioration, but we're beginning to see that book of business, which we retain and employment begin to fall off. So employers that are releasing folks, and we're seeing it or folks that are under the threshold of being eligible for insurance. So we're beginning to see that occur, but again, that's not to suggest in any way that we're not expecting that to accelerate. We are expecting the commercial business to deteriorate, and we are expecting to see membership decline. It just hasn't happened as abruptly as I would have thought. Your question on small group and middle market, I agree. I would have expected to see the greater pressure there. We haven't yet seen it. So there's not this big disconnect between ASO and fully insured or down market. Again, when I think about the small group marketplace, I think the PPP relief has helped. I think some of the things we've done in the short-term around grace periods and playing ball with those groups that need us to help them in the short term has played through. Our premium collections, by the way, have not been materially off. We talked about it being typically in the -- as a percentage of premium and the 50 bps to 100 bps of total premium that people take advantage of grace periods. We expected that to be around 3% in April. It didn't even quite frankly reached those levels. April wasn't that far off from what we typically see and May month-to-date, we've been in a pretty good place. So we felt pretty good about that thus far, again. And then rounding out the portfolio on the Medicaid side, we are beginning to see an acceleration on the Medicaid side. So definitely seeing membership creep there. Again, if you see a deep acceleration on the commercial side, you would have expected to see the Medicaid. We've seen that independent of that. Then on the individual ACA side, we haven't seen the same kind of acceleration as we've seen on Medicaid. We've seen a slight spike in the individual ACA, but we haven't yet seen it really rise. And again, I think that's delayed reaction relative to what we're seeing on the commercial book.

Got you. On Medicaid, let me just ask a quick follow-up, which should be, we've been here -- we're aware of the shutting down of the reverification sort of programs and things like that. Do you -- you having run that business for so long? Do you perceive that, that is what's happening there? Or are you actually seeing people who are going through with unemployment and actually now newly entering Medicaid for that purpose?

No. I think it's exactly what you said in large part in the short term. I think it is the reverification dynamic. So for folks that are not as familiar with that, for the last couple of years, the Medicaid business has been feeling pressure in that regard. And what that basically means is that when a member comes up for annual recertification, back in the years when I was running Medicaid, there was really great variability in that regard. So you had states that were really restrictive and made sure that if you weren't eligible or recertified, that you're bumped off the rolls and others that didn't create that kind of discipline. More -- so broadly, that kind of discipline was infused into the marketplace. And so you saw much more structure around reverifications, which created membership pressure and even pressure from a performance perspective overall in that regard. I think in light of the fact that, that was lifted in light of COVID, I do think in the short term, that's where you're seeing a lot of the membership play through. And/or folks that were historically uninsured that weren't necessarily employed that are now taking advantage of Medicaid. But again, I think that what you'll see when Commercial begins to have an acceleration and loss of membership, I think you'll see that play through into Medicaid as well.

Got you. And then one more here on this kind of membership question, more of a strategic question. You would had, obviously, a long time player in the individual market, your membership was plus or minus 1.8 million. Before you strategically decided to shrink it going into 2018. And so now as you're sitting here now, how are you looking at that for 2020, 2021? Obviously, there's still a lot of political uncertainty. There's going to be greater demand for products like that. What's your posture? And how much growth beyond just normal year-over-year growth should we be looking for there?

Yes. I think the company absolutely did the right thing back heading into 2018. We obviously had a very large footprint. We were an industry leader in the individual ACA. In fact, our performance ended up probably being better than most, but not where we needed it to be. And so we're really disciplined about exiting several markets back then. And we pivoted to really creating a great discipline in terms of our reentry strategy. And it's not like we just shut the doors. We have been strategically reentering counties in the individual ACA business, but in a very thoughtful way, and we continue to do that. And sort of our strategic approach on that is from a contracting perspective, depending on that particular market and the environment of that market, be it Medicaid plus or commercial minus, and what is a viable rate from a unit cost perspective. We need to establish that and get to a best-in-class rate or at least a strong competitive rate from that perspective. We're very focused on entering into the right kind of strategic relationships with our provider partners from a value-based perspective. So as you know, the individual ACA is a lot like Medicaid and Medicare in that regard. You need to perform really well, for example, on risk adjustment. And so that's really important. And from a cost of care perspective, it's really important to be partnered with the right kind of providers. In many ways, it's a lot like Medicaid, and that's why I think you see some of the Medicaid payers that predominantly Medicaid perform well. We have infused a lot of our Medicaid principles into the management of our individual ACA business. And so deploying a lot of those strategies as well on that side of the business. And then lastly, I'd round it out by, Lance, saying that our product, ultimately, when we file our product needs to be the lowest cost silver or near there. Also, we have a bronze play that works, but we can do all that work. At the end of the day, if we can't get the product situated in the right place, we will have a discipline to pull back. There are markets in which we were ready to expand them, we were ready to pull the trigger. And we saw where we were, from a rate perspective and a product perspective relative to some of the competition, we don't want to go back to a 2018 -- pre-2018 dynamic, and we pulled the plug on those expansions. So I don't think we're going to deviate from that strategy as it relates to the individual ACA. And that doesn't mean we're not going to expand. We're going to expand. We're just going to be really thoughtful about it.

Got you. Kind of putting the bow on the near-term and getting ready to shift to some of the more strategic initiatives, but last question, just to clarify for 2020 overall, as you have the kind of early part of COVID with lockdowns and things like that, and then we shift to pent-up demand and things like that. What's your outlook as far as when you look at the year in total, where medical costs will be? Is it possible to incur enough medical costs or produce enough medical costs to catch up to what's happened to date in the year? And how do you kind of frame that?

Yes. I mean, that's -- obviously, we're spending a lot of time on modeling all that. Like I said earlier, I think the objectives for -- so we are seeing, as I said, utilization play through and being significantly depressed, as we've talked about, and likely a second quarter MLR that's very strong relative to anything we've experienced in the past. The goal strategically is not to experience windfall in the year. Like there's so many moving pieces and parts that relates to this. I talked about several of them from premium credits to relief to employers, how we handle MLR rebates, to giving back to the provider community, acceleration of payments, settlements, grants to the provider community. So from a strategic perspective, it's really tracking that utilization, understanding when and if it will come back to what degree? And then how we bridge the gap for both providers and our employers in the short term. So that, again, going into 2021, we don't have an environment of unaffordability and a rate shock. That's the way we -- we're dealing with it. I don't know, Chris, if you want to add to that, but overall, that's what we're trying to manage through.

I think you covered it, Pete.

Let me turn over to Ingenio next and start to walk through some of the strategic initiatives. For Ingenio, could you talk a little bit about 2020, what you've accomplished, maybe hitting on how you've measured success within the migration? What's worked, what hasn't worked? How much of the incremental growth from the improved pharmacy costs did you target on '20? And then what's the outlook for '21 as far as, kind of how big Ingenio could become that year and maybe what are some of the important drivers?

Yes. So I'd say number one, we're excited about the launch of Ingenio. It's going to -- it creates -- it's creating tremendous value. It's going to create even more value down the road. I would say that as it relates to the 2020 selling season, when we were in 2019, and I think we've talked about this, Lance, our focus was much more oriented to operations and execution on the migration. Gail really pushed that. It was critically important for any of us. And you probably, back in the times when you were in the payer side, experienced some PBM migrations, I did, Gail did. Generally speaking, they don't go well, they're really complicated. And so there was a real focus on getting that right. And you -- as you'd expect, from my side of the business, when thinking about brokers and the distribution side of the business and even employers that are ultimately interested in this, even if the economics were fabulous, they're going to hesitate to make a significant change until they're comfortable that we were able to migrate this effectively. So that was kind of the environment that I was dealing with last year and understandable. And to be quite frank with you, people like Gail and myself were totally focused on execution around those operations, and we tracked every metric you could think of in terms of implementing well and when it was implemented, a command center, giving us real time feedback. Yes, we didn't get everything right, but generally speaking disproportionately, we got it right and where we didn't get it right because we had this centralized sort of command and control command center at each point in time when businesses were migrated. We saw tremendous success. My focus in large part. I know the same thing for Felicia was not in any way, creating an access to care issue because that's when the nightmare occurs. And so we tracked all that. We didn't have any real problems with that. It went really, really well. Heading into 2020, I was optimistic that we were going to see decent growth through the year. We saw decent growth in Q1. It wasn't mind blowing, but we saw good growth. Again, it was because we weren't oriented to growth back in 2019 around this, but COVID did definitely put a halt to some of it. And what I mean by that is some of the bigger opportunities that you think about, especially on the pharmacy side, as it related to 2020 growth, the brakes were put on that a bit. We are looking at a series of alternatives for 2021. We do have a pipeline, and that's pretty decent in terms of its richness, and we're actively bidding on that business to what extent folks don't execute on that because they don't want to go through a big change in 2021. I'm still uncertain. But I think what we're showing and representing from an affordability and an integration perspective right now is encouraging because we are seeing a lot of interest in that regard. And I'll just say one other comment about Ingenio as it relates to my business. The biggest opportunity for, I think, Anthem and my business, overall, is to carve an opportunity as it relates to our ASO business for Ingenio. I mean generating large freestanding business is nice, it's important. You need that for scale, but where the juice is in the short-term is in integrating pharmacy into our ASO business. And if you saw the penetration rates by segment, it'd be obvious what the opportunities are, and that we're deeply focused on that going forward.

Yes. And that's an area that, as you know, we've been really interested in and we've speculated on the penetration rates in the 20% range and things like that would present a bunch of opportunity for you. If you could cross walk us a little bit in your 5:1 to 3:1 or whatever your target is going to be as far as your self-insured margin improvement efforts. What are the important drivers? Maybe a little bit of kind of where are you and how has COVID impacted that? Where do you think you can take that? And what's the most -- 1 or 2 most important things to get there?

Yes. Well, and you've always been interested in this subject. And it was a big part of improving the profitability in our commercial business. Prior to Ingenio, we were deeply focused on packaging our clinical programs more effectively and upselling those, our shared savings initiatives. And again, what I mean by that are when we innovate around things like program integrity and launch new programs or when we build protections for our clients from at a network or surprise billing, for example, and we're able to create affordability for them there, sharing in that upside with the clients. As it relates to our specialty penetration, much like you mentioned in pharmacy for dental, vision, life and disability, et cetera. A lot of opportunity there. We saw a really nice uptick there, stop loss. So all these factors. We were seeing very good progress on a market-by-market basis and by a client-by-client basis. As prior to COVID, I could confidently say that we would have been 4:1 this year, which is ahead of plan. So I felt really good about the trajectory there. And I was pushing -- I've been pushing the team to see if we can do better than 3:1 longer term, but that still is our long-term objective. As it relates to COVID and the impact on this, we talked about it in some of the prior meetings. I don't know. I am really pushing the team to situate Anthem, as I said, a single source solution and create simplicity and affordability, bundling these services, doing it in a way that really creates incentives for employers and brokers to sell the product. And so while we may have less commercial members in general, can we create a dynamic where we are single source solution and get more uptick. I mean I'd like to see it. I'm not saying it's going to happen. I do obviously understand the practicality of that in getting these large clients or even the smaller end of the business, to embrace that in a period where creating a lot of change might not be their focus point, but at the end of the day, it creates a lot more affordability for them and simplicity. So if that's what they're looking for, I think it really plays through well.

Yes. I'm going to just toss in 2 last questions here. I know folks are going to have to leave to their next session. We really appreciate your guys' time today. Everybody on the line, if you could certainly go through and do that Procensus link to help us gauge sentiment and share that with you, that would be great. Last 2 questions, one on ESG. And one, just kind of looking at a post-pandemic world. On ESG -- or kind of ESG investing, where I'm kind of focused for the investor community here. Do you have any particular major ESG type initiatives? And in particular, I was thinking of social determinants of healthcare as an area that you've certainly talked about a number of times, but are there a particular things that you're focused on that you think might be most important as you're looking at other ways of contributing to stakeholders beyond just kind of financial returns?

Yes. I think it's a great question. On the government side of the business, there certainly is a very deep focus on social determinants of health. We're deep in the community. Our Medicare benefit portfolio, and I think that's been a real distinctive factor for us around Medicare is the alternative benefits that we're offering. So it goes well beyond and over-the-counter benefit. But now very focused on social determinants of health, nutrition, food delivery, even pest control, things like that, that I think are real differentiating for us. And we've gotten tremendous feedback that that's been a real positive differentiator for us on the government side. Doing similar -- I know Felicia is pursuing similar things on the Medicaid side. On the commercial side, a little less oriented to that, although I'm very interested in it, but to be totally transparent, that we haven't seen a big uptick in that. I've been very focused on -- and COVID has certainly helped accelerate this, but I've been very focused on what we can do from a digital perspective and an AI perspective, and how we accelerate that. I, like many of the folks probably in this conference, when you see things being deployed on a fragmented basis around digital and AI, so more capability-oriented, you just see a lot less utilization. So what I'm really focused on, and I've been in the short-term is how do we create products and services that really more encompass digital and really create a dynamic in which there's much more comprehensive utilization of that, be it in a digital-first or digital-only product offering as well as what we do internally from a digital perspective to create greater efficiencies, but Chris, I don't know if you -- if there's anything you'd want to add to that, that we're thinking about more broadly?

I mean, only that it's an area of focus. I mean, we have a lot of investor interest in what we're doing there. And certainly, on the pure environmental side, I mean, Anthem, just the nature of our business, we don't have a large carbon footprint. But we continue to work to improve our positioning there, and we acknowledge that it's something we still can improve on despite the fact we're already in a reasonably good spot.

Great. And last question, and this is a question we're asking of all the companies across all industries. So it gives investors an interesting perspective. As you're looking at sort of coming out of COVID world eventually. How are you looking at cost-cutting as opposed to increasing levels of investment? And how are you kind of balancing that future outlook?

Yes. No. It's really interesting for all of us. So one thing I think that we're all surprised by is the effectiveness of some of these virtual and digital technologies. I think that is playing through, and the efficiency of our meetings and discussions and the amount of work that we're getting through has fundamentally changed. On the commercial side, also seeing that play through from a sales perspective and an engagement perspective has been shocking to me, to be quite frank, thinking that now we're doing open enrollment meetings virtually that we're deploying sales playbooks and broker playbooks digitally and the uptick and the experience that we're having there is really surprising in terms of its effectiveness. From an investment perspective on how to be a more efficient organization, I can tell you, Gail, our executive team is really focused on this. So in the short term, will we continue to invest in developing internal capabilities to create greater efficiencies from an end-to-end perspective and deploying digital from that perspective? That's a really big deal, Lance. I think there's a tremendous opportunity in that regard. So when we talk about things like, in fact, when you were with payers and we talk about a quote-to-card, right, when a quote's deployed out in the marketplace, broker spreadsheets that, looks at that relative to other. There's a lot of handholding, a lot of in-person activity. And then ultimately to a decision being made and ultimately, the group and members accessing their cards and then beginning to access care. That could take weeks, months, right? We are working on strategies right now to take that down to hours and days. And so that's just one example of an end-to-end process flow that we're looking to fundamentally change. And that includes the whole dynamic of not only receiving the quotes, but how you rate things using AI. So less intensive from an FTE perspective, less intensive from an overhead perspective, really streamlined. And importantly, for me, and this is my words, not necessarily Anthem, but you're seeing this play through, is not only scale for efficiency, but scale for speed. In the new world of digital technology, you're dealing with smaller companies that can move with speed. You got to move with speed. I don't know care that we're a big organization, and we have a lot to manage. We have to move with speed. And so I think that, that will enable a lot of this. So I don't think you're going to see Gail relent on any of that. I think you're going to see us be more virtual. And I think you're going to see us continuing to invest not only externally, digitally, but internally to create a more efficient infrastructure.

That's great. I really appreciate you guys attending the conference, all the meetings you did to all the clients on the line. Appreciate you guys' time. Hope you have a good rest of the day. And everybody stay safe. And thanks again. And with that, I think we're going to turn it off and let everybody get to their next meeting. So they've got another one.

Thank you, Lance. Great job. You guys did a great job.

Thanks, Lance. Excellent, appreciate it.

Thanks.