How might ELV optimize its cost structure moving forward?

Elevance Health (ELV) can optimize its cost structure moving forward by focusing on the following strategies:

1. **Disciplined Expense Management**: ELV has already shown improvement in its adjusted operating expense ratio, which stood at 9.9% for the fourth quarter and 10.6% for the full year, reflecting a focus on managing expenses effectively. This discipline is likely to continue, ensuring that costs are aligned with operational efficiency and strategic goals.
2. **Strategic Initiatives**: The company's strategic initiatives, such as growth in employer group fee-based offerings and ACA health plan products, have been successful in driving revenue. ELV should continue to focus on these areas to optimize its cost structure, as they provide a solid foundation for revenue growth while keeping costs under control.
3. **Operating Efficiency**: ELV's consolidated benefit expense ratio was 89.5% for the third quarter, an increase of 270 basis points year over year. To optimize costs, the company needs to focus on improving operational efficiency, potentially through technology upgrades, process simplification, and better resource allocation.
4. **Market Positioning**: ELV's strong market position, with approximately 45.7 million medical members as of December 31, 2024, provides a stable base for cost optimization. The company should leverage its market presence to negotiate better rates with providers and other vendors, thereby reducing costs without compromising service quality.
5. **Innovation and Partnerships**: Innovation in healthcare delivery and partnerships with other health systems can help ELV reduce costs while improving patient outcomes. By staying at the forefront of healthcare innovation, ELV can optimize its cost structure while maintaining competitive advantage.
6. **Risk Management**: ELV needs to continue managing risks effectively, such as those related to Medicaid redeterminations and changes in its geographic footprint, which have impacted membership and costs. Proactive risk management will help the company mitigate these risks and maintain a stable cost structure.

By focusing on these areas, ELV can optimize its cost structure, ensuring financial health and competitiveness in the dynamic healthcare industry.