HUMANA INSURANCE COMPANY

Medicare has made Humana a big-time player in the health insurance game. One of the country's largest Medicare providers and a top health insurer, Humana provides Medicare Advantage plans and prescription drug coverage to more than 5 million members throughout the US. It also administers managed care plans for other government programs, including Medicaid plans in Florida and Puerto Rico and TRICARE (a program for military personnel) in 10 southern states. Additionally, Humana offers commercial health plans and specialty (life, dental, and vision) coverage; it also provides health management services and operates outpatient care clinics. All told, it covers about 20 million health plan members in the US.

Operations

In 2013 Humana realigned it business segments into retail, employer, and healthcare services.

Some three-fourths of Humana's sales come from government program (primarily Medicare) premiums, which are sold through the retail segment (about half of revenues). The segment also includes some commercial individual health plans (including HMOs and PPOs) and the company's specialty benefits unit, which provides dental, vision, life, and third-party administration service. New to the group are a collection of contracts with states to provide Medicaid, dual-eligible, and long-term support services benefits as well as its contracts with the Centers for Medicaid and Medicare Services (CMS).

The employer group segment (20% of sales) sells some Medicare policies; however, the division's revenues primarily come from the sale of commercial health plans (including HMOs and PPOs) to corporate accounts on a fully-insured basis or an ASO (administrative services only) basis. This segment also includes health and wellness businesses HumanaVitality and Lifesynch.

Humana's healthcare services segment (formerly health and well-being) accounts for about 30% of sales and provides wellness programs that encourage its members to make healthy lifestyle choices. The division manages prescription drug coverage for its other segments through Humana Pharmacy Solutions and mail-order pharmacy (RightSourceRx) services. The segment also includes the Concentra subsidiary, which operates some 300 urgent care medical centers and 260 workplace health clinics across the US, as well as the Humana Cares and SeniorBridge units, which provide home health and chronic care services for seniors. 

Geographic Reach

Humana has expanded the geographic reach of its Medicare plans, and now has at least one Medicare product available in every state in the US, with its largest markets located in the southern and midwestern US (including Florida, Texas, and California).

Financial Analysis

Humana's aggressive and creative expansion strategies have led to positive financial growth. The firm has experienced climbing revenues each year over the past decade, including a 6% increase to some $41 billion in 2013 from increased membership levels (leading to higher premium revenues) in both the retail and employer group segments. Healthcare services revenue grew mostly from two acquisitions made in 2012. The higher revenue lead to a 1% uptick in net income; operating costs and benefits expenses kept the number from rising more. Cash from operations has decreased steadily and continued that trend in 2013, falling $57 million to $1.6 billion as it used more case on receivables.

Strategy

Humana climbed the ranks to become a top Medicare plan provider by aggressively pursuing organic and acquisitive growth efforts within its government segments. It is ambitious in its retail marketing efforts to sign up Medicare recipients for its Medicare Advantage and Part D prescription plans. 

Additionally, the company works to maintain its competitive edge by forming partnerships with other health care-related companies. After experiencing sharp reductions in the number of Medicare prescription drug plan (PDP) members due to competition, the company has found renewed success by partnering with Wal-Mart to offer low-premium PDPs. In addition, in 2012 Humana partnered with Medicaid provider CareSource to provide services to dual-eligibility Medicare/Medicaid members.

While the company remains focused on Medicaid expansion, Humana is also diversifying its revenue stream to reduce its dependence on government operations, which leave the company vulnerable to challenges including reimbursement cuts and contract disputes. Humana aims to attract commercial customers by offering new individual major medical plans, affordable consumer-directed products, and coverage options for small businesses.

Humana is also working to widen its wellness and care coordination offerings, which are increasingly popular with clients as a means of controlling health spending levels and improving the quality of care. Towards that end, Humana joined forces with South African firm Discovery Holdings to form HumanaVitality, which provides wellness management services to Humana's commercial members (and will eventually serve Medicare patients as well). Humana is also expanding its chronic care and disease management programs.

Mergers and Acquisitions

In 2012 the company expanded its Medicare Advantage operations in the western US through two acquisitions (MD Care and Arcadian Management Services), adding more than 65,000 members through the deals.

Expansion efforts within the healthcare services segment include the purchases of American Eldercare, which provides a host of services for the elderly including hospice, adult day care, nursing, and case managment (2013); Harris, Rothenberg International (2012), which offers customizable work/life services and employee assistance programs; Certify Data Systems (2012), a health information exchange (HIE) provider; and SeniorBridge (2012), which offers chronic care services to seniors in their homes.

Also in 2012 Humana acquired Florida-based Metropolitan Health Networks, which provides care coordination services for Medicare and Medicaid customers, in a deal valued at $850 million. The Metropolitan business was also added to the health care services segment.

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HUMANA INSURANCE COMPANY


1100 Employers Blvd
Green Bay, WI 54344-0002
Phone: 1 (502) 580-1000
Fax: 1 (920) 3375432
www.humana.com

STATS


  • Employer Type: Unknown
  • Md, Sr V Pres: Roy Beveridge
  • Director, Provider Relations: Bev Deavers
  • Exec V Pres: James Murray

Major Office Locations

  • Green Bay, WI

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