About Humana Insurance Company

Medicare has made Humana a big-time player in the 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 members in the US. Aetna is buying Humana for $37.1 billion.

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 included the Concentra subsidiary, but Humana sold Concentra in mid-2015.

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).

In addition to its headquarters in Louisville, Kentucky, the company has locations for customer service, enrollment, and/or claims processing in Tampa, Florida; Cincinnati, Ohio; San Juan, Puerto Rico; San Antonio, Texas; and Green Bay, Wisconsin.

Sales and Marketing

Humana markets its products through television and radio ads, the Internet, telemarketing, and direct mailings. It employs some 1,700 sales representatives and around 1,200 telemarketing representatives to sell its retail products; additionally, the company markets its individual Medicare products through an alliance with Wal-Mart. Humana uses licensed independent brokers, independent agents, and employees to sell its group products.

Financial Performance

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 17% increase to some $48 billion in 2014 from increased membership levels (leading to higher premium revenues) in both the retail and employer group segments. However,  healthcare services revenue remained flat in 2014 over 2013.

Despite that growth, the company saw a 7% decline in net income to $1.1 billion in 2014, due to increases in operating and interest expenses. Benefits expenses rose that year as a result of increases in both the retail and employer group segments, mainly driven by higher average Medicare Advantage as well as individual commercial medical memberships.

Cash from operations has decreased steadily and continued that trend in 2014, falling $98 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, Humana partners 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. The company is focused on growing its commercial products by participating in new health insurance exchanges, introducing new products and benefit designs, growing its specialty products (dental, vision, and other supplemental coverage), adopting new technologies, and successfully integrating acquired businesses and contracts. 

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.

The company sold subsidiary Concentra for $1.1 billion in 2015. Although it acquired the unit in 2010 to provide additional care benefits to its members, management ultimately decided that Concentra's focus on providing occupational injury care didn't fully align with its own strategy for growth.

In 2014 the company established or extended partnerships with Dignity Health, providing members access to that firm's facilities in Arizona; the Colorado-based Boulder Community Health, providing retail care for those purchasing Connect for Health Colorado insurance as well as commercial HMO plans; and Wisconsin's United Hospital System, for Medicare coverage. Humana also has agreements with Saint Luke's Health System, Banner Network Colorado, and MDX Hawai'i.

In 2015 the company agreed to a $37.1 billion merger with fellow insurer Aetna. The deal could create the #2 health insurance firm in the nation, and significantly adds to Aetna's exposure to the growing Medicare Advantage market (as well as the Medicaid and TRICARE markets).

Mergers and Acquisitions

Expansion efforts within the health care services segment include the 2013 purchase of American Eldercare, which provides a host of services for the elderly including hospice, adult day care, nursing, and case management.

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Humana Insurance Company

1100 Employers Blvd
Green Bay, WI 54344-0002
Phone: 1 (502) 580-1000
Fax: 1 (920) 337-5432
www.humana.com

Stats

  • Employer Type: Public
  • Md, Sr V Pres: Roy A Beveridge
  • Pres: Michael McAllister
  • Exec V Pres: James E Murray

Major Office Locations

  • Green Bay, WI

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