Our Take: Humana to streamline its operations into two units: Insurance Services and CenterWell
As part of Humana’s $1 billion “value creation” initiative announced earlier this year, CEO Bruce Broussard revealed during the second-quarter earnings call last week that the company will be realigned into two distinct units, starting in 2023.
The Insurance Services unit will consist of business lines currently within Humana’s retail and group/specialty segments. The CenterWell unit will represent the company’s growing payer-agnostic health care services segment.
“We believe this simpler structure will create greater collaboration across our Insurance and CenterWell business and will accelerate work that is underway to centralize and integrate operations within the organization,” Broussard said.
The Louisville-based company is undertaking an external search for candidates to lead the new Insurance Services unit and expects to select its inaugural President of Insurance and Enterprise Services by the end of this year.
The realignment will also entail some changes in management roles. Among them, after 31 years at the company, Alan Wheatley will step down from his current role as retail segment president in December.
George Renaudin will become president of Humana’s Medicare segment, and Susan Smith’s current responsibilities as senior vice president will be expanded — she will lead the company’s enterprise services. John Barger will continue to be in charge of Humana’s Medicaid organization, and Sue Schick will stay in her role overseeing Humana’s group and specialty segments. All of these executives will report to the new president of the Insurance Services unit when the position is filled.
Our Take: It appears that Humana’s efforts to generate $1 billion to invest in its Medicare Advantage (MA) business are paying off.
The company’s net income for the second quarter, at $696 million, was up 18% compared with the same quarter last year. Revenue for the quarter was up 14%: $23.6 billion versus $20.6 billion for the second quarter of 2021.
The increases were attributed in part to enrollment growth in Humana’s Medicare and Medicaid segments, along with lower inpatient utilization by Medicare members.
On the earnings call, Humana’s chief financial officer, Susan Diamond, said the company was raising its full-year adjusted earnings per share guidance by $0.25 to “approximately $24.75,” noting that the updated guidance reflects “a compelling 20% growth in adjusted earnings for 2022, while funding additional investments to support our long-term growth.”
Broussard said on the call, “We are pleased with our significant progress in growing the business, including our primary care clinics and our organic expansion of Medicaid membership, combined with the initial rollout of our value-based home care.”
“As we look ahead, we are confident that we [can] continue to deliver strong results as a leader in Medicare Advantage and value-based care delivery,” he remarked.
According to Broussard, the company began expanding its value-based model in Virginia in June, increasing the number of MA plan members covered by the model by 22%, to 331,000 members.
Will Humana eventually overtake UnitedHealthcare to become the country’s largest MA insurer? We’ll see. According to Modern Healthcare, Humana has 5.1 million members and UnitedHealthcare has 6.9 million. That’s a considerable gap, but certainly not an unconquerable one.
In January, Humana reported a 27% decrease in net profits for 2021 in comparison with the previous year and lowered its forecast for 2022 MA enrollment by approximately half, spurring the whole value creation strategy.
According to Diamond, the company’s goal is to “get back to industry-leading growth as quickly as we can. We’d love to do that in one year. We’ll just have to see whether peers made other investments for 2023 and how our ultimate offering stacks up.”
What else you need to know
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The Whole PERSON Health Score: A Patient-Focused Tool to Measure Nonmedical Determinants of Health. NEJM Catalyst, 7.20.22 (summary available without subscription)
Systems-Aligned Precision Medicine—Building an Evidence Base for Individuals Within Complex Systems. JAMA Health Forum, 7.29.22
The Key To Improving Population Health And Reducing Disparities: Primary Care Investment. Health Affairs Forefront, 7.27.22
Invisible Storm: A Soldier’s Memoir of Politics and PTSD, by Jason Kander. Once a political phenom, former U.S. Army intelligence officer Jason Kander abruptly quit the Kansas City mayoral race in October 2018 after announcing he was suffering from PTSD for more than a decade. Prior to that, Kander had risen to national fame with this political ad in the Missouri Senate race, where he impressively assembles a gun blindfolded.