Humana's Long-Term Strategy
Editor’s Note: The importance of Humana’s consumer focus, care in the home, technology, and other strategic imperatives have been amplified by the novel coronavirus (COVID-19) pandemic. As COVID-19 presses onward, below we present an industry perspective from Bruce Broussard, President and Chief Executive Officer of Humana. This conversation was conducted by the Wharton Health Care Club team in conjunction with their February 2020 Wharton Health Care Business Conference.
Wharton: You’re one of the most successful health insurers in the country. What has allowed Humana to thrive for the past couple of decades?
Bruce: Humana is unique in the fact that we have a long history of re-inventing ourselves. Humana was founded as a nursing home company in the 1960s, eventually becoming the nation’s largest operator of acute care hospitals by the early 1990s. In 1994, Humana pivoted to exclusively managed care, spinning out into the hospital business. After the Medicare Modernization Act of 2003, Humana re-invented itself again, building a leading Medicare franchise and providing healthcare benefits to the nation’s seniors through Medicare Advantage and Prescription Drug Plans.
Underlying this history of re-invention is a constant focus on the consumer. Humana is a mission-oriented company, driven by our goal to help our customers achieve their best health and improve the health of the communities we serve. The combination of our foresight and a relentless focus on the health needs of our customers has served us well and will continue to guide us into the future.
Wharton: What future healthcare trends are Humana most focused on adapting?
Bruce: Humana is at the forefront of several major healthcare trends. Healthcare continues to become more consumer-centric. But the complexity and fragmentation of the healthcare system make it very difficult for consumers to navigate and meet their health goals, especially those consumers with multiple chronic conditions. Those in healthcare that are most aligned to solving the complexity of the system and providing simpler experiences to customers will win in the long-term.
Related to Humana’s push toward customer-centricity, we believe the movement of care toward the home will shape the coming decade. The home, aided by advances in digital health and logistics technology, has the potential to transform the delivery of care. The home is a more convenient setting for individuals, can potentially lower costs, and provides a powerful touchpoint to understand and manage the holistic health of an individual. Humana believes home health can be the next frontier of value-based medicine.
Wharton: How does Humana think about adapting to these trends? What are the key pillars of your strategy?
Bruce: Our strategy revolves around being a trusted partner for our customers by delivering simple and easy healthcare experiences and differentiated health outcomes. To deliver superior health outcomes, Humana is investing heavily in advancing our clinical capabilities in five places we have the greatest influence – primary care, home health, pharmacy, behavioral health, and social determinants of health – because these are our greatest opportunities to improve quality and health outcomes for individuals with chronic health conditions.
Over the past couple of years, you have seen us expand our primary care footprint through our owned assets and strategic partners. For example, we purchased a minority in Kindred at Home, the largest home health and hospice provider in the country, and purchased Enclara Healthcare to bolster our pharmacy capabilities.
However, we believe the integration of these capabilities to create seamless experiences is equally important to accomplishing our strategic goals. Here, we are investing significantly in data, analytics, and digital health technologies. Last year, we opened what's called Humana studio_h, our newest digital center in Boston. Led by our digital health and analytics team, we are advancing our data capabilities and infrastructure to enable more personalized and simple experiences for our customers.
Wharton: Humana seems to be focused on providing better primary care through technology (such as with your Epic partnership), innovative financing (such as with your Welsh, Carson, Anderson & Stowe — also known as WCAS — partnership), and various retail strategies (such as with your Walgreens partnership). What drives your focus on primary care?
Bruce: We believe high-quality, value-based primary care is a critical influence point to help deliver easier experiences and better health outcomes for individuals, especially seniors with chronic conditions. However, the adoption of value-based care has been slow in many markets. Therefore, a key part of Humana’s strategy is to catalyze the development of high-quality, senior-focused, value-based primary care across the country. This has led us to work collaboratively with partners like Iora Health and Oak Street Health, but also to think creatively about how to scale our fully owned primary care operating model, Partners in Primary Care.
With Walgreens, we are testing the potential to better integrate our Partners in Primary Care centers into the day-to-day routines of our customers, co-locating our centers within existing pharmacies, and making accessing holistic care more convenient for our customers. With WCAS, we are partnering with private equity to help shoulder start-up losses associated with accelerated expansion.
However, even as we build new supply, partnering with existing providers is still a critical element of our strategy. This is where partnerships like Epic come in. Through our relationship with Epic, we are creating better ways to share information with providers to help them transition to value-based care by enabling simpler experiences and better health outcomes. For example, we are implementing real-time pharmacy benefit checks that will enable Epic's physicians to understand the formulary status of various drugs in their electronic medical record workflow at the point of care, removing hassles and improving adherence.
Wharton: Humana has announced many partnerships with healthcare and technology companies across a variety of areas. What types of partnerships does Humana find compelling?
Bruce: We see ourselves as an integrator versus an aggregator. Therefore, partnerships are a major part of our strategy. Not all capabilities and services are best owned and operated by Humana, and we often seek best-in-class solutions to partner with. Modern technology architectures allow us to seamlessly share data across parties coordinating the care of a patient, which makes partnerships more attractive than ever. The opportunity to bring together an ecosystem of best-in-breed innovators to more quickly bring solutions to market and improve the health outcomes and experience of our customers will be critical to our success in a rapidly evolving healthcare market.
Wharton: On the other side, you’ve acquired some companies over the past few years. Kindred Healthcare and Enclara Healthcare come to mind, for instance. How do you think about acquiring versus partnering in the context of your overall goals?
Bruce: We are very intentional from a business development perspective to evaluate the best relationship and ownership model for various capabilities from simple commercial partnerships to joint ventures to full ownership, and many models in between. We want to make sure we are putting our capital to work in the most efficient way possible to advance our strategy. Partnering with private equity to execute our transaction with Kindred at Home, for example, afforded us the opportunity to shape the strategic innovation of Kindred and align organizations' incentives, while managing our execution and integration risk and limiting our upfront capital outlay as we prove out the thesis around value-based care in the home.
With Enclara, we saw an opportunity to enhance and build upon our leading internal pharmacy capabilities, while entering the attractive hospice pharmacy and benefit management space. The Enclara acquisition provides Humana with the opportunity to extend our comprehensive care continuum strategy to cover the pharmacy-related needs associated with hospice care — a very clinically complex population. Here, the value of integrating our operations and clinical programming led us down the path of a full acquisition. We evaluate the unique circumstances of each situation and follow the approach most optimal for the nature of the value-creation opportunity and the strategic need.
Wharton: Anything else you’d like to highlight on the future of healthcare?
Bruce: It’s an exciting time to be a part of this industry. The pace of change in healthcare right now is phenomenal. To drive that positive change has been a fascinating opportunity.