Humana 1999 Annual Report Download - page 4

The Medicare product development team has dedicated itself to implementing
business-improvement initiatives the company established in late 1999. After a
departmental brainstorming meeting following the announcement of these initiatives,
the team came up with specific measures to advance Humana's agenda. For example, one
of the five initiatives — rationalize markets and products — is reflected in the team's
preparation and implementation of Medicare benefit change recommendations, reviewing
ancillary benefits and weighing new benefit and product designs.
For improving cost management, another of the five initiatives, the team
recommended prescription benefit changes to encourage drug compliance and better
integration of disease management programs. Shown in the photograph below are team
members Steve Russell, Susan Bramer, Ruby Brown, Jill Combs, Vatina Edwards, Michael
Lathon, Betsy McAtee, Amy Noble, Shaun Scully and Angela Lee Price.
Why Humana?
At first blush, the answer may be
unclear. In fact, one might ask why
invest in any company in the man-
aged care industry and be met with
the same response: why indeed?
After the decade of the 1990s —
during which, according to
Princeton University economist Uwe
Reinhardt, the savings and medical
quality improvements engendered
by managed care transferred $300
billion into the wallets and pocket-
books of working Americans —
managed care finds itself facing:
Consumer Backlash
Consumers want to receive the care
they believe they need from their
doctor of choice with minimal
out-of-pocket expenses.
Lawsuits
One of the industry's cost drivers
is expensive litigation, and the filing
of multiple lawsuits seeking class-
action status against Humana and
its peer companies has exacerbated
the problem.
Pharmaceutical Spending Explosion
Drugs are being developed faster,
gaining FDA approval more swiftly
and being accepted more readily by
an American public inundated by
drug-industry direct-to-consumer
advertising.
Government Regulation
Legislators and policymakers are
highly sensitive to managed care
“horror stories,” and even though
such stories are statistically
insignificant and often inaccurate,
they are the godfather of state-
mandated benefits and equally
costly legislation that results in
higher premiums for the consumer.
Employer Anxiety
Employers are alarmed about rising
costs and faced with a dispiriting
choice between hefty price increases
and reduced benefits for their
employees.
On top of such an unhappy
environment, Humana faced internal
challenges in 1999. We failed to
anticipate medical cost trends
correctly in our commercial business,
and therefore struggled with
inadequate rates throughout the
year. We issued an earnings warning
in April, and experienced an
earnings per share decline of 40
percent in the first half of the year.
In early August, our chief executive
officer resigned.
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Rose Timmerman
National Contracting
Green Bay, WI
Charles Jackson
Information Systems
Cincinnati, OH
Linda Eigel
Provider Relations
San Antonio, TX
David Wong
Human Resources
Green Bay, WI
Peg Longdin
Utilization Management
Milwaukee, WI
Teresa Daniels
Administration
Jacksonville, FL
Anthony Sanchez
Customer Service
San Antonio, TX
Liz Jacobucci
Marketing
Chicago, IL
Alice Bowling
Market Administration
Louisville, KY
Jon Ziegele
Sales
Milwaukee, WI
Tracy Stillman
Provider Services
Milwaukee, WI
Laura Branker
Commercial Sales
Miami, FL
Ken Fose
Web Technology
Louisville, KY
Lynn Weber
Customer Service
Chicago, IL
Brent DeRossett
Finance
Kansas City, MO
Adele Shepherd
Financial Recovery
Louisville, KY
Theresa Ostert
Underwriting
Green Bay, WI
Linda Moore
Customer Service
Jacksonville, FL
Our premise is that everyoneanswers to someone, and to do so is a privilege.
Accountability
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