Humana 2003 Annual Report Download - page 4

ŠWe launched our individual product, HumanaOne, in 14 states and currently have more than 50,000
members enrolled. Our expectations are for a continuation of this strong trend in growth.
ŠThe Department of Defense awarded us the TRICARE contract for the new South region, recognizing
our leadership and expertise in the specialized business of providing health benefits to military families
and retirees.
ŠOur increased administrative efficiency led to the consolidation of seven service centers into four. The
transition was effected seamlessly, with no disruption in service to our members.
ŠWe completed the sales and distribution infrastructure investments necessary to make us a leader in
multiple segments of the health benefits industry.
Leading by Disruption
In terms of our relationship to the industry, in 2003 we continued our drive to redefine value in health
benefits.
Our total solution – uniting wide choice in plan offerings with a robust menu of consumer-engagement
tools, education and programs – is not a product in the traditional sense, but a new process-around-product. It
achieves two breakthrough outcomes: it reduces double-digit health cost inflation to mid-single digits, and it
empowers consumers to choose and use their benefits with confidence, producing a better health-plan experience
for employees and their families.
Success in this new space was recognized in July when Forrester Research named Humana the industry
leader in health benefits consumerism. In rating Humana first for both its strategy and current offerings, Forrester
commented, “Humana positions its CDHP [Consumer Directed Health Plan] offerings as part of a broad
spectrum of employer and employee product options and wraps them all with exceptional online services and
tools.”
This “wrapping” is the essence of the process-around-product in the Smart family of Humana plans. By
providing guidance and actionable information, much of it through Internet technology, Humana transforms
passive health-care users into active health-care consumers. Employees then start for the first time making
informed health spending decisions in their own economic self-interest – and thus by extension in their
employer’s.
This total solution now involves more than 200,000 Smart members. In addition, we have been renewing
100 percent of the eligible early adopters. In a related extension of our consumer expertise, the technology-driven
services that support consumer engagement within the Smart family are increasingly being applied across the
board to our traditional Commercial, Medicare and TRICARE membership.
AStrategic Acquisition
In December, we announced our intent to acquire Ochsner Health Plan of Louisiana, a market leader both in
New Orleans and throughout the state. The addition of Ochsner provides us the opportunity to enter a new market
with critical mass, the support of solid provider contracts and the opportunity to introduce a host of innovative
products to this market.
Ochsner is an excellent fit for us strategically from many perspectives. It provides an opportunity to broaden
our footprint, making us more attractive in the mid-market and national account space. It enables us to leverage
our existing presence in the Texas markets with our new presence in Louisiana – a key attribute due to the
number of companies that have overlap between these two geographies. And it overlays with our soon-to-be-
expanded TRICARE presence in the new South region.