Humana 2004 Annual Report Download - page 6

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This฀ diversified฀ history฀ set฀ the฀ stage฀ for฀ our฀ current฀ industry-leading฀ product฀ and฀ business-segment฀
diversification.฀฀We฀are฀one฀of฀the฀few฀health฀benefits฀companies฀that฀draws฀revenues฀from฀group,฀individual,฀
Medicare,฀Medicaid฀and฀military฀customers,฀and฀the฀only฀one฀with฀membership฀divided฀nearly฀evenly฀between฀
government฀and฀commercial.฀฀Besides฀making฀us฀less฀susceptible฀to฀market฀sector฀volatility,฀this฀diversification฀
allows฀us฀to฀leverage฀strengths฀across฀businesses.
If฀we฀can฀highlight฀the฀three฀ways฀in฀which฀we฀are฀unique,฀it฀would฀be฀in฀our฀consumer฀orientation,฀our฀focus฀
on฀providing฀a฀non-commodity฀total฀solution฀and฀our฀practical฀use฀of฀innovation.฀฀Each฀of฀these฀aspects฀helps฀
us฀drive฀sales฀and฀differentiate฀ourselves฀in฀the฀marketplace.
Consumer฀orientation
Perhaps฀the฀key฀differentiating฀factor฀is฀our฀consumer฀orientation.฀฀Our฀areas฀of฀greatest฀strength฀are฀those฀
in฀which฀we฀directly฀touch฀an฀individual฀customer.฀For฀example,฀internally฀we฀think฀of฀our฀Medicare฀business฀
and฀ our฀ individual฀ insurance฀ products฀ together,฀ under฀ a฀ “direct-to-consumer”฀ business฀ heading.฀ As฀ we฀
referenced฀a฀moment฀ago,฀Medicare฀is฀a฀market฀of฀highly฀motivated,฀discerning฀individual฀clients฀who฀require฀
great฀products฀and฀excellent฀marketing฀skills.฀ This฀ consumer฀orientation฀also฀allowed฀us฀to฀achieve฀ rapid฀
success฀with฀our฀individual฀commercial฀product,฀launched฀in฀2002.฀Ultimately,฀the฀demands฀of฀the฀Medicare฀
and฀individual฀insurance฀members฀need฀to฀be฀handled฀in฀similar฀ways;฀both฀are฀retail฀purchasers฀who฀are฀
personally฀ invested฀ in฀ the฀ decision฀ to฀ buy.฀ ฀ This฀ consumer฀ focus฀ is฀ also฀ helping฀ us฀ to฀ bring฀ a฀ consumer฀
orientation฀to฀the฀military฀families฀and฀retirees฀we฀cover,฀offering฀actionable฀information฀that฀enables฀them฀
to฀choose฀and฀use฀their฀benefits฀with฀confidence.
The฀best฀example฀of฀our฀consumer฀orientation฀is฀our฀groundbreaking฀Smart฀products.฀The฀unique฀Smart฀approach฀
offers฀employers฀and฀employees฀a฀spectrum฀of฀plan฀options฀that฀include฀traditional฀HMOs฀and฀PPOs฀as฀well฀as฀
consumer-choice฀plans.฀These฀options฀are฀surrounded฀by฀Internet-based฀guidance฀tools฀that฀transform฀passive฀
health-care฀users฀into฀savvy,฀value-conscious฀health-care฀consumers.฀Through฀actionable฀information฀supplied฀
by฀Humana,฀consumers฀gain฀the฀ability฀to฀make฀cost฀and฀quality฀decisions฀the฀way฀they฀do฀in฀other฀aspects฀of฀
their฀purchasing฀lives.฀The฀result฀for฀them฀and฀for฀their฀employers฀is฀dramatically฀lower฀costs฀–฀trend฀for฀Smart฀
customers฀runs฀at฀about฀5฀percent฀annually,฀well฀under฀half฀the฀rate฀of฀health฀care฀inflation.
The฀approach฀to฀consumer฀engagement฀we฀developed฀for฀Smart฀products฀is฀paying฀off฀in฀a฀variety฀of฀ways.฀฀
For฀2005,฀we฀have฀projected฀growth฀of฀about฀100,000฀new฀members฀in฀our฀consumer-choice฀plans.฀Equally฀
important,฀we฀have฀used฀the฀techniques฀developed฀in฀our฀Smart฀products฀to฀drive฀consumer฀orientation฀in฀all฀
our฀business.฀This฀is฀evident,฀for฀example,฀in฀our฀new฀Medicare฀products,฀which฀feature฀such฀cost-saving฀tools฀
as฀Maximize฀Your฀Benefit฀–฀a฀voice-activated฀telephone฀notification฀of฀lower-cost,฀therapeutically฀equivalent฀
prescription฀ drug฀ alternatives.฀ We฀ believe฀ consumerism฀ in฀ Medicare฀ will฀ be฀ very฀ successful฀ as฀ the฀ senior฀
audience฀is฀increasingly฀motivated฀to฀hold฀costs฀in฀check.
One฀of฀the฀reasons฀our฀consumer฀focus฀is฀so฀important฀is฀that฀it฀is฀reflected฀more฀and฀more฀in฀public฀policy฀
decision-making.฀The฀Medicare฀Modernization฀Act฀was฀also฀the฀vehicle฀that฀established฀the฀HSA฀financing฀
option฀for฀employees฀who฀choose฀a฀high-deductible฀health฀plan.฀As฀HSAs฀grow฀in฀popularity,฀and฀employers฀
shift฀costs฀in฀all฀benefit฀offerings,฀our฀customer฀service฀orientation฀and฀our฀technology-supported,฀consumer-
oriented฀culture฀will฀position฀us฀well฀to฀take฀advantage฀of฀the฀opportunity.
Focus฀on฀total฀solutions
An฀important฀aspect฀of฀our฀consumer฀orientation฀is฀our฀focus฀on฀providing฀total฀solutions฀to฀the฀end-user.฀
We฀integrate฀different฀parts฀of฀our฀business฀to฀make฀this฀possible.฀฀Our฀abilities฀in฀product฀design,฀clinical฀
programs,฀financial฀forecasting฀and฀what฀we฀call฀the฀integrated฀consumer฀experience฀have฀been฀combined฀to฀
create฀the฀Humana฀Guidance฀Solution,฀which฀is฀predicated฀on฀consumer฀engagement.฀Ultimately,฀consumer฀
engagement฀ leads฀ to฀ cost฀ savings฀ and฀ significant฀ improvement฀ in฀ how฀ end-user฀ customers฀ view฀ their฀
experience฀with฀Humana.฀฀
A฀good฀example฀of฀such฀consumer฀engagement฀is฀our฀Personal฀Nurse฀service.฀฀While฀most฀other฀companies฀
have฀a฀nurse฀available฀to฀answer฀incoming฀calls,฀we’ve฀developed฀a฀program฀in฀which฀our฀Personal฀Nurses฀
interact฀over฀time฀with฀members฀who฀have฀chronic฀conditions.฀With฀special฀training฀in฀behavioral฀science฀and฀