Humana 2007 Annual Report Download - page 8

6Annual Report 2007
For chronically ill members, the results are
even more dramatic. While an average original
Medicare member with diabetes, heart failure
and Chronic Obstructive Pulmonary Disease
(COPD) spent 18.2 days in the hospital, his or her
Humana counterpart was hospitalized for 10.7
days. The Humana member spent 3.9 days in a
skilled nursing facility, compared to 14.2 days;
had 11.7 home health visits, compared to 19.6;
and had a cost of care of $24,978, compared to
$43,589 for the original Medicare member. At a
time when evidence-based medicine is yielding
the insight that longer hospital stays do not
automatically equate to better outcomes, these
fi gures are especially noteworthy.
One of the best assets our career agents and
exclusive brokers have in acquainting prospects
with our Medicare PPO plans is the expansiveness
of our provider network. Our PPO network is the
result of more than two years of concerted effort.
And the work continues in full force today. We
are constantly striving to make our existing
networks more robust, while simultaneously
expanding the geographies that our PPO
networks cover.
We anticipate continuing as the leader in
bringing PPO arrangements to the Medicare
population – that is, in offering to older
Americans the type of benefi t plan that most
aging-in baby boomers have and are happy
with in the workplace today. In addition, as
we mentioned earlier, increasing Commercial
synergies from our Medicare network are leading
to enhanced Commercial growth.
Commercial: Increasing Synergies
from Medicare Expansion, While
New Specialty Offerings Target
Growing Market
Our Commercial operating earnings increased
signifi cantly in 2007. We also saw membership
gains in our four strategic areas of Commercial
product focus: individual plan membership was
up 35 percent, our Smart plans and related
consumer-focused products increased 29 percent,
and our small-group and Administrative Services
Only (ASO) plans also experienced modest
membership gains. By strategically growing these
areas in a price-disciplined manner, we expect to
build successfully on our Commercial segment’s
continuing progress again in 2008.
We also signifi cantly broadened our portfolio of
offerings in the growing specialty benefi ts market
through two acquisitions completed in 2007’s
fourth quarter – CompBenefi ts, a nationwide
dental and vision company; and KMG America,
which specializes in employer-sponsored
voluntary benefi ts. Here again, we’ve enhanced
our ability to anticipate the needs of consumers –
who are now more likely to opt for these types
of offerings than in years past – as well as
responding to employers’ desire for a
comprehensive spectrum of benefi ts and
related services that help foster their employees’
engagement, productivity and development.
Integration of these acquisitions is proceeding
swiftly, due in part to the strength of senior
management and the capabilities of associates at
the acquired companies.
Like Medicare, the specialty products market is
another area of growth in the immediate future,
with industry analysts projecting mid- to upper-
single-digit expansion for this sector over the next
few years. With our total specialty membership
having increased so dramatically year-over-year,
we are well positioned to take advantage of this
expanding opportunity.
Our Medicare PPO network is the
result of more than two years of
concerted effort. And the work
continues in full force today. We
are constantly striving to make our
existing networks more robust,
while simultaneously expanding
the geographies that our PPO
networks cover.