Humana 2011 Annual Report Download - page 4

3 – 2011 Annual Report
Our 2011 earnings of $8.46 per share,
compared to $6.47 per share in 2010,
reflected strength in key areas of
strategic focus as well as unusually
low commercial medical cost trends
industry-wide. Operational discipline
and a compelling senior value proposition
led to significant Medicare membership
growth, further progress on our 15 percent
solution, and continued focus on prudent
administrative spending.
Along with the cost reductions in Medicare
noted above, Humana in 2011 achieved
appreciable progress on quality in our
Medicare Advantage plans. Updated Star
ratings issued by the Centers for Medicare
and Medicaid Services (CMS) indicated
that 98 percent of Humana’s Medicare
members are now in plans that will qualify
for quality bonus payments in 2013. We
also announced our intent to acquire two
Medicare HMOs, Arcadian and MD Care
(which closed in late 2011), increasing our
provider network strength in several areas
of the country and enabling us to enter new
geographies, particularly in California.
This progress bodes well not just for the
company. It has a potentially significant
societal benefit. Faced with its multi-trillion-
dollar liability, the Medicare program must
deepen its partnership with the private
sector if America has any hope of reining
in its Medicare spending. While traditional
Medicare functions primarily as a claims
processor, Medicare Advantage plans have
proven their ability to reduce costs while
improving health outcomes for Medicare
beneficiaries. Not insignificantly, such
plans are also extremely popular among
seniors. Seniors like the care coordination,
the personal attention, the variety of
choices, and the provider accountability
inherent in Medicare Advantage offerings.
In Humana’s case, very few of our Medicare
Advantage members ever choose to return
to traditional Medicare.
2011 in
review:
A record
year
Company-wide, 2011 revenues increased
to $36.8 billion from $33.6 billion in 2010.
Medical membership of 11.2 million at
December 31, 2011 compared to 10.3
million a year earlier and included Retail
Segment Medicare membership growth of
nearly 34 percent (Medicare Advantage and
stand-alone PDP combined). Total Retail
Segment medical membership was 4.7
million at year-end, compared to 3.5 million
in the previous year, while Employer
Group Segment medical membership
was 2.8 million at year-end, compared to
3.0 million the previous year. Combined
Retail and Employer Group Specialty
membership, which includes members
with dental, vision, and other supplemental
benefits increased to 7.3 million at year-
end compared to 7.0 million in the previous
year. The 2011 Specialty membership total
included growth of more than 53 percent in
the Retail Segment.
Along with the previous milestones came
the welcome news in 2011 that the award
of the Department of Defense (DoD) South
Region TRICARE® contract to Humana
Military Healthcare Services was upheld by
reviewing authorities. Health care delivery
under the new contract is scheduled to
begin on April 1, 2012. As is customary, the
contract provides for five one-year options
exercisable by the DoD.
Diluted Earnings per Common Share
$10.00
$7.50
$5.00
$2.50
$0.00
2009 2010 2011