Humana said the company is cutting the jobs in part to invest in technology………….…………
By Bruce Japsen
I write about healthcare business and policy Opinions expressed by Forbes Contributors are their own.
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- insurer began an early retirement program and other efforts to cut 2,700 jobs, or nearly 6% of the company’s workforce
- “There is a continued need to invest in the business,” Humana CEO Bruce Broussard
Humana profits tumbled more than 10% as the insurer began an early retirement program and other efforts to cut 2,700 jobs, or nearly 6% of the company’s workforce.
Humana on Wednesday reported an 11% decrease in third-quarter earnings, to $799 million, compared with $902 million in the year-ago period, as the company recorded $124 million in expenses “associated with voluntary and involuntary workforce reduction programs.” The job reductions should be complete by mid-January of next year, executives said.
Humana said the company is cutting the jobs in part to invest in technology and infrastructure needed to offer more competitive insurance products to its customers. “There is a continued need to invest in the business,” Humana CEO Bruce Broussard told analysts on an hour-long call Wednesday morning to discuss earnings.
Humana has been working a turnaround following the failed sale of the company last year to Aetna and large losses from sales of individual policies under the Affordable Care Act. Humana, Aetna and UnitedHealth Group are among the carriers exiting the ACA’s individual market after being unable to manage costs of sick patients signing up for such coverage.
Humana’s total premiums and healthcare services revenues were down 3%, or $420 million, in the third quarter to $13.18 billion, compared to $13.6 billion in the third quarter of 2016.
Still, Humana said the earnings it reported for the third quarter were better than expected and the insurer says it expects solid sales of individual Medicare Advantage plans, which is a key segment of the company’s business.
Such plans are increasingly popular among seniors and overall industry growth is on the rise. Insurers sell such private plans via contract with the Medicare program, agreeing to provide all the services of traditional Medicare plus some extra, generally outpatient and wellness services.
To boost profits from its Medicare Advantage plans, Broussard said the company is focused on a value-based approach in how it pays doctors and hospitals to care for seniors. This means providers will be held to quality measures rather than being paid fees for service.
Broussard said the company is focused on “continuously proactively” helping seniors, and that means investing in ways to improve clinical outcomes.
