Humana plans to fend off the competitive threat posed by the CVS-Aetna merger and other disruptive forces by focusing on what it does best: serving seniors with complex medical needs.
That’s one of the conclusions drawn by Leerink Partners analysts, who recently met with Humana’s top executives to glean insights about the company’s business and strategy.
The analysts say the nascent Amazon-Berkshire Hathaway-JPMorgan Chase healthcare venture appears to be less of a threat to Humana than other healthcare players. They reason that the new entity—in whatever form it takes—would find it difficult to replicate the “intense clinical focus” required for managing seniors with chronic conditions that Humana has developed over the years.
Recently, the insurer has taken steps to strengthen its integrated clinical model through the build-out of the Conviva primary care physician platform in Florida and Texas and the partial acquisition of Kindred Healthcare, which complements its existing Humana at Home model.
Humana’s in-house pharmacy benefits manager is also a plus, since insurers are largely moving toward integrating medical and drug benefits. And that’s even more true now that pharmacy and PBM giant CVS has inked a deal to acquire Aetna.
That $69 billion deal also threatens to shake up the retail healthcare space, since the two companies plan to expand their clinical capabilities if allowed to combine forces. However, Humana’s management told Leerink that the CVS MinuteClinics don’t yet offer care management that contains the “appropriate clinical intensity for seniors,” who can be among the most complex patients to treat.
Overall, Humana’s focused chronic care management platform for seniors is “driving the all-important competitive medical cost advantage,” the analysts said, while the benefits of a lower corporate tax rate are offering the insurer opportunities to invest in further growth.
Humana’s executives are not the only ones to find themselves on the defensive about the disruptive forces in the industry. On Cigna’s quarterly earnings call, CEO David Cordani fielded questions about the Amazon-Berkshire Hathaway-JPMorgan Chase venture, saying he views the push toward greater value in healthcare as a positive. Past cost-control efforts by employer groups, he noted, have resulted in opportunities for Cigna “because we’re oriented around transparent, aligned funding relationships.”