After disappointing results in Medicare Advantage's open enrollment window, Humana launched a plan to refresh its approach to sales and marketing in a bid to boost both new member growth and retention.
So far in the first quarter, the insurer has rolled out new training for contracted call center workers, new compensation structures for plan brokers and additional ways to ease the member experience that can be deployed by its in-house call centers, executives said on the company's earnings call on Wednesday morning.
For instance, a new computer-based training program for call center workers focuses on common sources of complaints from members, CEO Bruce Broussard said. Over the past several months, Humana has seen complaints to the Centers for Medicare & Medicaid Services decrease in tandem, he said.
New compensation models for brokers focus on quality, he said, and in-house call center workers are able to assist members directly with online shopping as well as with using certain benefits appropriately, such as setting up healthy food cards.
Rethinking its approach to sales runs parallel to Humana's $1 billion value-creation projection, which aims invest in the insurer's core Medicare Advantage business to drive growth. Broussard said Humana has highlighted four areas of focus for this effort: strategic initiatives, organizational efficiencies, third-party spend and automation and digital advancement.
Broussard said the company initially expected each focus area to account for a relatively even piece of the $1 billion pie, but now estimates that organization efficiencies and third-party spend will account for a third each, strategic initiatives for a quarter and then automation for the remaining 10%.
Humana has already made headway in goals across these four targets, and is on pace to achieve the $1 billion goal by 2023, Broussard said.
"I'm confident that our team is equal to the task and understands the purposeful approach we are taking to make Humana an even stronger company," he said.
Humana reported $930 million in profit for the first quarter of 2022, up 12.3% year over year from an $828 million haul in the first quarter of 2021.
Revenues were also up by double digits from the prior-year quarter, hitting $24 billion, the company reported Wednesday. That's a 16% hike from the first quarter of 2021, when the insurer earned $20.7 billion in revenue.
Both figures surpassed Wall Street's expectations, analysts at Zacks Investment Research said. In its earnings report, the company said the "outperformance" in the first quarter can be attributed in part to lower than expected administrative costs and strong performance in its pharmacy business.
Broussard highlighted the company's newly launched, $1 billion value creation initiative, which aims to boost Humana's core Medicare Advantage business, in a statement, saying the effort proceeds apace.
"We’re also making strong progress in our plans for significantly improving Medicare Advantage membership growth in 2023, including work underway with our distribution partners, and steps we’re taking to improve retention," Broussard said. "The $1 billion value creation initiative we introduced last quarter is developing as expected, creating capacity to further enhance our Medicare offerings and expand our Healthcare Services capabilities.”
Late last year, Humana slashed its Medicare Advantage membership growth outlook significantly, raising eyebrows across the industry and sending its stock into a nosedive. The company said last quarter that it will launch the $1 billion program to reinvest in that business to address the membership slump.
The company's total membership crossed 10 million in the first quarter of 2022, according to the earnings report, adding 354,900 members compared to the prior-year quarter, or growth of 3.7%.
Due to its performance in the quarter, Humana is hiking its financial outlook for the year and now expects earnings of $24.50 per share, which is growth of 19% compared to 2021's earnings per share. It reaffirmed its guidance for Medicare Advantage membership growth, projecting it will add between 150,000 and 200,000 new members this year.