Businessmodel of Humana

Customer Segments

Humana offers a broad range of products and services to customers across multiple segments. The Company’s customers can principally be organised into the following categories:

• Individuals, comprising individual consumers covered under health benefit plans, notably the Medicaid program, including individuals across multiple demographics;
• Employers, comprising employers and employer groups across multiple business sectors and industries, including commercial entities, government and public bodies, and other organisations, such as non-profits; and
• Healthcare Services Customers, comprising certain Humana businesses, as well as external health plan members, external health plans, and other employers or individuals. Humana notably has a contract with the US Department of Defense, under which it provides administrative services to arrange health care services for the dependents of active duty military personnel and for retired military personnel and their dependents.

Humana’s core market is its native US, where its serves customers nationwide. The Company does not appear to have any significant international operations.

Value Propositions

Humana provides value to its customers in the following ways:

• Its reputation and industry standing, with the Company established as leading provider of medical insurance coverage and other related services, having a positive track record in the industry and serving high-profile customers across multiple segments, including the US Department of Defense;
• Its broad range of insurance products, with the Company offering its customers large portfolio of products and services, including dental and vision protection products, as well as pharmacy solutions and provider services;
• Its personalised services, with the Company offering services and coverage that is tailored to the individual needs of each client, seeking to assist individual customers meet their own health goals; and
• Its specialist expertise and experience, with the Company employing a number of trained, specialist personnel, including primary care providers, as well as a team of experienced industry executives. ### Channels

Humana operates a website at www.humana.com, through which the Company provides information on its various products, services, and other activities. The Company does not operate an online sales channel. It does, however, offer information on medical providers and medical plans through its website. It also operates an online client portal, which enables customers to manage their policies and access resources independently.

Humana offers its services and products primarily through a dedicated sales force. This includes around 1,600 sales representatives, as well as approximately 1,400 telemarketing representatives who work out of the Company’s network of offices across the US. These sales personnel assist in the marketing of Medicare and individual commercial health insurance and specialty products in the Company’s Retail segment, including making appointments for sales representatives with prospective members.

Additionally, Humana has a marketing arrangement with Wal-Mart Stores Inc for its individual Medicare stand-alone prescription drug products offering. It also sells group Medicare Advantage products through various large employers, as well as marketing Medicare and individual commercial health insurance and specialty products through a network of licensed independent brokers and agents.

Customer Relationships

Humana does not sell products and services to customers on a self-service basis. It does, however, offer a range of tools and resources to its customers through its online client portal, which allows customers to manage their coverage plans and make payments without interacting directly with members of the Company’s sales and service teams.

Humana principally makes its sales through its dedicated sales personnel, who seek to offer tailored coverage to each individual client, assisting its customer base in reaching their health and wellness goals. The Company’s sales staff work consult closely with customers in order to ensure that their needs are met.

Humana operates a dedicated customer support organisation, the members of which provide personalised customer assistance to individual and employer clients over the phone and online. The Company also offers a range of online resources, such as FAQs and guides, which customers are able to access independently.

Additionally, Humana operates a number of social media accounts – including with Twitter, Facebook, Instagram, YouTube, and LinkedIn – through which the Company is able to interact directly with clients and provide regular company updates.

Key Activities

Humana operates as a health and well-being company and medical insurance provider. The Company aligns its operations into three reportable business segments: Retail, offers Medicare benefits, marketed to individuals or directly via group accounts, as well as individual commercial fully-insured medical and specialty health insurance benefits, including dental, vision, and other supplemental health and financial protection products; Group, which offers employer group commercial fully-insured medical and specialty health insurance benefits, including dental, vision, and other supplemental health and voluntary insurance benefits, as well as administrative services; and Healthcare Services, which provides a range of services, including pharmacy solutions, provider services, home-based services and clinical programs, as well as services and capabilities to advance population health.

Key Partners

Humana works closely with a range of companies and organisations across its three operating segments. These partnerships can be organised broadly into the following categories:

• Supplier and Vendor Partners, comprising suppliers of equipment, services, and tools that are utilised across the Company’s three operating segments, as well as companies to which certain non-technical functions can be outsourced;
• Channel and Distribution Partners, principally the Company’s network of independent agents and brokers, which provide products and services on the Company’s behalf;
• Healthcare Partners, comprising various healthcare, dental, and other specialist healthcare service providers with which the Company collaborates to provide health coverage to its customers;
• Strategic and Alliance Partners, comprising various market-leading companies with which the Company works on joint projects, including branding, marketing and other projects; and
• Community and Social Partners, comprising charitable organisations and non-profits with which the Company collaborates on social and community projects across the US. Humana has launched a number of partnerships in recent years. This includes an accountable care agreement with HealthCare Partners Nevada Launch, and education partnership with CVS Health, and a wellness partnership with Weight Watchers.

Key Resources

Humana’s key resources are its intellectual properties, its online customer portal, its IT and communications infrastructure, its network of independent brokers and agents, its physical infrastructure – including its network of medical centres and offices, its partnerships, and its personnel.

Humana owns a number of patent and intellectual properties that are key to its operations. Searches of records published by the US Patent and Trademark Office identified a number of patent applications filed in Humana’s name, including applications entitled ‘Pharmaceutical vial processing system and method’, ‘Pharmaceutical verification camera system and method’ and ‘Organization categorization system and method’.

Humana additionally owns and or leases a number of physical properties across the US. This includes its network of 200 medical centres and 343 administrative offices, the majority of which are leased.

Cost Structure

Humana incurs costs in relation to the development of its intellectual properties and its online portal, the maintenance of its IT and communications infrastructure, the procurement of supplies and services, the management of its partnerships – notably its broker and agent partners, the implementation of marketing and advertising campaigns, and the retention of its personnel.

In 2015 Humana recorded total operating costs in the amount of $51.94 billion. This included $44.27 billion in benefits expenses, and $7.32 billion in general operating costs.

Revenue Streams

Humana generates revenue through the provision of medical insurance coverage and other related services. The Company principally derives its revenue in the form of regular insurance premiums paid by its customers, as well as service fees paid on a case-by-case basis.

In 2015 Humana generated total revenue for the year in the amount of $54.29 billion, up on the $45.96 billion recorded by the Company in 2014. The vast majority of the Company’s revenue, around $52.41 billion, came in the form of insurance premiums, with service revenue totalling $1.41 billion for the year.