Humana CEO: Keep People Out of Hospitals

Outgoing CEO Michael McCallister said one of Humana’s primary strategies going forward is to keep patients out of hospitals and other healthcare institutions, when possible.

McCallister noted that healthcare institution-affiliated attendees in the audience at the 30^th Annual JP Morgan Healthcare conference, where he delivered his comments, might not be pleased to hear about this particular goal. But the problem, according to McCallister, is that one in five hospitalizations end up being readmitted in 30 days, often due to social or environmental factors, such as imperfect living conditions for dealing with health issues. “They’re tripping over pets and rugs,” or they need ramps, said McCallister. If seniors can feed and bathe themselves, they ought to be at home, he said.

The Humana Cares program, launched in February 2009, has decreased hospital readmissions by 48 percent for members, and has decreased medical claims costs by 22 percent. Emergency room visits have dropped by 22 percent, according to a company statement. The program, developed to help facilitate access to care for seniors, and to provide a more holistic approach to treating chronic illness, will be expanded in 2012, said McCallister. To that end, Humana announced its intent to acquire Senior Bridge, a New York-based company providing in-home care, last November. McCallister called Senior Bridge a perfect fit, given its network and relationship with seniors.

In addition to preventing hospitalizations, Humana has also set a corporate goal of outperforming Medicare by 15% across the board, on average, in terms of overall expense. On the topic of accountable care organizations (ACOs), McCallister suggested that the program could indeed help to address the cost problem in the U.S., but that many physicians had already joined similarly designed programs with Humana and others. Doctors that want to be in ACOs, that understand how they work, have already gotten involved, he said.

With respect to U.S. healthcare reform in general, McCallister called the individual mandate “too weak,” but said that overall, from a business perspective, healthcare reform is “pretty clear…it looks pretty good.” McCallister will hand the company reins over to Bruce Broussard, formerly CEO of McKesson Specialty Care, after a transition period.

Originally a nursing home and hospital company, Humana spun off its institutional assets (into Galen Healthcare, now a part of HCA) in 1993, in favor of the health insurance business. Humana is “one of the big two national players” in Medicare Advantage, according to McCallister.