Humana Looks to CenterWell, Home Health Care Amid MA Headwinds

Home health care will be at the heart of Humana Inc.’s (NYSE: HUM) rebound plans, according to company leadership.

An increase in Medical Advantage (MA) costs driven by “higher than anticipated” hospitalization costs were the main culprit for Humana’s grim outlook coming out of the fourth quarter.

The significant uptick in utilization in Q4 has impacted the entire health care sector. Despite efforts to mitigate costs, Humana couldn’t fully offset the headwinds.


“The Medicare Advantage sector is navigating a complex and dynamic period of change as we are all working through significant regulatory changes, while also absorbing unprecedented increases in medical cost trends,” Humana CEO Bruce Broussard said during the company’s fourth-quarter earnings call Thursday. “The increase in utilization that emerged late in the fourth quarter was a significant deviation from an already elevated level impacting the industry.”

Humana cited an increase in outpatient services and a rise in inpatient care in November and December among patients enrolled in Medicare Advantage.

The insurer reported a loss of $591 million in Q4. That compares with a loss of $71 million during the same period a year ago.


“We take our commitments seriously and are disappointed with where we are, unable to fully offset these higher cost trends despite our best efforts to identify mitigation opportunities throughout the year,” Broussard continued.

Despite near-term challenges, Broussard and other Humana leaders reiterated confidence in the company’s long-term vision. They noted Humana is actively evaluating pricing actions for MA in 2025 and expects earnings growth in other lines of business.

One of those businesses is Humana’s home health arm, CenterWell Home Health.

“In terms of the long-term margin outlook, we had really moved away from setting a specific target for individual MA recognizing that we will work very hard to maximize the margin contribution across the enterprise,” Humana CFO Susan Diamond said during the call. “Which becomes increasingly important as we continue to expand and scale the CenterWell capabilities, and so we remain very focused on that.”

Humana’s CenterWell brand includes home health care, primary care and pharmacy services. Its home health segment has over 350 locations, over 9,000 clinicians and serves more than 350,000 patients annually.

In order for Humana to rebound, Broussard believes a big contributor to the insurer’s success will come from CenterWell.

“We do find that the growth and the scalability and the integration of CenterWell offers us that opportunity to continue to expand — not only our services that we find are much more effective in clinical outcomes and satisfaction — but also the ability to continue to drive better and better value for the enterprise overall,” Broussard said. “We really view the ability to continue to drive the membership growth in the total value of what we offer. And that’s around our brand and our quality — in addition the relationships that we have with value-based providers and feel that that will carry the day for the foreseeable future.”

Looking ahead, Humana knows that it needs to hit its growth goals for both the health plan and its services side of the business. Diamond emphasized the need for progression in both aspects.

“As we think about 2025 and the benefit adjustments we’re going to have to make, we are being very intentional around which markets do have further integration opportunities and where we have CenterWell assets, particularly primary care,” Diamond said. “I think you will see us prioritize those markets to ensure that we can drive disproportionate growth in those markets to a greater degree going forward, and support that enterprise integration and margin expansion that we’ve been talking about.”

During 2024, Humana expects to roll out its home health utilization management services in additional states, increasing the share of Humana MA membership covered by approximately 13% to 3.4 million by year end.

Humana expects to serve nearly all of its CenterWell Primary Care patients who utilize
home health via its owned CenterWell Home Health and onehome agencies where there is
overlapping coverage by the end of 2024, driving a 25% increase in value-based home
health admissions on a year-over-year basis, according to the company.

Humana also on Thursday announced the hiring of David Dintenfass as president of enterprise growth.

The initial focus for Dintenfass will be on the growth of Humana’s insurance businesses, but it will “evolve over time” and integrate with the company’s care delivery offerings through CenterWell. That evolution will include advancing Humana’s integrated health strategy of increasing the penetration of health plan members utilizing CenterWell primary care, home solutions and pharmacy offerings.

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