Harvard Case - Humana's Bold Goal: 20 Percent Healthier by 2020
"Humana's Bold Goal: 20 Percent Healthier by 2020" Harvard business case study is written by Nancy M. Kane. It deals with the challenges in the field of Strategy. The case study is 26 page(s) long and it was first published on : Jan 31, 2017
At Fern Fort University, we recommend Humana adopt a multi-pronged strategy to achieve its "20 Percent Healthier by 2020" goal. This strategy should focus on leveraging data and analytics, fostering innovation, and building strategic partnerships to create a comprehensive ecosystem of wellness.
2. Background
Humana, a leading health insurance company, faced a critical challenge in 2015: improving the health of its members by 20%. This ambitious goal required a fundamental shift from traditional insurance to a proactive, preventative approach to healthcare. The case study highlights Humana's commitment to this transformation and its exploration of various strategies to achieve it.
The main protagonists of the case study are Humana's leadership team, including CEO Bruce Broussard, who spearheaded the '20 Percent Healthier' initiative, and various internal stakeholders involved in developing and implementing the new strategy.
3. Analysis of the Case Study
To analyze Humana's situation, we can utilize several frameworks:
a) SWOT Analysis:
- Strengths: Strong brand reputation, extensive data and analytics capabilities, established network of healthcare providers, commitment to innovation.
- Weaknesses: Limited direct control over healthcare delivery, potential for resistance to change within the organization, reliance on external partners for some initiatives.
- Opportunities: Growing demand for personalized and preventative healthcare, advancements in technology and data analytics, increasing focus on value-based care.
- Threats: Rising healthcare costs, competitive landscape with other insurance companies, regulatory changes impacting the healthcare industry.
b) Porter's Five Forces:
- Threat of New Entrants: Moderate, with potential for new entrants driven by technological advancements and changing consumer preferences.
- Bargaining Power of Buyers: Moderate, as consumers have limited options for health insurance but are increasingly demanding value and personalized services.
- Bargaining Power of Suppliers: Moderate, with healthcare providers having some leverage but also seeking partnerships with insurance companies for patient access and revenue.
- Threat of Substitute Products: Moderate, with potential substitutes like telemedicine and alternative healthcare options emerging.
- Rivalry Among Existing Competitors: High, with intense competition among established insurance companies, driving innovation and cost-cutting measures.
c) Value Chain Analysis:
Humana's value chain can be examined by analyzing its primary and support activities:
- Primary Activities:
- Inbound Logistics: Managing member data, processing claims, and coordinating with healthcare providers.
- Operations: Developing and implementing health programs, providing customer service, and managing risk.
- Outbound Logistics: Delivering health information, facilitating access to care, and managing member communication.
- Marketing & Sales: Attracting new members, promoting health programs, and building relationships with providers.
- Service: Providing support to members, addressing concerns, and ensuring quality of care.
- Support Activities:
- Infrastructure: Technology infrastructure, data management systems, and organizational structure.
- Human Resource Management: Recruiting and developing talent, fostering a culture of innovation and collaboration.
- Technology Development: Investing in data analytics, AI, and digital platforms for personalized healthcare.
- Procurement: Sourcing healthcare services, managing contracts with providers, and optimizing cost.
d) Business Model Innovation:
Humana needs to move beyond its traditional insurance model and embrace a more proactive approach to health management. This requires:
- Shifting focus from reactive care to preventative care: Investing in programs that address lifestyle factors, chronic disease management, and early intervention.
- Leveraging data and analytics: Utilizing member data to identify health risks, personalize interventions, and measure program effectiveness.
- Building strategic partnerships: Collaborating with healthcare providers, technology companies, and community organizations to create a comprehensive ecosystem of wellness.
- Developing innovative payment models: Moving towards value-based care models that reward outcomes and encourage preventative measures.
4. Recommendations
Humana should implement the following recommendations to achieve its '20 Percent Healthier' goal:
a) Data-Driven Health Management:
- Invest in advanced data analytics and AI: Utilize data to identify high-risk individuals, predict health outcomes, and personalize interventions.
- Develop predictive models for chronic disease management: Proactively target members at risk of developing chronic conditions and provide tailored support.
- Implement personalized health programs: Offer customized health plans based on individual needs, preferences, and health data.
- Track and measure program effectiveness: Continuously monitor program outcomes and refine strategies based on data-driven insights.
b) Innovation and Partnerships:
- Develop innovative health programs: Partner with technology companies to create gamified apps, wearables, and virtual coaching programs that encourage healthy behaviors.
- Foster a culture of innovation within the organization: Encourage employees to develop new ideas and solutions for improving health outcomes.
- Build strategic partnerships with healthcare providers: Collaborate with hospitals, clinics, and community organizations to deliver integrated care and support.
- Explore partnerships with technology companies: Leverage emerging technologies like AI, telemedicine, and wearable devices to enhance health management.
c) Strategic Communication and Engagement:
- Communicate the '20 Percent Healthier' vision clearly: Educate members about the benefits of preventative care and encourage active participation in health programs.
- Develop engaging and interactive communication channels: Utilize social media, mobile apps, and personalized messaging to reach members effectively.
- Empower members to take ownership of their health: Provide tools and resources for self-management, education, and healthy lifestyle choices.
- Build trust and transparency: Be open and transparent about data privacy, program effectiveness, and member feedback.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: Humana's strengths in data analytics, technology, and network management align with the proposed strategy. The focus on preventative care and personalized health aligns with Humana's mission to improve the health and well-being of its members.
- External customers and internal clients: The recommendations address the needs of members by providing personalized health programs and engaging communication. They also empower internal stakeholders by fostering innovation and collaboration.
- Competitors: Humana needs to stay ahead of the competition by embracing disruptive innovation, leveraging data analytics, and building strategic partnerships.
- Attractiveness ' quantitative measures: The proposed strategy is expected to lead to improved health outcomes, reduced healthcare costs, and increased member satisfaction. These benefits can be measured through metrics like hospitalization rates, disease prevalence, and member engagement.
- Assumptions: The success of the strategy relies on the availability of reliable data, the adoption of new technologies, and the willingness of members to engage in preventative care.
6. Conclusion
By embracing data-driven health management, fostering innovation, and building strategic partnerships, Humana can achieve its ambitious goal of improving the health of its members by 20%. This strategy will not only benefit members but also position Humana as a leader in the evolving healthcare landscape.
7. Discussion
Other alternatives not selected include:
- Focusing solely on traditional insurance: This approach would not address the need for proactive health management and would likely result in lagging behind competitors.
- Merging with a healthcare provider: While this could provide more control over healthcare delivery, it carries significant risks and may not be strategically aligned with Humana's core competencies.
Key risks and assumptions of the recommendation include:
- Data privacy and security: Ensuring the responsible and secure use of member data is critical.
- Technology adoption: The success of the strategy depends on the adoption of new technologies and the ability to integrate them seamlessly.
- Member engagement: Motivating members to participate in health programs and adopt healthy behaviors is essential.
8. Next Steps
To implement the recommendations, Humana should:
- Develop a comprehensive strategic plan: Define clear objectives, timelines, and resource allocation for each initiative.
- Establish a dedicated innovation team: Focus on developing and testing new health programs and technologies.
- Build partnerships with key stakeholders: Collaborate with healthcare providers, technology companies, and community organizations.
- Pilot test new programs and initiatives: Gather data and feedback to refine strategies and ensure effectiveness.
- Continuously monitor and evaluate progress: Track key metrics and adjust strategies as needed to achieve the '20 Percent Healthier' goal.
By taking these steps, Humana can transform its business, improve the health of its members, and become a leader in the future of healthcare.
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Case Description
Beginning in 2013, Humana Inc., headquartered in Louisville, Kentucky, pursued a major organizational transformation, from being an insurance company focused on paying claims to becoming a health and well-being company focused on improving the health of its beneficiaries. The company set a "Bold Goal" of improving the health of the communities it served by 20% by 2020. To achieve this new goal, Humana undertook a multiyear redesign and investment of people, processes, and products in order to gain the trust of consumers and providers, and to partner with communities to improve health. The case focuses on community initiatives, where Humana was developing its new role as "convener of conversations," providing leadership infrastructure and partial funding to spark community planning with a wide range of stakeholders and to design and monitor interventions that were tailored to local health improvement. At the same time, Humana remained a publicly-held corporation accountable to its shareholders for revenue growth and financial return. The case protagonist, Andrew Renda, MD, MPH, Director, Bold Goal Measurement, must design and implement a business plan, including leading and lagging performance metrics, that would measure Humana's progress toward its Bold Goal in ways that supported continued investment in community health improvement in Humana's local markets, while satisfying its traditional business constituents. This case can be used in courses on strategy, community health improvement, the corporate role in public health, and other courses exploring the intersection of business and society. It also offers a rich opportunity to explore the research design and measurement challenges associated with evaluating the impact of public health interventions on local communities.
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