Humana Inc. (HUM) Earnings Call Transcript & Summary

Thanks for joining us for Humana presentation. Humana's a leading health insurance, health care services provider, over 15 million enrollees in its various health care products. 70% -- over 70% of their $65 billion of revenues derived from Medicare Advantage sector, also operates its own captive PBM. It's been building out its home health platform. I have the CEO, Bruce Broussard, on my right; and CFO, Brian Kane, on my left; and also Amy Smith, Investor Relations. And we're going to go fireside chat format, although it feels awfully formal. There's no fire, hot cocoa or anything, but we'll make do. And then we'll break out across the hallway.

So I think what I want to start -- maybe we'll do some more detailed stuff across the room in the breakout. But maybe to start, 2 of the most common questions that I get, big picture, around your core product, which is the Medicare Advantage product is, one, the number of seniors in the U.S. is growing 3% or so a year but Medicare Advantage enrollment's been growing 6%, 7%. It's going to grow 10% this year. So what is so compelling about the product offering for the industry and for Humana that seniors just keep increasingly choosing this, and we're seeing penetration of fee-for-service Medicare continue to decline?

I'd say a few things. I'd say first, care coordination. Unlike in Medicare fee-for-service, where you might go to the hospital or you might go to a particular provider, you are not assisted through the transition. So first I think is just care coordination in there. But the second part is, is that you get a much more comprehensive benefits, whether it's your benefits from a maximum out-of-pocket expense to voluntary benefits, whether it's dental, vision to transportation to now introducing social determinants and being able to help out with lifestyle issues that have downstream impact. So it's much more holistic, much more care coordination. And we're seeing just both a great consumer attraction, but more importantly, great health outcomes from the ability to serve somebody holistically.

And when we think about Medicare Advantage penetration, we've crossed over -- we're around 1/3 of the total Medicare population today. Where do you think that ends up long term? I know a lot of folks in the industry say, well, maybe we'll get to 50% in a decade or so and then we'll just figure out from there if it conceivably goes higher. There's a lot of counties in the U.S. that have penetration substantially below that 1/3. So how are you thinking about long-term trajectory?

I still think -- we gave an estimate in our Investor Day last year that we do believe 50% is fully achievable over the next 7 to 10 years, and we still believe that. And in fact, this year, we're seeing great growth in the industry for a number of reasons we can talk about later. But for us, we believe that there are certain markets that are more mature. South Florida is an example of that. Southern California is an example of that. But there's a lot of markets in the Midwest, even in Texas and other places, that have the opportunity to have significant growth there. And we're seeing in a lot of our areas that the underpenetrated areas are actually the areas that we're going to grow the most. And I think the most important thing for us in being able to grow is to have a provider's -- or providers that are oriented to value-based payment models and the ability to continue to help improve the quality around the delivery of care.

I would just add, I think it builds on itself in markets. So as markets get more and more penetrated, more and more people know about it, and there's a network effect there that MA really becomes a product that is something that they can comfortably decide to choose. And so that sort of education about the MA benefits becomes more pronounced as more and more people in the market get it. And so it builds on itself, which is important.

So I think another thing that people find interesting and maybe potentially confusing about the line of business is that Humana and your largest competitor, United, have such dominant share of the MA business but continue to generally grow faster than the overall industry growth rate. Usually, that's kind of rare, right? Usually, it's the smaller players, just by virtue of their smaller size, can grow faster. That's not consistently been the case in this business. So can you talk a little bit about -- you talked a little bit about growing on itself, but just generally, the benefit of scale in MA and how that flows through Stars and delivery network, et cetera. And the fact of the matter is you have 2 very different business models. You're sort of nearly a pure play on this business, and then your largest competitor is very large in MA but it's in the context of a larger insurance company that offers multiple lines of business. So it's really 2 different business models that are -- that have been succeeding in terms of share growth. But just go back to that sort of scale question and why we're seeing this dynamic where you guys are growing and taking [ the most ] share.

I would say a few things. I would say, first, just the inherent opportunities in the industry are dependent on brand. I would say it's a consumer-oriented -- the consumer decides, not the HR department. The second is clinical programs that are really important, we can come back to that that then enhance the benefits. What we see long term is the ability to compete in this marketplace will be really determined on your clinical capabilities and being able to help members stay out of the -- utilizing the health care system as well as what we've done in the past around the ability to manage the cost in the traditional managed care way. But what we see the differentiation in the marketplace, where it shows up, is and if you're keeping your admissions per 1,000 down by continuing to help people in being able to prevent downstream costs. The second thing we constantly see is the ability to increase your quality, and that's how -- both done within providers but also outside providers and leveraging technology and your relationship with the member. And then the third area we see very important is your experience. We find that 60% of the decision-making is made by the actual consumer themselves. The other 40% to 50% or so is decided by the experience that they have and being able to make it easier for them.

Got you. Maybe backing up a little bit higher level which perhaps has reemerged as the issue of the day with some of the recent polling coming out of Iowa. When you look at some of the policy proposals from some of the Democratic candidates, it really seems to, in a lot of ways, present more opportunity than risk for Humana as largely a Medicare company. The very concept of like a Medicare for All is, perhaps as unlikely as that is, it doesn't sound like a bad thing for a Medicare company. Early buy-in to a Medicare program seems like it could potentially be an enormous opportunity as some of the commercial nonrisk business could shift to Medicare Advantage. And then perhaps public option in the realm of plausibility maybe being something else that's still ultimately plausible in the long run. Is there any of that, that -- obviously, the devil's in the details -- but conceptually particularly concerning? Do you think Humana's well positioned for plausible public policy changes over the next 5 years or so?

Yes, I think what we've seen both within our Medicare experience but also looking at the polling is that the American society is wanting a private option, no matter if it's the employer or some other type of offering. And so we do believe, no matter what would be proposed, that a private option will be an important part of that, because the American society is demanding that. Today in Medicare, we have a private option and we have a public option. And what you're seeing in the marketplace because of Medicare Advantage growing is, is that citizens are choosing the private option. And I think the private option offers a lot of benefits. I think the structural aspects of Medicare Advantage around where the consumer decides, the -- there's a payment for conditions, and it encourages the industry to help and assist individuals that are sicker and need help. And it also helps people that are under-resourced and financially cannot afford health care. And then the last thing it does is it really encourages to focus on the holistic aspect of the individual as opposed to treating one particular aspect of their condition. So when I think about the opportunity for public policy to really enhance below the 65, I think the elements of Medicare Advantage really have proven over time that it is a model that can withstand the test of time. I think the second aspect is, is that there is significant support both on the Democratic side and on the Republican side for MA. There might be a difference here or there. But for the overall support, it is a program that really has become bipartisan and has a significant amount of support.

Sticking with public policy a little bit. Just before Christmas, Congress passed permanent repeal of the health industry fee or tax, which gives you the opportunity in 2021 to make a lot of additional investments in your benefits and in your business if you choose to do that. My impression is Humana historically has leaned towards the [ dry ] benefits enrollment experience for the long-term present value of enrollment growth and retention. The whole industry now has a little more juice, so to speak, in 2021 as it thinks through that trade-off between margin and enrollment. So at this very early stage, how are you thinking about the HIF repeal? How does it impact not just how you'll start thinking about '21, but how do you think it impacts what competitors are doing with benefit design?

As Brian has indicated, we haven't even given 2020 guidance so now we're talking about 2021. So it' obviously...

We can do it. We can do it right now, right here. This is public dissemination, don't you think?

Let me give you some things. We're not -- I think in general, we want to be fully transparent with the investors on what's going through our minds. We're not prepared to talk about how the HIF will be utilized over the coming bid cycle, for a whole host of reasons. But most importantly, there's a lot of things that have to be decided, and we have to answer some questions. First is just the simple thing of the rate notice. The second thing is, is that there is a headwind as we see 2021 with ESRD and the significant of that population coming into MA and how does that impact the design of the benefits and as importantly, how do we ensure that we have the right provider network to help us with that. And those 2 things are really probably large and being for us to be able to come back and give a full discussion around 2021 and how we'll use the HIF. And then lastly, this is a very competitive field. And so we always are looking at how our competitors are going to respond. And as we begin to start to digest more of how the rest of the year works, as we think about the -- we enter the markets and see the various different markets and how we compete, it's going to be how we need to change our benefits to compete in 2021. So benefit design and competitiveness will be an important part. ESRD will be an important part. And then just some of the public policy areas; specifically, rate notice will be the other part. So I know you're trying to get it out of us, this is about the fifth time you've asked us. But some ...

[ This will be in the ] breakout, breakout too.

But sometime in the near future, we'll give you some more details.

And I would just add, I mean we have tried over the last few years to strike a balance between growth on the top line and growth on the bottom line and also importantly, investing in our core business, which we talk about all the time in terms of creating long-term sustainability. There's a lot of transformation that has to happen in this industry that is costly. And so as we think about the uses of funds that we have, that's an important element as well. But I think investors will acknowledge that over the last few years, we've really tried to balance the top and bottom line tension that we have as well as still investing in the business for the long term.

Well, I tried. I'll keep trying. Moving along maybe to -- I want to talk about inorganic and then organic. So I'll go inorganic first. Given what MA has really proven to be over the last few years, which has been mid- to high-single-digit enrollment and certainly high-single-digit organic revenue growth, the line of business exposure's really compelling to almost every company in this business. So a lot of investors still think maybe Humana is more target than acquirer. And a few years back, you did see some strategic benefit to combining with the company -- another company and the DOJ blocked that. And various combinations continue to happen in both insurance and provider delivery model. So if we talk about inorganic, is there still -- is there any big picture thing on potential combinations that could allow you to do more than you're doing today, both either upstream or downstream with insurance, with providers? I know it's a broad question, but...

I think within the industry, there's probably only a few consolidations that can be done when you consider the Justice decisions a few years ago and the ongoing Justice reviews that have gone on. So as we think about growth, we really think about how do we build the health care services side more. We'll still buy plans, especially on the Medicaid side, in the markets that we want to be in. But for the most part, I think our capital deployment is expanding the capabilities we have. And I think the industry is going through some interesting evolution from an industry that has been very effective all the way from leveraging the managed care chassis, such as all the ability, whether it's financial recovery to pre-authorization to all the things that traditionally have made managed care companies and the processes wrapped around that to manage cost, to now really oriented to more around how do you prevent disease from progression -- progressing. And we see an ongoing trend that the merging between the health care services side and the risk-taking side will continue. I think the CVS-Aetna transaction is an example of that. The United acquisitions of health care services side of the equation and our continued orientation to that. It's all wrapped around how do you slow the disease progression and really provide a more holistic view of the patient, and we see that going forward. So our capital deployment is going to be much more in the building of those capabilities and being able to advance the clinical side. The second thing that we see is that this business has been built on a technology platform that has older technology. And I think all companies that will compete in the future are going to have to invest and expand their technology to more contemporary technology that allows a much easier user interface, much more agile and much more cost-effective. And so our partnership with Salesforce or Microsoft are 2 great examples of that. But in addition, investing in the contemporary platform like what we've done with our digital health and analytics group is an example of that. And then the third area that we see is, is the ability to expand our experience level. And there's companies like Devoted, Oscar and others that are out there that are changing the experience from more about health than the product itself. And so for large organizations that have established customer base, we need to be able to do that. So when we think about the investments, whether they're organic, i.e., they're being funded off the income statement as what Brian was talking about, or if they're inorganic, like an acquisition, like our investment in Kindred and our investment in some of our primary care areas, are all wrapped around how do we improve the experience, how do we expand our clinical capabilities to slow disease progression and then how do we build a technology stack that allows us to be much more agile, much more effective and in addition, to make it easier for our customers and providers.

Okay. I'll take a peek at the shot clock, see what I'm working with here. Okay.

5 minutes and 49 seconds here.

Maybe ask -- I'll ask about this. CMS has been creating new flexibility in some of the benefit design for Medicare Advantage, including things like transportation and personal care services, et cetera. But as we sort of do our macro analysis of that, it seems like MA plans have been relatively slow. I don't know if that's the right word, but cautious, slow, tentative, at least initially in terms of adding those benefits in a sizable way. And so I guess one, is that a fair observation? If (sic) [ so ] two, sort of what's driving that? And three, it does seem like those additional benefits could really be key catalysts to accelerating even more shift from fee-for-service, so kind of round that out for us.

Yes, I would say it's -- I think it's wonderful, and CMS's vision on allowing social determinants and related benefits to be incorporated in there is wonderful. I think what you see the industry doing is really finding out what the customer values and what is the most impactful from health outcomes. And so what you see is more of a test and learn. I know for us as an organization, we picked a number of geographic markets and we went in with the VBID product, which is a product that allows you to customize to particular conditions. We went in and offered some social determinants benefits. And we want to see how that works, again, both from the standpoint of how is the customer responding to it because it will cannibalize another benefit or raise the cost of the benefit, and does it provide both economic and health outcomes. So that is the most effective there. So I think the industry is just learning and spending a little bit of time to understand it as opposed to going big and wide on this.

Maybe my last question for this section. Long term, you've targeted 4% to 5% or 4.5% to 5%, I think I'm in the right ballpark in terms of -- 4.5% to 5% in terms of pretax margins for this business. But certainly there's a lot of scale opportunities as you increase the size of the business, and I think you're sort of laying out a thought process that there's a lot of incremental investment you want to make in the near term that probably doesn't change that margin profile. Longer term, could that profile change? Or given that this is predominantly a government business, is that probably still a place that you're going to kind of always have to circle?

Brian, do you want to take that?

Yes. I think the 4.5% to 5% is a good number. We do think there are opportunities to continue to reduce costs. If you look back over the last number of years and look at our G&A ratio, if you exclude the HIF, you'll see a significant reduction in that G&A ratio. And I think there's a real focus at the company around productivity. And so a lot of the changes we made coming into 2020 in order to prepare for the health insurance fee were ones that were really sustainable. We felt that we had an opportunity to look across silos and across departments to figure out how end-to-end, we could run our business more efficiently. We very much leveraged automation, artificial intelligence and other elements to drive significant cost out of the equation. I think you'll continue to see us do that. In fact, we've already started planning for 2021, as you can imagine. But a lot of those dollars we'll ultimately likely reinvest into some of the investments that Bruce was talking about as well as into customer benefits. And so we believe it's important to continue to drive out costs in less value-added ways and reinvest them in more highly value-added ways. But if we can continually achieve the 4.5% to 5% margins and grow our top line as we have, close to double digits year-over-year, that becomes a pretty compelling business model.

I would just add to what Brian is saying is, listen, there's a lot of waste in the health care system, and I think we have an opportunity to continue to take that waste out. Under Brian's leadership and others, what we've been oriented to is how do we do that in a way that reduces the customer friction points into the system, and at the same time improve our efficiency as an organization. And I think that's -- if you're not doing that in this business, then I think you're leaving a great opportunity on the table. And I think at the same time, it's the right thing to do for our investors.

Well, Humana cares deeply about its customer experience, and so does JPMorgan equity research. So I'm going to give you a whole extra minute to navigate the salmon run upstream. So thank you very much.

Thank you.

Thank you. [Break]

Okay. I have 3:30. Are we live? We are live.

Okay. Great. Welcome to the Humana breakout. I have a significant request from the audience. We need big audience participation because we've had a Humana lunch and then the fireside. And the questions that I have remaining for Bruce and Brian are going to drive them crazy. So we -- I'm going to need some help from the audience here. That said, I've got a few to start with. Maybe the first, amongst all the success -- I mean one part of the business that's been less successful lately has been the PDP business, which isn't obvious to folks when you've got a, or the leading, Medicare franchise and your own captive PDP national formulary. So really good opportunity to acquire pharmaceuticals at good prices and compete in this business. So can you walk us through -- we did this a little bit at lunch, but maybe walk us through sort of what's been impacting that business the last 3 or 4 years. Enrollment's down almost 30% over 3 years. And where does that position Humana today going into -- walking into the next couple of years?

Sure. I think it's important when you think about the PDP business to recognize the constraint that CMS places plans under, which is you're only allowed to have 3 slots per region, which is important. So unlike other insurance products, you can introduce a new plan, you can't do that in PDP. And one of those plans is a basic plan, which is for the low income. So you're really stuck with 2 plans. The second thing is that when you have a book of business that doesn't turn over very much, by definition it gets older and sicker and therefore costs you more. And so if you can't introduce a new product at a lower price to attract the healthier member mix, you're going to start getting a book that has much higher morbidity, higher costs, and therefore it builds on itself. And so what's happened over the last few years is that we are the largest individual PDP player in the country: millions -- close to almost 4.5 million, 5 million individual PDP members. Over time as we got so large we weren't able to offer a low-price plan any longer, because we had such a large entrenched book in place. As that book aged, we couldn't keep up with the lower prices that someone coming in new to the marketplace could offer. And so what happened was we had other players pulling our healthy members away, and we were stuck with a book that was declining in morbidity and increasing in cost. And so we had to make a decision, it was a painful decision, but we had to make a decision this year to fundamentally reorient our PDP strategy, which was to combine 2 of our plans into a higher-price plan and then introduce a new low-price plan to attract the healthier member mix and start us on a growth path again. The PDP business is important for us for [ 2 ] reasons. One, while there's some insurance profit, most of the profitability shows up in the health care services area, which is in our PBM [ in ] our mail order pharmacy. The Walmart plan in particular, which is really our marquee plan, tends to have reasonably high mail order use rate, which is important. And then there's also a PBM element too where we're processing the claims. And so the PDP business is attractive. It also allows us to cross-sell PDP members into Medicare Advantage, and that's been a strategy of ours as well. So we saw a reasonable cross-sell activity in 2019. We've seen that again in 2020. Needless to say, we had to make a very difficult decision. We worked with our customers as much as we could to telegraph what we were doing and work with them and help them switch their plans. But what it enabled us to do is to reorient our business such that going forward, we'll be able to stem these declines. And again, had we not done this, we would have shrunk again this year anyway, except we wouldn't have been in any better position. So we think we took the right decision. It was not an easy decision, but we're comfortable with what we did.

And what we see today is the low-cost plan is actually growing quite well. And I think the revised estimates that we just came out with was really we saw more terminations in the high-cost plan, which is this transition period that Brian was referring to. But we feel really confident today that the low-cost plan is -- that our strategy is sound, and as we enter 2021, we'll be prepared to grow.

[ Christian ]?

There's this discussion about how much of the HIF relief will you be able to spend versus [ insurance ]...

We haven't got that question at all today.

So let me ask it a different way. Realistically, what percentage of the fee can you use to adjust benefits? Because there's a limit as to how much you could adjust benefits. So there's a -- I would assume there's a cap as to how much of that could be moved in that direction.

Yes, I don't think that's as much -- I think you're referring to just the...

[ Can you ] repeat the question?

I'm sorry. The question was, is within the cap of the adjusting of the benefit, how much can we adjust benefits for them. That's usually more how much we can increase it versus change them overall. And so there's more of a -- this is talking about how you can lower it. And so I don't think that would be an issue for us as we think about going into 2021. I think the real question [ just comes to be ] is getting all the answers to the questions as we prepare for bids in 2021. Traditionally, the member does see a significant benefit from the HIF, and it has in the past. And so we'll be as very oriented to as much as we can give back to the customer because in essence that's what CMS is looking for. But at the same time, there are some significant headwinds that we have to overcome.

Can I -- before I go to the back, I appreciate the participation challenge being answered. Just -- I just want to finish on PDP. I mean if I understand what you're saying correctly, I mean have you essentially sent some adverse selection out into the PDP marketplace? I mean effectively, is high-cost members ending up in other companies' lower-priced, lower-cost PDP plans?

I would say that we've attracted a balanced risk pool is what I would say. It's hard to say on an overall basis where we've gone. I think what we've been able to do is attracted healthier members to balance some of our unhealthier members. But there's no doubt that people have left. I mean just given the magnitudes that we're talking about, largely, I would say, of our book, an average member effectively left, an average utilizer is the way to think about it. And that would be a higher utilizer than the person we would attract into the low-price plan.

Back row.

Can you talk about your relationship with Kindred and how do you expect that relationship to scale? And also last year, there was a lot of talk about balance billing [ in the industry ]. How do you expect [ the ultimate outcome to be on that ]?

Let me just repeat it for the -- so the question, for the webcast, was relationship with Kindred, how it might scale and then thoughts on how balance billing legislation might end up.

Sure. The investment in Kindred, and ultimately we anticipate that we'll own all of Kindred through a put/call relationship that starts in 2021. We entered the relationship as really 3 steps along the way. The first step was just to make it an independent entity and to operate on its own since it was a subsidiary of Kindred as a whole. And I would say that the management team has done a wonderful job in doing that. Along the way, we also acquired the second largest hospice company in the United States and integrated that together and that has gone quite well. The second part of it is also to bring their technology up, and they've replaced all their technology this year, their electronic medical records specifically. And everyone is on the same electronic medical records. So from a company that has been a subsidiary that was not independent to then have modern technology, they've done a wonderful job. And at the same time, they've also been hitting the long-range forecasts in our investment forecast there. So we feel really comfortable where they are today. At the same time, we've also wanted to test out the clinical models where we can use the health -- home health nurses as they go in there for treatment, for downstream cost prevention, ER visits, admissions and so on. And what we're seeing is the clinical models that we are putting in place for the existing care models that are out there, that we're actually having an impact on downstream costs. So we're seeing some really good benefits there. We've gone from about 5,000 episodes to about 20,000 episodes. So we've seen some material increase, which I think entering 2020, we have a national contract in place that allows us to scale on that. So getting an independent, testing out value-based payment models to try to prevent downstream costs. The third side is now to begin to move to more acute services into the home. And that would be items like primary care being serviced in the home, both from a telehealth point of view using an assisted nurse to go in there to assist in the telehealth side and then also the ability to have a primary care actually visit the home. As we think about '20 and '21, that is really the test that we're moving into. And that will give us a lot of visibility into the timing and the necessity of the put/call as we enter 2021. That's the first put period. And then 2022 is when the first call period is.

And then balance billing, any thoughts?

Balance billing -- yes, listen, balance billing I think is required. I think the transparency of what happens, whether it's an air ambulance or in other parts of the health care system, it's just improper. I think it's not the right thing to do. And so I do believe that, that is something that needs to be taken on. I think this year, the public policy just didn't take place. I think there was a lot of pushback. But I think over time, what we're seeing in the public policy efforts area is more about, not just about health care cost in totality, but the health care cost at the counter. And so when you think about the pharmacy discussion that went on and some of the aspects of that, maximum out-of-pocket expense regulation and balance billing, it is all related to that the consumer can't afford health care today. And it's really they can't afford the deductible and some of the components of health care, and that's where you see public policy. I suspect that is a -- it is a Republican and Democratic issue. And so I suspect that as this election period is over, you'll start to see it come back into play -- in discussion. I can't tell you if it's going to get done or not, but I do believe it isn't going away.

You made a recent investment into Accolade. I think you were speaking about high-risk patients that are big utilizers. Do you feel that your partnership with Accolade can help drive some of that engagement with the population?

That is much of a commercial-oriented partnership, working with employer groups. And what we find is it is both, I would say, highly chronic or individuals that are highly oriented to utilizing the health care system. But as importantly, it also is to help with the confusion and the complexity of the health care system. And we see that as being a really large demand by employers today, just to help their population. And so we see the Accolade, both technology and the services that they offer, is a great opportunity for us to differentiate in the marketplace today. And in some places, an area that employers are demanding, and that is a simplified health care processes.

So let's go here and then we'll come back to [ Christian ] again.

Going back to your affordability for some of these products, that the patients can't afford them. With the biosimilars and authorized generics coming out, would you simply add them to the formularies? Or would you create a newer, low-cost formulary to encompass these new products?

Yes, we are constantly looking for ways that we can provide the affordability. And I think one of the unique aspects of both Medicare Advantage and Part D is that all our rebates get passed back to the plan. So they are not captured within the company and show up on our bottom line, they're actually incorporated into lowering the cost of the benefit cost or offering additional benefits. That being said, we are oriented to how do we do that in a way that's cost-effective, and being able to use biosimilars or being able to use a generic and being able to put that in a Tier 1 kind of benefit plan is a very important part of our offerings that we do. And so any time we can do that that is a #1 strategy for us as an organization. Just to add to that and just to build, and that's the uniqueness of Medicare Advantage and is, is the fact that it is incorporating the pharmacy side and the health care side. And we want our members to be taking their drugs not just because it flows through our PBM, but because it affects the outcomes of the cost and in addition, keeps them -- their condition stable. And we find one of the worst things that someone can -- does is they don't take their prescriptions, whether they cannot afford it or they don't have access to it. And so for us, any way we can do that is so important for us to lower the cost of the care and at the same time, benefits them and benefits us.

Two questions. One, given your comments earlier on the HIF, do you expect a big step-up in Medicare Advantage penetration in 2021 because of your comments? And the second question is, assuming there's a Democratic administration, if they expand or they allow 55-year-olds to buy into Medicare or what have you, do you expect that to be part of like a Medicare Advantage-type program or something else? Or...

The question was, one was around HIF and will it stimulate further penetration into Medicare Advantage, and then the second part was about a potential of the 55-year-old -- or lowering the age of Medicare to allow 55-year-old or greater. First, I just have to say, are you paying him for these questions on the HIF side? I mean you're trying to get it another way. On the HIF side, I think there is some history that the HIF does stimulate a little bit of growth. We've seen that when it does -- it is paused, so to speak, in that. But that being said, we were seeing some really good growth this year in Medicare Advantage. I think we attribute the growth this year to, we think more education is happening as a result of more of the brokers -- we're seeing much more broker activity in the marketplace, which includes also advertising. I think there's a little bit in the supplement change that came about with Medicare Supplement. But we do think any time that you can lower the cost of the benefit or improve the benefits, then you'll stimulate some demand there. I don't think that's going to cause it to go from 8% to 12%, you might have it on the margin there, but I do think it increases it. But I will say what we're very bullish about is the demographic continued aging where there's a demographic that has been using health plans in the past and used to it. And then in addition, the Congressional and the Administrative support for Medicare Advantage, such as expanding the social determinants and related benefits like that, that we see the ability to offer plans more specialized for a broader audience there, and we see that as being a great opportunity to grow. In your question of Medicare Advantage for 55-year-old or greater or something like that, I just feel that there is a great opportunity to leverage the structural benefits of Medicare Advantage to a broader audience. And I think the -- there's -- that opportunity I think is acknowledged in the halls that I walk through that they say why don't we just use this program for a broader audience where it offers competitiveness, it offers a consumer choice, it offers a holistic view of someone's health, it encourages value-based payment. So I suspect if they were to do something that was just building off of Medicare, that Medicare Advantage would be part of that offering. But I just -- I think it has so many ways to improve the society, and I will continue to be the proponent of that and I think we have a bright future as a result.

Can I ask...

I've got another question over there.

Oh, okay.

Just your comments in the last session about incorporating what the consumer values in value-based payment [ that through the way ]. Can you talk a little bit about the different ways that you might [ include them ] ?

Yes, the question was how do we incorporate consumer experience, consumer design -- what the consumer is looking for in value-based payment models. What we see in general in value-based is that we have a higher Net Promoter Score and that when we have a deep relationship with the provider, we see better quality outcomes and we see lower cost. I mean it's just a perfect example of the old triple aim that was put in place years ago. And we see that for a number of reasons. And we first see it that they feel that someone is there taking care of them, helping them coordinate care through their complicated health care system, oriented to their health longer term as opposed to just treating the symptom of the day. And we see them having interaction beyond 2 minutes with the doctor. An average panel size for some of our clinics that are providing value-based payment kind of services is usually about 500 compared to a fee-for-service, which is about 3,000 patients. So you have the time to be able to spend with the patient and be able to educate them on how to really take care of themselves. The second part of value-based payment is the fact that there's an incentive to look beyond the health care system. The social determinants conversation I just had about benefits and incorporating those in there are examples of that. So if someone goes into someone's home, they're not just worried about the home health services that are being provided. They're worried about does the person have food in the refrigerator? Do they have a ramp? Is there a bar in the bath and the shower to help them? So there's a lot of benefits because it's a holistic view of that. So having an incentive that is much broader than the treatment itself is just a -- it's putting the consumer right at the center and carrying it on in a complete fashion. And that's -- again I get back to Medicare Advantage. That's the uniqueness of Medicare Advantage, is the ability to treat the consumer holistically as opposed to just treating the particular symptoms.

Yes?

Just to follow up. You talked about the inefficiency in health care and the opportunity to address it. At a high level, do you think there is more bang for the buck in terms of improving the efficacy and efficiency of clinical interventions or mitigating them altogether? [ I think the answer is yes ].

Can I answer both? A few things. I think first just the administrative cost in health care needs to continue to be addressed. I mentioned that in there. Brian talked about it. We're part of the problem is, is just the administrative costs. And I think the investments in technology in some of the areas and just how you design your processes need to continue. And I take full responsibility of that, and we look at that as an opportunity for us as an organization to take on. So we're part of the problem. We need to help fix it, and that's the full intention of that. The second part is, is there's a tremendous amount of fraud and waste in the system as a result of just why you pay people for what they do. The more they do, the more they get paid as opposed to just the outcomes of that. And because of the complexity of the system, it also creates fraud and abuse in that area. And it might not be fraud, it might be a mistake, but we need to continue to make it much more efficient. But at the same time, more aligned payment models will help also with the fraud and abuse side, but also just technology in general to do that. The third, which is more specific to your question around just clinical inefficiencies, duplicated tests, those kind of things versus how do you prevent downstream cost, I think it's a combination of both. But I would say that the ability to prevent somebody from having to use the health care system because you did something that predicted that they were going to have a heart attack or their A1C, for a diabetic, was not in -- they were out of the range, are all great things. I mean you look at what a heart attack cost outside of just moral and pressure on the individual themselves, it's a significant cost to the health care system. And the more we can prevent those from happening, whether it's through remote monitoring, ensure they're taking their beta blockers to ensuring that they're eating properly is all proper things that we could do. And as you think about our investments, whether it's in the primary care area, whether it's in the technology, whether it's in our areas of our experience, are all wrapped around how do we prevent those downstream costs through prevention and the monitoring of individuals.

This is more of a philosophical question. But who owns the patient in your mind? Have you thought about that? Is it the provider? Is it the hospital? Is it [ the family ]?

Yes, it really -- to answer your question, I think a number of people own it. That's maybe part of the problem, but part of the need to integrate this together. What we have experienced in our -- is who provides the most empathy and caring is the one that has the relationship with the patient. So we find when our nurses are helping individuals in their home, they actually have more influence on the member than the physician themselves. We find that if our -- a nurse on the phone is helping somebody, we find that they're more helpful for the individual. So it's really where the individual is. Now if someone's being taken care of for cancer and they're stage 3 and it's really complex, then their oncologist is going to be more important to that. So it is where you are that really matters than who owns it, so to speak. But -- so it is personalized and -- but I would say where someone's taking care of somebody is what's going to happen. I mean I get Christmas cards literally from members, from individuals that are thanking us for the things that we do for them, and that's because our nurses are taking time. They might be lonely. Our social worker might be helping them with their drugs. They might need some assistance in transportation. So it's really who is helping them versus who really completely owns the relationship.

With that, we're only on 30 seconds. So I'm sorry, but I appreciate the participation. Thank you very much, and we'll move along.

Thank you.

Thank you.