Humana forms ACO - Analyst Blog

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Kentucky based health care company, Humana Inc. ( HUM ) has inked a collaborative Accountable Care deal with St. Luke's University Health Network. St. Luke's University is an integrated Network in the north eastern Pennsylvania area, comprising six acute care hospitals and over 1400 physicians. This initiative is in sync with the company's agenda to provide high-quality care to medical members at an affordable price.

This agreement will allow Humana to foray into the Pennsylvania region and provide its HMO and PPO plan designs throughout eastern Pennsylvania in association with St. Luke's hospitals, physicians and affiliated facilities. In turn, improvement in medical member outcomes, quality of care and reduction in costs are slated to fetch rewards for these physicians. These incentives are thus aimed to bring more cost-effective and superior quality patient care for Humana members. St Luke's was chosen in particular for this Accountable Care agreement by Humana, as the locations allow beneficiaries easy access to the requisite services.

Humana's Accountable Care initiative is similar to an Accountable Care Organization (ACO).  An ACO is a collaboration of health care providers who voluntarily form alliances to provide coordinated high quality care to patients at lower costs. In line with the objectives of an ACO, the aforementioned deal will provide a number of personalized care and population management tools including predictive analytics, chronic care, disease management and wellness programs.

Humana currently consist of 33000 primary care physicians and is in Accountable Care association with 900 organizations. The above deal is an extension to its existing portfolio. Initiatives like these are intended to improve the health of Americans as well as to offer high quality health care to patients. We believe an expansion of Humana's services in Pennsylvania and provision of cost-effective care should enhance the membership base of the company, thereby paving the way for more revenue generation.

Other healthcare stocks that have formed ACOs in recent times include Aetna Inc. ( AET ) and Cigna Corp. ( CI ). Aetna agreed to form an ACO with PinnacleHealth System this month, whereas Cigna started a Collaborative Accountable Care initiative with University Hospitals Accountable Care Organization (UHACO) last month.

Humana currently carries a Zacks Rank #3 (Hold). However, some better-ranked stocks in the healthcare services space include Kemper Corporation ( KMPR ) and Cigna. Both the stocks carry a Zacks Rank #2 (Buy).



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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ACO , AET , CI , HUM , KMPR

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