Humana Inc. (HUM) and United Health Group (UNH)
Humana is an insurance company that is well established traversing different fields in the business and economic arena of the USA. It covers service provisions offering assistance to individuals on economic, social, financial and health aspects of human lives and the economy. The company was founded in 1961 and started by offering nursing home services but ventured into the insurance and financial savings field later on for future and next generation healthcare provision. On the other hand, United Health Group offers similar services to the people as it strives to provide avenues for accessible and quality healthcare as well as responsible financial planning. Consequently, it is ideal to state there are numerous similarities that exist between these two companies. Therefore, this paper seeks to delve into these and it goes further into financial reports in order to unravel the effectiveness and diversity of the strategies used by these companies. The first section deals with similarities while contrasting issues involved and making a point of note on financial aspects of these two at the end.
What the businesses have in common
First, they are involved in provision of insurance services to individuals and they invest in market securities of the economic industry. A common denominator of these companies is health plans provisions. Health plans mean the companies provide families, individuals and people with different frameworks that ensure they enjoy good health as well as well-being in their lives. It is via this that they provide different choices and plans for people whether they are employed in the private or public sector. In addition, it helps people get into activities that help them in coming up with ways through which they can save reasonable amount of money for purposes of health. By providing platforms that make it possible for individuals to access savings for the future of one’s health, these companies have a similarity since there are a number of networks in the country that bring services to the companies and the people. Apart from serving individuals, these companies a well deal with transactions seeking to include other employers and companies to bring about capability for all the employees to access healthcare.
Through health insurance networks provisions, these two companies are engaged in penetrating the people and the country to provide health insurance packages that are comprehensive which go a long way to improve healthcare for all conditions and ages. As such, these companies provide different kinds of services that aim to improve the quality and nature of health care provision in the country. Over the years, it has been observed that health care is a holistic aspect of human life. It is known as overall wellbeing of a person and their ability to cope with the environmental conditions that are always changing. Therefore, the social, psychological, emotional and physical perspectives of life need to be taken into consideration. While organizing for the process of making sure there is provision of health care in all environments, these companies take this into consideration. The Humana Inc., is the leading company in the business of health care provision and it has a large network coverage in southeastern parts of nations, while the UHC plays an important role in provision of good health for the rest of the country and making sure that adequate medical services, equipment’s, pharmaceuticals and facilities are availed in health care industry.
What is more, since the original idea of the entire formation process was based on medical process, these companies have great investments in the public health and medical field sectors. Consequently, both play a crucial role in employment of various medical practitioners and personnel. In so much as they are engaged in the business of health insurance, the companies still maintain a touch of the original visions of founders which was provision of quality medical and health services. Therefore, they both have a large number of employers who are part of the workforce. These employees include medical practitioners and doctors working hand in hand with other professional personnel like nurses in provision of quality health care.
On the other hand, there is need for adequate number of efficient hospitals, equipment and facilities. The companies in this instance have seen the vision and they are engaged in long term investment in the installation and establishment of satisfactory facilities throughout the country especially in regions where they have networks. What is more, the best manner to go through with the aim of giving customers and clients quality services involves medical and health care as well as ensuring there is complete investment on positive growth of the existing facilities progressive as well as increase in quality medical care or public health provision.
Apart from investment in healthcare services and facilities, and insurance services, the companies are also engaged in process of making sure there is better good health provision through engaging in the policy of formulations that go a long way to improve quality of health care as provided by medical companies, professionals and facilities involved in the sector. Hence, these two companies, as the key players in such fields are engaged in lobbying process seeking to improve health care provision services. It is through engagement in extensive mediatory and consultations processes that are needed of major players in the sector. As such, through such processes, the companies have the capabilities of influencing dynamics of health care provision as well as providing health insurance implementations and plans. Through this, it is observed that together with other lobbyists in the sector, there are positive trends created in making decisions that are associated with healthy lifestyle practices, health as well as increased penetration of services.
Also, it has been seen that companies must engage in the process of giving the world and country engagement in the development processes that can be both sustainable and profitable to objectives and the targets of people within the health sector. As such, it is common occurrence to see these two major players engage in the process geared towards attaining sustainable development. Sustainability is looked upon as the ability to create development that not only leads to progress but creates an avenue for environmental conservation as well as health features that are strong and good enough to support the preceding generations and the ones that follow. Through sustainable programs and long term policies coupled by public education, these companies have come out as great advocates for betterment of health care practice and provision.
Differences in the two Businesses
The first outstanding difference between these two companies is the means and mode of service provision that is involved in their scope of reach. For instance, the United Healthcare Group is an insurance company that like other insurance companies, aims to provide service packages that can go a long way in order to increase health care quality as well as accessibility by people involved. The biggest difference is observed in costs of various services that the companies offer. For example, it has been observed generally that UHC services are cheaper compared to those of Humana Company.
In regard to network coverage in the entire country, it has been observed as well that over time, the companies have differing coverage and availability of their establishments and facilities. The Humana Inc. has been seen to a large extent, to cover the south eastern regions of the country. This is not to mean that their services cannot be accessed by people from other regions. It simply means the territory coverage is predominant in the given areas of the country. Various subsidies and facilities of the UHC on the other hand are spread out evenly throughout the country penetrating to larger regions in terms of territorial influence. What this means is that UHC enjoys stronger links with its own target classes of people. With this in mind, it is ideal to note that Humana Inc. network is that of EPO while UHC works with PPO form of network.
It is also ideal to note insurance companies engage in some non-insurance businesses and associations. On this front, it is crucial for realization of the various services that are the result of ensuring success in business to come with variety of prices and costs to the client and customer. As such, UHC has involved use of other sectored companies like IT and different business models that suit its services and operations. As such, it has initiated incorporation of companies like IT and consulting firm Ingenix as well as pharmacy benefits manager. Additionally, it is the corporate patent of the Golden Rule Insurance Company to play role of offering services. Humana Insurance Company on the other hand has taken a specialization and development approach that is different. It started as a company that was in delivery of nursing home services and employed diverse professionals in the process. With time, after 1961, the company ventured into the field of not just maintaining quality health through nursing but providing medical and insurance services to people. This was achieved through a decision by management to come up with ways of providing proactive as well as reactive ways towards health care service provision. When all frameworks are put into place, it was determined the individual, the company or the family are given services that ensure there is holistic provision of health services.
Business philosophies of the founders and current leaders
Initially founded as the Extendicare Company in 1961 then later renamed Humana Insurance Company, the Humana Inc. was co-founded by the renowned David Jones Sir with Wendell Cherry as a nursing company. The two founders as such, had great background of experience and interest in the areas of business, public health and healthcare provision. The UNH was founded in 1977 with its headquarters at Minnesota and is enlisted as the best performing companies in its caliber. As such, it is ranked as a top 20 company in the Fortune Five Hundred companies in the country. Founders such as Richard T. Burke formed the company with 2 foundations which included the United Health Foundation and United Health Care. These two were to work together in a manner that would ensure health provision in the nation was not just made accessible to all but improve in terms of quality. Founders of the two companies as such had common social and business philosophies.
To start with, there was the belief of untapped ways of making money through provision of healthcare and making impact on the positive part in the health sector. On a different front, they believed that the only way to come up with good measures was curbing problems in the process of service provision by making sure that people take responsibility for their health and the health of their families by investing or saving for the future. Additionally, communication and information has been found to be core issue in companies operations. It is by giving people valid information that is up to date that helps them in making accurate and wise decisions in the process of making choices regarding their health insurance packages. Other strategies that are envisioned by founders and which are vital part of the organization is the culture applied in the process of strategies and policies application. Some of the policies envisioned include making sure the well-being of the community’s health, corporate social responsibility practice; all round health service provision and national policy formulations that go a long way into giving rise to effective health care. Current leaders have the tendency to embrace competitive business dynamics and health care challenges like competition, rising complexity in the medical field as well as confounding insurance and health situations.
The table below provides a summary of financial statements of Humana Insurance company since 2009 (Sec docket, 72):
|Year/category||End of 2012||End of 2011||End of 2010||End of 2009|
|Income after tax||1,222||1,419||1,099||1,040|
|Diluted weighted av. Shares||163.46||167.83||169.80||167.07|
|Dividends per share||1.03||0.75||0.00||0.00|
For United Health Group, the financial indicate a great deal of diversity in terms of development and spread of profit acquisition. For example, the incomes in 2010 to 2012 were 110,618, 101,862 and 25,314 respectively. As such, at the end of every three years, acquiring the gross profit averages to around 8,465 for the 3 years. Notably, compared to Humana company, the net applicable income to common shares was 5,526 for 2012 which was an improvement from 2011’s 5,142 and the value of 2010 of 4,634 (BIR, 345).
From observing the financial statements and company profile as well as historical developments of the companies, it is important to note that all the areas of business and jurisdiction, these competitors are doing well. However, it can be recommended for Humana Inc. to increase market share by investing more in other regions of the country other than the South eastern region. This will lead to increase in the market and go a long way into improving competitive approach strategy UHG on the other hand needs to focus on packages that are more moderate and price of services so as to maintain balance between operating expenses and operating incomes. Generally, use of technology and more efficient, advanced techniques of data use, processing and storage is ideal step for the two companies in a market that is so competitive (Linkage Inc., 36).
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Best’s Insurance Reports. Oldwick, N.J: A.M. Best Co, 2003. Print.
Linkage Inc’s Best Practices in Leadership Development Handbook: Epub Edition. John Wiley & Sons Inc, 2009. Print.
Sec Docket: A Weekly Compilation of Releases from the Securities and Exchange Commission. Washington, D.C: Securities and Exchange Commission, 1973. Print.