LOUISVILLE, Ky. (WDRB) — Louisville-based Humana Inc.’s corporate reorganization came into sharper focus Wednesday when the company announced a leader for one of its two main segments.
Dr. Sanjay Shetty, a radiologist who leads the Dallas-based Steward Health Care System, will become the first president of CenterWell, Humana’s newly named healthcare services division that includes hundreds of primary care clinics as well as thousands of home health providers and its pharmacy benefit manager.
Under a plan announced last year, Humana is reshuffling into two segments: one focused on healthcare services (CenterWell) and the other on its primary business, insurance.
Insurance — which includes Humana’s lucrative Medicare Advantage franchise — is by far the larger of the two. Humana is set to eclipse $100 billion in revenue in 2023, with insurance providing about 80%.
But Humana sees a future in providing care to the people it insures as well as the patients of other insurers.
As WDRB reported last year, CenterWell represents Humana partially returning to its roots. It was founded as a nursing home operator in the 1960s before evolving into hospitals and later, to insurance.
Humana has yet to name an executive to run the insurance side, but the search for that position has closed, Humana CEO Bruce Broussard told analysts Wednesday.
“As with any company of our size and caliber, we will continue to evaluate strategic additions to, and the evolution of, our leadership team as we advance our strategy,” he said.
New executive headed to D.C.
Shetty, who starts April 1, will be primarily based at Humana’s office in the Washington, D.C. area, corporate spokesman Mark Taylor said.
WDRB reported last year on the growing prominence of the DC office as a hub for Humana’s senior leadership, as the pandemic and remote work made the company’s connection to Louisville — its official corporate headquarters — more tenuous.
In an email Wednesday, Taylor repeated what the company said last fall: that Humana finds value in being near its customers — including its largest, the federal government. The D.C. area is “an important source of talent and healthcare expertise that Humana must continue to attract. This makes good business sense and in no way diminishes our commitment to Louisville.”
Shetty, a Harvard-trained doctor who also holds a graduate business degree, leads a health system that includes 39 hospitals, a “large multispecialty medical group,” and an accountable care organization, which is a group of doctors, hospitals and others who coordinate care for patients, according to Humana.
“Sanjay’s extensive experience leading a large health care system serving Medicare and Medicaid patients will accelerate the integration of the substantial health care services business we’ve built under the CenterWell brand,” Broussard said in a news release.
Over $100 million in severance
As it reorganized last year, Humana also embarked on a “value creation initiative” to come up with $1 billion in annual savings, in part by eliminating an unspecified number of jobs.
Humana disclosed Wednesday that the initiative cost the company $473 million in one-time costs, including severance.
Taylor, the corporate spokesman, said about a quarter of the $473 million — or $118 million — was related to severance. Most of the $473 million was accounting charges resulting from decommissioning assets such as IT systems.
Taylor added that the job losses “represented a small percentage of Humana’s overall workforce and the positions were geographically dispersed. Over the past year, we’ve also seen certain areas add new roles, including in our CenterWell business where we continue to hire additional physicians, nurses, and home healthcare workers.”
Humana also disclosed Wednesday that it is back on track with its main business, Medicare Advantage.
The company said it expects insure 13.7% more seniors this year through the program, a return to the annual growth rate that Wall Street analysts have come to expect. Humana slipped in 2022, when its Medicare ranks grew only about 5%, well behind the industry average.
Humana insures about 5 million seniors through the program.