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Health Net: An Update from Steve Sell

May 29, 2012


A Health Net Tailored Network Success
An Update from Steve Sell

May 24, 2012


It's been said that when we are no longer able to change a situation, we are challenged to change ourselves. At Health Net, we are changing both the situation and ourselves so we continue delivering affordable value in health benefits.

Health Net is one of the nation's leaders in developing networks that are tailored for specific geographies, employers and cultural sensitivities that produce premium savings for both purchasers and users.

One of these tailored networks, Health Net Blue & Gold, was created specifically for California's second-largest employer, the University of California, and used by its employees and their dependents.

The Blue & Gold network allowed us to change the school's financial situation by delivering projected two-year premium savings of $76 million. And on top of that, member satisfaction, as measured by the Consumer Assessment of Healthcare Providers and Systems survey (CAHPS), improved about 5 percent after Blue & Gold's introduction.

In creating these powerful improvements, we also changed ourselves and the way we serve our customers. Our Blue & Gold innovation was successful because of the heightened collaboration, communication and commitment between us and the university. In short, the two of us have a shared vision of the future for affordable value through tailored solutions.

Our other significant tailored networks, which are successful because of our strategic provider partnerships, also are producing premium savings of up to 25 percent - sometimes even more - when compared to similar benefits through our full statewide network.

First Quarter Earnings
Health Net, Inc. held its first-quarter 2012 earnings call on May 3. While our earnings for the quarter were disappointing (we posted a GAAP net loss of $26.2 million, primarily caused by an unanticipated volume of claims delayed from the last quarter of 2011 due to HIPAA 5010 implementation) there was continued promising news. Some highlights:
  • In the commercial arena, our tailored network enrollment grew 8 percent since the first quarter of 2011 and now represents 35 percent of our Western Region membership.
  • Enrollment in our Medicaid program in California (Medi-Cal) grew nearly 10 percent in the first quarter, and we remain one of the largest providers of Medi-Cal and Healthy Families benefits in California. And we received further validation of our Medi-Cal value and effectiveness when the state announced on May 4 that it intends to award us the contract to provide commercial Medi-Cal benefits in San Joaquin County, which is currently served by another plan. And the state intends to renew our contracts in Kern, Stanislaus and Tulare counties.
  • Our Medicare Advantage enrollment grew 8.1 percent since the first quarter of 2011 as a result of our return to marketing during the 2011 Annual Enrollment Period.
  • We were selected last month by the California Department of Health Care Services to participate in the state's proposed dual-eligibles demonstration pilots in Los Angeles and San Diego counties.
You may listen to a replay of the announcement by clicking here (guestbook sign-in required). Or you may view the printed transcript and our press release.

Strength and Stability
As Health Net continues preparing for the future, you and your clients should take note that we remain strong and stable, as demonstrated by these key March 31, 2012, measurements:
  • Approximately $4.0 billion in total assets
  • More than $ 1.8 billion in cash and investments
  • Approximately $960 million in reserve for claims and other settlements
Always Interested in Your Thoughts
At Health Net, we're excited about our momentum, and we're always interested in knowing how we can support you better. If you have ideas, I'd like to hear from you.


Steve Sell signature
Steven J. Sell
President, Western Region Health Plan

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