Message from Steve Sell: Health Net's Momentum Continues


An Update on Health Net’s Progress from Steve Sell

Health Net, Inc. recently announced its 2009 financial results, and I wanted to take the opportunity to provide a progress report. While 2009 was a difficult year for the economy, it was a good year for Health Net because we executed on our plans.

We started the year discussing the need to get the basics right and build our commercial base for the future. The economic downturn meant that people were willing to trade some choice for greater value from their health plan dollar.

Helping Value-Conscious Consumer
Our strength is in this more managed care environment, and we have developed and successfully launched a suite of narrow network products for the increasing numbers of value consumers. Enrollment in these products grew 13 percent in 2009, and we are heartened by initial enrollment projections for January. Together, enrollment in these products accounts for about 40 percent of our small-group business in California, and we are starting to see greater interest from our mid-market and large-group customers.

Executed Sale of Northeast Operations
Health Net also executed on the sale of our Northeast operations. With the close of this transaction in December and $350 million from the sale, there was a significant strengthening of our balance sheet. This transaction allows us to be a much more solid and focused company moving forward.

You and your clients can take comfort in knowing that our financials remain strong:

  • We have total assets of $4.3 billion.
  • We have cash and investments of $2.2 billion.
  • We have $1.0 billion in reserves for claims and settlements.
  • Our risk-based capital exceeds the benchmark set by the ratings agencies.

Improved Medicare Performance and a Growing Medi-Cal Presence
In addition, Health Net last year also laid out the need to improve our Medicare performance – and we have. We believe we have appropriately positioned benefits and prices in 2010 to continue our positive momentum, with a particular focus in markets where we can fully leverage our provider networks.

For Medi-Cal and our other state-sponsored health plans, enrollment grew 12 percent in 2009, fueling our continued strong performance as one of the largest providers of California state health program benefits.

For Details
To listen to a replay of last week’s financial results, you may click here (guestbook sign-in required). Or you may view a printed transcript. And our press release is here.

TRICARE Contract Extended
When we started the year our goal was to continue or strength in TRICARE. We are in the middle of the follow-up to the appeal process and await a final determination by U.S. Department of Defense. But in the meantime, Health Net’s contract has been extended through March 2011. When there are key developments on the TRICARE contract, we’ll let you know.

Health Care Reform
No one can answer with certainty what will happen with health care reform, but we can agree on the fact that the underlying reasons for reform are still present. Health Net is in a great position to demonstrate the value of managed care in this reform environment.

Let Me Know
As you can see, I’m optimistic by our continuing evolution. While I have reason to think we’re doing things right and are appropriately focused on your needs, I always want to know if we can do better. So if you have any ideas, or if I can assist you any way, please let me know.

Sincerely,
 
Steven J. Sell
President, Health Net of California