Humana Rises on ACO Deal Announcement with 2 Entities
Shares of Humana Inc. (HUM) rose 1.8% within a single trading session to close at $127.32, after the company announced an Accountable Care alliance with the Nebraska Health Network. This news is expected to drive bullish sentiment on the stock as this marks yet another attempt by Humana to enhance the patient care experience of the Medicare Advantage (MA) members, after a similar deal with Health Choice Preferred Network last week.
While the deal with Health Choice was aimed to provide quality healthcare to MA members in the Salt Lake, Davis, Utah and Weber counties, the latest agreement targets to cater to MA members in the greater Omaha area. This endeavor definitely raises optimism as it is not only expected to boost MA member outcomes and lead to increased enrolment but also strengthens Humana’s 25-year long Accountable Care relationship history.
As part of the agreement, Humana, in association with Health Network of Nebraska, which is the healthcare delivery organization jointly owned by Methodist Health System, The Nebraska Medical Center and their affiliated physicians, will form an Accountable Care Organization (:ACO) in Jan 2015. Going ahead, the entities remain eager to collaborate further to fulfill goals like disease management and prevention, including diabetes care and treatment, breast cancer screenings, colorectal cancer screenings and high-risk medication.
Similar to the alliance with Health Choice Preferred Network, the aforementioned Accountable Care deal focuses on a pay-for-value system. From time to time, Humana is undertaking initiatives to shift to a value based system from the traditional pay-for-services system. The company is likely to benefit from this transition as most of the healthcare providers still resort to the traditional system that is not as efficient as the value-based system in delivering better healthcare at lower costs. Thus, this shift will likely give Humana a comparative advantage over peers in terms of enhancing healthcare outcomes and thereby gaining more members.
Currently, Humana carries a Zacks Rank #3 (Hold). Better-ranked players in the healthcare services space that appear attractive at current levels include Gentiva Health Services Inc. (GTIV), Amedisys Inc. (AMED) and Chemed Corp. (CHE). All these stocks sport a Zacks Rank #1 (Strong Buy).
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