Health insurer Humana Inc. said Tuesday it's teaming with a South African company to offer a wellness program aimed at reducing its medical claims and lowering out-of-pocket health costs for its medical members.
Participants willing to work out and make healthy choices can get more than trimmer physiques or smaller health bills. They can score free or discounted airline tickets, movie tickets and music downloads through the rewards-based initiative.
Humana didn't disclose financial terms of its joint venture with Discovery Holdings Ltd.
"This joint venture fits perfectly with Humana's consumer-focused strategy that integrates health, wellness and lifelong well-being as our platform for future growth," Humana Chairman and Chief Executive Michael B. McCallister said.
Humana stock shot up $2.51 per share, or 4 percent, to close at $63.95 Tuesday _ putting it near the high end of its 52-week range.
As part of its deal with Discovery Holdings, Humana said it will capitalize a new entity, HumanaVitality LLC, which will be based in Chicago. Discovery will hold a 25 percent stake in the new enterprise.
Humana also will acquire a 25 percent stake in the business of The Vitality Group, Discovery's U.S. subsidiary.
Participation in the comprehensive wellness programs will be voluntary for Humana members, Humana spokesman Tom Noland said. At the outset, the initiative will be available to Humana's approximately 3 million commercial members, he said.
Louisville-based Humana is weighing whether to expand the wellness offerings to its Medicare members, he said. The company has reaped big enrollment gains in its lucrative Medicare Advantage business, which offers government sponsored, privately run programs providing comprehensive health coverage for seniors.
Humana members choosing to participate will be given health assessments, then will be put on a "personal pathway" toward better health through improved diet and exercise, Noland said.
Another Humana executive called the program "one of the world's best at motivating and rewarding healthier living."
"The new company we're forming ... will offer Humana members a comprehensive health and well-being program unlike anything offered in the U.S. today," Humana chief strategy and corporate development officer Paul Kusserow said in a conference call. "It will help Humana members live healthier lives."
Participants will be rewarded through a point system that can result in such goodies as movie tickets, airline miles and music downloads. Humana members can accumulate points for larger rewards such as electronics and fitness equipment. For example, a member will receive points for a good workout at a fitness center. They will be rewarded for weight control, not smoking, regular health screenings and flu shots.
"The goal is to foster positive behavior change," Noland said. "At least 50 percent of health care costs come from health behaviors that can be improved. This program has been shown to work very effectively in fostering such change."
Discovery Vitality serves more than 1.9 million people worldwide as an incentive-based health-enhancement program.
Adrian Gore, Discovery Holdings' chief executive, said the trend toward managing health costs through prevention and wellness programs offers "a compelling opportunity" for HumanaVitality.
Gore said the joint venture "combines Humana's brand credibility and scale with Vitality's intellectual property and proven track record in consumer-engaged wellness programs."
Noland said both Humana and its participating members will benefit from the science-based initiative.
"It's a win for our members because positive behavior change results in a higher quality of life and often lower out-of-pocket health costs," he said. "And it's a win for the company because Vitality has been shown to be very effective over time in bringing down claims costs based upon positive changes in members' behavior."
It's the latest expansion by Humana, which recently made its first broad foray into health care delivery in nearly two decades with its purchase of Texas-based Concentra Inc. in an approximately $790 million cash deal. Concentra delivers occupational medicine, urgent care, physical therapy and wellness services from more than 300 medical centers in 42 states.