Transcript Well-Being Improvement System

Barclay’s
Global Healthcare Conference
March 14, 2012
Safe Harbor Provisions
This presentation contains forward-looking statements that are
based upon current expectations and involve a number of risks
and uncertainties. In order for Healthways to utilize the “safe
harbor” provisions of the Private Securities Litigation Reform
Act of 1995, investors are hereby cautioned that these
statements may be affected by the important factors, among
others, included in the discussion in Part I, Item 1A, and Part II,
Item 7, of Healthways' Annual Report on Form 10-K for the
fiscal year ended December 31, 2011. Consequently, actual
operations and results may differ materially from those
expressed in these forward-looking statements. Healthways
undertakes no obligation to update or revise any such forwardlooking statements. This presentation contains certain nonGAAP measures. You may refer to the Company’s website for
reconciliations. These non-GAAP financial measures should
not be considered an alternative to GAAP financial measures.
Confidential and Proprietary
© 2011 Healthways, Inc.
2
Agenda
•
•
•
•
Current Company Overview
Market Implications
Growth Catalysts
Financial Outlook
Company Overview
Value Creation
Employers
Health Plans
Health Systems
Government
Consumers
Global Footprint
scaled systems
40 million participants
4 countries:
30 years of experience,
validated outcomes,
and strong customer retention
U.S.
France
Australia
Brazil
Mission
to create a healthier world
one person at a time
Solutions & Innovation
focused on science of
behavior change
Broad Capabilities
in health & well-being
improvement
Confidential and Proprietary
© 2011 Healthways, Inc.
4
Our Core Strategy – Improve Well-Being
“Health is a state of
complete physical,
mental and social
well-being
and not merely the
absence of disease or
infirmity.”
Community
Financial
Physical
Social
Emotional
- Preamble to the Constitution of the
World Health Organization as adopted by the
International Health Conference, New York,
19-22 June, 1946
Career
Individuals ● Experts ● Social Connections ● Environment ● Policy
Confidential and Proprietary
© 2011 Healthways, Inc.
5
Healthier People Cost Less and Perform Better
Improve
Well-Being
Adopt or maintain
healthy behaviors
Reduce health-related
risks
Optimize care for health
conditions and disease
Reduce Total
Medical Cost
Increase
Performance
Increase Total
Economic Value
•
Hospitalizations
•
Energy
• States
•
Event Rates
•
Engagement
• Communities
•
Disease Rates
•
Absence
• Payers
•
Lifestyle Risks
•
Work Impairment
• Individuals
Prevent or delay next new case of disease or condition
Economic
Drivers
Confidential and Proprietary
© 2011 Healthways, Inc.
Prevent or reduce impact of the next new episode of care
Enhance one’s ability to actively manage their health
6
Science Confirming the Value of High Well-Being
Well-Being
Improves
Total
Medical
Cost
Decreases
Performance
Increases
Total
Economic
Value
Increases
Well-Being to
Utilization and
Health Care Cost
Well-Being
Improves
Total
Medical
Cost
Decreases
Performance
Increases
Total
Economic
Value
Increases
Well-Being
Improves
Total
Medical
Cost
Decreases
Performance
Increases
Total
Economic
Value
Increases
Intervention to
Well-Being to
Well-Being
Performance
Improvement
Behavior Change Outcomes
Control
Hospital
Admissions
Well-Being
Total Claims
Cost
1 pt. =
1%
60
50
40
30
20
10
0
Exercise
Well-Being
Confidential and Proprietary
© 2011 Healthways, Inc.
Coaching
70
2%
% Risk Reduction
1 pt. =
Online
80
7
Stress
Well-Being Matters At Work
Ranking 25 Separate Business Units by Well-Being Score
Internal corporate measure
% at Optimal Income
Well-Being Scores
TOP QUINTILE
2ND QUINTILE
3rd QUINTILE
4TH QUINTILE
Healthways Well-Being Assessment Results, March 2010; 27,090 Eligible Employees; Completion Rate 14,276 (52.7%)
Confidential and Proprietary
© 2011 Healthways, Inc.
8
5TH QUINTILE
How We Make A Meaningful Impact
Our
Well-Being
Improvement
System
pulls five key levers
Community
Financial
Physical
Social
Emotional
Career
Individuals ● Experts ● Social Connections ● Environment ● Policy
Confidential and Proprietary
© 2011 Healthways, Inc.
9
Unmatched Breadth & Scale
Web
Email
Text
Messaging
Mail
Communities
IVR
Telephonic Face to
Face
At Home
Headquarters
Technology &
Fulfillment Operations
Center-Based Experts
Confidential and Proprietary
© 2011 Healthways, Inc.
Population Health Coordinators
(Provider-Based)
Field Experts
Community-Based Venues
Provider Experts
10
Seeking Health
Seeking Care
At Work
Solutions Framework: Today’s Go to Market
Well-Being Value Proposition
Improve Health
Improve Performance
Solutions
Lower Cost
Well-Being Improvement System
Community
Business
Individuals and Experts
Prevention
Well-Being Leadership Development
Social Network Mapping
Change Management Consulting
Culture Audit and Planning
Policy Adoption and Implementation
Built Environment Re-engineering
Weight Management
Smoking Cessation
Nutrition
Fitness
Stress Management
At Risk
Medication Adherence
Standards of Care
Biometric/Health Screening
Well-Being Assessment
Virtual Coach (Web/Mobile)
Chronic
Complex
Condition Management
Core Chronic Illness Management
High Risk Care Management
Complex Case Management
Readmission Avoidance
Hospital Service Line Enhancement
Physician Practice Re-Engineering
Healthcare System Performance
Physician Leadership
Strategic Planning and Execution
Medical Home/Accountable Care
Tools
Embrace Platform - Lifestyle Networks - Care Networks - Analytics - Mobile Apps - Assessments
Best-In-Class Strategic Partner Capabilities
Confidential and Proprietary
© 2011 Healthways, Inc.
11
Market Forces Implicating
Sustainable Profitable Growth for
Healthways
Current and Near-Term Market Forces
•
•
•
•
•
•
•
Continued rise in health risk factors for populations globally
Continued increase in prevalence and incidence of chronic illness
Ongoing increase in direct and indirect cost of healthcare
Aging worldwide population and increase in average life expectancy
Struggling economies world-wide
Solutions required to address demand and supply forces of cost & quality
Everything in the future will have to be achieved at much lower cost
•
•
•
•
•
•
Global preparation/disruption in response/anticipation to/of reform/change
Systematic incentives moving to reward value vs. volume for all entities
Advances in technology afford scaled integration of enterprise data/services
Role and responsibility of the delivery system is undergoing radical re-design
Demand for consumer-centric, holistic health & well-being model is mounting
Competitors are increasing in number, sources, size and sophistication
Confidential and Proprietary
© 2011 Healthways, Inc.
13
A Deeply Changed Market
Population Health and Well-Being Improvement
Confidential and Proprietary
© 2011 Healthways, Inc.
14
Competition – Entire Market Movement
•
•
•
•
•
•
•
•
•
•
•
•
•
•
National Health Plans:
Consultants:
Revenue Cycle – Providers:
Health & Care Managers:
Distributors:
Pharma:
PBM/Retail:
Analytics:
Wellness/Prevention:
Government:
Home Health:
CAM/Chiropractic:
Behavioral Health:
Data/Software:
Confidential and Proprietary
© 2011 Healthways, Inc.
United-Optum, Aetna-Active Health, Cigna
Carol, Red Brick, Accenture, IBM
Accretive
Alere, Health Dialog, WebMD
Cardinal, McKesson
Sanofi Aventis, J&J, GSK, Pfizer
Walgreens, CareMark/CVS, Walmart
Ingenix, Thomson-Reuters
Healthy America, US Prevention, Staywell
CDC
Amedysis, Univita, Clincally Home
American Specialty Health
APS, Beacon, Magellan
Trizetto, McKesson, MedDecisions
15
Competing for What?
The General Contractor Role
Source of Capital
Integrator
Aggregator
Risk Manager
Trusted Brand
Navigator of People
Multi-Specialty
Clinics
+
_
Confidential and Proprietary
© 2011 Healthways, Inc.
Health
Systems
Insurers
Retailers
(Others)
+
_
+
_
+
_
16
General Contractor “Network” Model
Integrated
Model
General
Contractor
Population
Speed to Growth in
Share
350 Major Markets
Administrative
Services
The Network
Performance
Cost
Well-Being
The Value
Proposition
Pharma
Management
Health & Medical
Management
Behavioral Health
Management
Dental/Vision/CAM/Chiro
Management
Medicare/Medicaid
Health Care Systems
Confidential and Proprietary
© 2011 Healthways, Inc.
17
% FFS to VB Mix
Degree of Integration
Validated Results
Co-Architect, Integrated Services and Risk Partner
Integrated
Model
Strategy, Design, Change Management and Implementation
General
Contractor
+
Well-Being Value Proposition
Administrative
Services
The Network
Improve Health
Improve Performance
Pharma
Management
Solutions
Well-Being Improvement System
Health & Medical
Management
Community
Business
Individuals and Experts
Prevention
Behavioral Health
Management
Dental/Vision/CAM/Chiro
Management
Lower Cost
Well-Being Leadership Development
Social Network Mapping
Change Management Consulting
Culture Audit and Planning
Policy Adoption and Implementation
Built Environment Re-engineering
Weight Management
Smoking Cessation
Nutrition
Fitness
Stress Management
At Risk
Medication Adherence
Standards of Care
Biometric/Health Screening
Well-Being Assessment
Virtual Coach (Web/Mobile)
Medicare/Medicaid
Tools
Chronic
Complex
Condition Management
Core Chronic Illness Management
High Risk Care Management
Complex Case Management
Readmission Avoidance
Hospital Service Line Enhancement
Physician Practice Re-Engineering
Healthcare System Performance
Physician Leadership
Strategic Planning and Execution
Medical Home/Accountable Care
Embrace Platform - Lifestyle Networks - Care Networks - Analytics - Mobile Apps
Health Care Systems
Confidential and Proprietary
© 2011 Healthways, Inc.
Best-In-Class Strategic Partner Capabilities
18
Sustained Engagement
Behavior Change
Decision
Making
Prochaska’s Transtheoretical Model
Behavioral
Economics
Dynamic Intermittent Reinforcement
Emotional and
Social Health
Social
Connectivity
Gamification
Environment
Confidential and Proprietary
© 2011 Healthways, Inc.
•
Rational decision-making through stages of change
•
Pro-Change Embedded in Healthways Core Products
•
Predictably irrational decision making in humans
•
Already in use for medication adherence
Mindfulness and Neuro-plasticity
•
Paying attention in a particular way: on purpose, in the
present moment, and non-judgmentally
•
The changing of neurons via new experiences
Social Networks
•
A social structure of “nodes” which are connected by
one or more specific types of interdependency, such as
friendship, kinship, common interest, knowledge, etc.
Gaming Theory
•
•
Fun vs. fulfillment
Appealing to all…Explorer, achiever, socializer, competitor
Community, Work, School, Home and Play
•
•
Permanent and semi-permanent environmental changes
Silver “Buckshot” versus the Silver “Bullet”
19
Effective Engagement Takes a Network
Academic
Partnerships
MIT AgeLab
Working to advance health education
and support for an aging population
Health Management Research Center
Relationship for the commercial
application of applied research in the
area of health risk reduction and related
economics
Johns Hopkins University
Unique research and innovation
relationship with the schools of medicine,
nursing and public health
Pro-Change Behavior Systems
Jointly developing leading approaches
to improved behavior modification
Strategic
Partnerships
Gallup-Healthways Well-Being Index
Creating definitive measure of well-being
through the Gallup-Healthways WellBeing Index
Wholly-Owned
Subsidiaries
MeYou Health
The development of products and solutions at
the intersection of mobile technology, social
network science, gaming, and Well-Being
improvement.
Technology
Partnerships
Hewlett-Packard
Enhancing an already powerful platform
with greater scalability and sustainable
timely innovation at a lower cost
MedNetworks
Applying the science of social network
mapping to population management
techniques
HealthHonors
Dynamic Intermittent Reinforcement
incentives model in an integrated webbased application
Blue Zones
Joint venture to scale population longevity
interventions of permanent and semipermanent environmental changes
Navvis
Focused on health system strategy,
leadership and performance to help
healthcare leaders achieve success in a
complex, ever-changing marketplace.
GlaxoSmithKline
Partnership to scale consumer pharmaservices integration for smoking cessation
and weight loss
20
RoundArch
Deliver a unique, total digital experience
for our Well-Being Improvement Solution
that drives sustained engagement
through web, mobile and social media
Growth Catalysts
Growth Catalysts for Healthways
Market Preparation for Health Insurance Exchanges
Implementation of Value-Based Payment System
Demand for Data, Analysis, Service and Value Integration
International Adoption of Population Health
Demand for Expanded Value (Cost and Performance)
Confidential and Proprietary
© 2011 Healthways, Inc.
22
Key Business Development Progression – 2011-12
Contract
Status
Health
Insurance
Exchanges
HMSA
CareFirst
New South Wales
France
WellMark
Iasis
Equity Healthcare
Regional System
Payment
Reform







Regional System
National System
State Government
Major Retailer
Confidential and Proprietary
© 2011 Healthways, Inc.
23
Demand for
Full
Integration
International
Adoption of
Population
Health
Demand for
Value
Expansion
HMSA-BCBS Hawaii (State of Hawaii)
 All Lines of Business – Total ~750,000 Lives
 Commercial (Individual, Fully-Insured, ASO)
 Medicaid Risk
 Medicare Advantage and Medicare Cost
 Healthways Role – Full Population Health Integration
 Global Data and Analytics Management
 Innovation and Services for Full Continuum
 Prevention, Wellness, Health Risk, Care and Case Management
 Integration – Population Health Services with PBM and Behavioral Health
 Physician Engaged - Patient Centric Model
 100% of Primary Care Network – 100% of HMSA Membership
 10 Year Agreement
 At Risk Business Structure
 Longitudinal Health, and Economics of the Population
 Intense dedicated resources in-market
24
24
Key Business Development Progression – 2011-12
Contract
Status
Health
Insurance
Exchanges
HMSA
CareFirst
New South Wales
France
WellMark
Iasis
Equity Healthcare
Regional System
Payment
Reform







Regional System
National System
State Government
Major Retailer
Confidential and Proprietary
© 2011 Healthways, Inc.
25
Demand for
Full
Integration
International
Adoption of
Population
Health
Demand for
Value
Expansion
Health System Partnering Requirements
They want outcomes…
…To address customer value
A robust and intensive set of activities that
improve current system performance
Customer: “Any person or institution that
takes risk for healthcare outcomes”
Immediate and credible claim on health and
wellness
Consumers
The option to go direct to employers should
they choose
The long-term ability to succeed in
tomorrow’s payment arena
Employers
The formation of sustainable business
models for payer collaboration
Plans
The ability to grow share, lower operating
costs and deliver more value to create net
positive economics under payment reform
Confidential and Proprietary
© 2011 Healthways, Inc.
“I keep myself healthy using
[Health System] tools and
programs”
Exchanges
26
“I control my healthcare
costs and improve
performance using [Health
System] tools and
programs”
Healthways and Navvis Market Presence
Healthways DSL Presence
Navvis Market Presence
Provider-Owned Health Plans
Blue Plans
Blue Plans & Provider-owned Plans
< 10,000 employees
10,000 to 50,000 employees
> 50,000 employees
Confidential and Proprietary
© 2011 Healthways, Inc.
27
Major Market Integrated Health System
• Integrated Health System Distribution Platform
• 23 Hospitals
• 1600 Physicians
• Critical Mass Lives (30%+ of Geographic Population)
• Healthways Role – Full Total Population Health Solution
•
•
•
•
•
•
•
Integrated Health System-HWAY Direct to Employer Model
Primary Care Delivery Integration
Hospital Re-Admission Management
Chronic Care Inpatient and Outpatient Line of Services (Hospital)
Care Transitions Management Solution (Acute-Sub-Home)
Accountable Care Organization/Risk Sharing Business Model
Narrow Network PPO Product for the Exchange
• Intense dedicated resources in-market
Confidential and Proprietary
© 2011 Healthways, Inc.
28
Health System Long-Term Partnership Structure
Master Strategic Agreement
Well-Being Strategic Value Development and Delivery
Consulting
Managed Services
Licensing
Custom Product
Assessment
Existing Product Portfolio
Tools
Ideation
New Product
Analysis
Integration
IP
Design
Combined IP
Strategy
Build
Planning
Pilot
Evaluation
Scale
Confidential and Proprietary
© 2011 Healthways, Inc.
29
Joint Innovation
Financial Outlook
Revenue Growth Trends by Market
Customer Markets
2011 -12
2012 -13
2013 -14
Regional Health Plans
Direct to Employer
Medicare Advantage Plans
Integrated Health Systems
Direct to Consumer
International
Cigna
Confidential and Proprietary
© 2011 Healthways, Inc.
N/A
31
Margins and Earnings
2012
• EBITDA margins 12% - 15%
• Cigna Impact
•Margins higher than corporate average
•Cost Take-Out Extended into Q1 2012
•Purposeful Retention of Talent and Resources
• Performance Based Fees (5% increasing to 7-9%)
• Large Transformational Contracts
• Continued Investment in Long-Term Initiatives
Return to Growth Objectives
• Expand EBITDA margins back to 18% - 20% range
Confidential and Proprietary
© 2011 Healthways, Inc.
32
2012 Revenue and Earnings Guidance
Adjusted EPS
Revenues
(in Millions)
$800
$2.00
$717
**$698
$700
$689
$665 - $705
$600
$1.50
$500
**$1.11
$400
$1.00
*$0.99
***$0.85
$300
$0.42 -$0.54
$200
$0.50
$100
$0
$0.00
2009
2010
2011
2012
2009
2010
2011
* 2009 Results exclude Lawsuit settlement and investment gain
** 2010 Results exclude Earn-out adjustment and investment gain, CMS Settlement and Restructuring Charges
*** 2011 Results exclude Restructuring Charges and Impairment Charges
www.healthways.com
33
2012
Confidential and Proprietary
© 2011 Healthways, Inc.
34