From Peace Corps service to corporate leadership: Humana CEO Jim Rechtin discusses the importance of listening and effective management.

Jim Rechtin, CEO since July 2024, spoke with Coins2Day before earnings were released, detailing his approach to a challenging environment and his efforts to reshape Humana.

This conversation has been shortened and refined for better understanding. 

Your professional journey began with The Peace Corps, where you managed a public health and water sanitation initiative in the area now known as the Republic of Congo. What insights did you gain from that situation?

After six months, I felt like giving up and returning home. Our construction efforts focused on building latrines and capping wells, with the expectation that communities would finance these initiatives independently. 

They’re sitting there, saying ‘I have a stream in my backyard that has perfectly clear water in it.’ As we began to ask questions, people would come back to say, ‘Well, we need latrines in the market. The school and the hospital both require latrines, which allowed us to adjust the project's focus accordingly. The core takeaway is to engage with your customers and inquire about their requirements, as they possess that knowledge.

You've been given this project, but it's unworkable because no one has been on-site, and you spend your initial year discovering its failure. So you start talking to people and listening to them and you realize that we misunderstood the need. Honestly, that's no different at all from my initial year and a half with the company.

Humana is like the Peace Corps?

You come in with an idea of what needs to happen, but the reality is you don’t know.

So you spend a whole bunch of time going out, talking to members, providers, your own associates, and you begin putting ideas together. 

Most of my background has been in the provider space, not the insurance space. We’re both, but we’re predominantly in the insurance space. The challenge there is that it’s a business built around managing a high volume of transactions and pricing risk, but it’s not a business that is inherently attuned to consumers. If you interviewed a bunch of our 65,000 associates, you’d walk away and say, ‘Hey, these are good people. They really care about customers.’ Then you would realize that we have almost no tools to collect feedback from our customers.

A lot of what we’re trying to do now is behave more like a consumer health care company, to the degree that there is such a thing in the U.S. Right now, as opposed to a traditional insurance company. That starts with understanding who your customer is and getting feedback and trying to balance that multiyear journey with the near-term pressures.

Once you get all that feedback, are there some inherent constrictions with the business model in terms of incorporating it?

I don’t want to pretend that there aren’t obstacles, but I would say that they’re not structural to the business or the sector. They are obstacles of history, the cultural biases that we bring to every conversation. It’s the way that we have chosen to do things that we have to unwind.

Any examples?

We recently rolled out a new portal for the annual enrollment process. What we have never done before is say: Let’s rapidly prototype one in 30 days, trial it with a bunch of real consumers, get feedback, modify the next 30 days, get feedback again and so on. We would have typically come up with a six-month plan to build something, with no input from the people who are going to use it and then find out that we didn’t build it quite right. There’s no structural reason to do it one way or another.

Your customer base must skew older because the bulk of your revenue comes from Medicare Advantage (private Medicare-approved plans that often offer extra benefits like vision, dental and fitness coverage).

Yes, most of our business is built to serve seniors. We do have other businesses that don’t serve seniors, and those are growing, but we predominantly serve seniors. They’re on Facebook, they use YouTube, they shop on Amazon. They may not be as digitally native as a 25-year-old, but they’re absolutely digitally engaged. Sometimes we get caught up in the bias that they’re not. We need to give them the type of experience that they want to engage with. We sponsor the Senior Games, kind of like the Olympics for seniors, and this year we rolled out an adjacent event called the Cognitive Games.

Cognitive games?

It’s things like Bejeweled and Wordle and those kinds of games. In the first week, we engaged a few hundred thousand people, so we knew we’d built something that they wanted.

How does that help the Humana band?

On the Cognitive Games, I don’t know the answer. For what it’s worth, we didn’t start sponsoring the Senior Games because we were looking for an ROI. We thought it was a good thing to do, as a civic contribution. We almost stumbled into the ROI by accident because we were seeing people enrolling at the Senior Games or after.

The bigger thing is how it changed perceptions of our brand. If you were to interview people at the Senior Games about Humana, they would tell you that it’s about wellness, taking an interest in the whole person’s health. That goes beyond a let-me-pay-your-claim consumer health care company. We’re out where consumers are, building a relationship with them. We’re not managing a payment transaction in the shadows.

Any thoughts on the current administration’s moves to cut health care costs?

Health care is one of the largest expenditures in the federal and state budgets. There’s not much that goes on in the policy world that doesn’t have some second- or third-order implication for us. So, yes, we pay attention. Yes, it matters. I think we should all be concerned about the fiscal pressures that the country is under right now. Those fiscal pressures and the size of health care expenses means there will continue to be pressure on our sector.

There are these opposing forces: One is the fiscal realities of our country and our government; the other is an active voter block that really loves Medicare and Medicare Advantage. Those two things are pushing on each other, and we sit in between. We can play that role passively and hope that those two pressures resolve themselves, or we have an opportunity to be proactive in trying to diffuse that pressure, taking a more active stance in helping consumers make good health care decisions, which will reduce costs over time. Most consumers want to make good health care decisions. They need information and the tools to be able to do that. And so we can play a more active role. To me, that goes right back to being a consumer health care company.

What are we not paying enough attention to, in terms of the opportunities or the challenges?

Most of the conversation is about one annual budget after another. Addressing the issues we face won't be accomplished within a single year's budget period. What's a more comprehensive approach to address the financial strains and the healthcare aspects?

What would you do?

How can you eliminate wasteful use from the system? How can we make the system more efficient and straightforward, thereby significantly reducing its administrative expenses? This isn't confined to a single industry. The way various healthcare sectors interface significantly influences that outcome. The expense of billing and collecting is excessive. The expense of distribution is excessive. Barriers to entry lead to inflated expenses. To facilitate industry-wide data exchange, we require more contemporary conduits for communication among stakeholders. To be candid, we require enhanced data accessibility, enabling us to more effectively inform, guide, and educate our members regarding healthcare access. Our system's fragmented design leads to difficulties. It incurs expense. Much of that stems from a lack of modernization.

Is AI as transformative as we make it out to be in this space?

This will occur within the coming five years. The pace at which you can implement the capability and the tools is slower than you'd prefer. However, it's true that healthcare, the industry, and the economy overall will undergo significant changes.

How are you using it right now?

I'm ready. Please provide the text you'd like me to rewrite. We're introducing ambient listening technology designed to alleviate the administrative workload for our physicians, enabling them to dedicate more time to patient care. Our brokers and sales agents now have access to a new tool, Agent Assist, designed to simplify a highly complex sales process. With Medicare Advantage, it's necessary to review numerous documents. AI can automatically review all those documents and answer very simple questions much faster, which shortens the sales cycle and, frankly, provides more precise answers. Ultimately, people will engage with it firsthand. That's not feasible at this moment, but it's anticipated to be available in approximately three years.

For immediate approval of requests, AI is needed for prior authorizations. However, our aim is for a positive outcome, not a negative one, correct? Currently, we leverage AI tools to expedite approvals. The "nos" consult a physician who can access superior documentation more rapidly, thereby streamlining the procedure.

How can we support this new wave of entry-level employees who might currently face limited career prospects? 

My childhood was mostly spent in Indianapolis, with a small portion of it in Kentucky. That was my entire existence. I didn't spend much time elsewhere in the nation. As a sophomore, I participated in a service trip to Appalachia. I spent a month primarily residing with a family in that location, and I departed with the understanding of how distinct life can be just a few hundred miles from my birthplace. It got me curious: What’s it like elsewhere? So I did a service trip to Honduras and then the Dominican Republic. I sought further knowledge. And that’s what led me to the Peace Corps.

What I wanted to do is live in a community that was very different from the community I grew up in. Experiencing new things is really what’s valuable from a learning experience. If we are going to find ourselves in a world where entry-level jobs are harder to come by, and the economy is in transition, and we need to find mechanisms to allow a generation of kids to keep growing, to get those new experiences.

What did it teach you about yourself?

I was a political science major. We talked about rule of law and democracy. You don’t really understand what those are until you’re in a place where they aren’t. That was probably the biggest thing that was eye-opening for me, to be in a place where you don’t have a mature judicial system or legal system. But the biggest thing that I realized is the power of asking questions.  

Five years from now, will Humana look different?

It better, because if it doesn’t look different, it won’t survive, right? I think that’s true of everybody. Humana has unique positioning to have a real impact on how improved quality care reduces total cost. We serve seniors, who have a lot of health care needs, and it’s an individual product so you can tailor the product. Third, we are also in the primary care space. We’re in the home health space. We have our own ability to distribute medication in areas that have the greatest ability to impact chronic conditions and the total cost of delivering health care services. I think you can really have an impact on both cost and quality of care.

How do you want people to think about the brand?

If we’re going to stop being viewed as a health insurance company and start being viewed as consumer health care company, we need to engage our members in a way that does two things. One is arm them with what they need to make better health care decisions on the front end to avoid or delay downstream issues. Second, help them navigate the system. We’re not the provider who touches them every day, but we have more data and more knowledge about those providers and about the experience that they are going to have with them than anybody else. We have never stepped back and fully acknowledged that we have agency in that experience.

So you’ve been more of a passive actor in the background in that process?

Way too often. That’s what health insurance has been: They’ve been passive actors.

So what are your priorities right now?

We are not where we want to be, and we’ve been very public. The challenge is that when we realized we had fallen behind, we only had three months to fix it. We feel very good about the trajectory that we’re on for next year. We have to get our star ratings right, which means we need to make sure that we are delivering for our customers, both from an experience standpoint and clinical standpoint. That’s number one.

The second priority for us is what I would describe as tech enablement. How do we use technology to better engage members and run more efficiently? Third, how do we really differentiate the experience we are delivering, which is not all technology driven. We’ve simplified our product. We’ve made it easier to access preventative care and we’re taking away the financial hurdles. To do that, we are streamlining the prior authorization process to make it less cumbersome, both for providers and consumers. We are partnering with companies like EPIC (an electronic health record system) to create more cost transparency for our members. At the end of the day, it’s about building an experience that a consumer wants to be a part of.