Thursday, March 28, 2019

Orange Crate Update Number 1

Earlier this month I announced the Death Nurse Orange Crate of Publicly-Traded Hospice Companies*. Timing is everything, because now is when these guys tell the world how much money they've made and/or try to explain why they didn't make enough.

I'm sifting through their assorted filings and reports, dense with legal disclaimers, marketing braggadocio, and accounting. I'm not going to tell you that I understand it all, because I don't. I'm not a lawyer, accountant, of Master of the Universe.

However, my bullshit detectors are finely tuned, and there's plenty of that kind of stuff in these reports, and in the associated materials that make up your typical investor road show.

My detectors quickly sniffed out two examples from Humana's (NYSE:HUM) latest, courtesy of my new friends at Seeking Alpha. They're not the only ones, but ya gotta start somewhere. 

Before we do, a quick review of the fundamental premise behind every company in the Orange Crate*:

1. People are dying.
2. ?????
3. Profit!!

Number one is fact. Number three is the goal. Number two? A combination of magical thinking and messy details. Do you see what I'm saying? Good, let's begin.


HUM's base business is selling health insurance, an industry where making money depends entirely on nickle-and-diming vulnerable patients, denying their claims, and squeezing their providers. 

They're doubling down on the whole Medicare Advantage thing because it's their direct pipeline to seniors, and we all know about seniors and health care dollars.

It's like when someone asked Willie Sutton why he robbed banks - you go where the money is. For our friends at HUM, that means the United States Department of Health and Human Services. The Centers for Medicare & Medicaid Services is its drive-up teller window.

So, right now they can pick the pockets of about 4 million people over age 65. Of course they want more, but it's enough to get started on exploiting the opportunity (People are dying).

Since we've already identified the final objective (Profit!!), the only thing that remains is replacing the question marks with... a circle and two pieces of the world's easiest puzzle. 

Wasn't that easy? Who says healthcare is hard? Next slide, please.


I previously posted about HUM's entry into corporate hospice through their minority (40%) partnership with two leveraged buyout firms (they'd rather we say "private equity") in the $5.4 billion blender called, "Kindred at Home." (smoothie still in progress) It's key to their "success" - $$ from the dying.

You'd think that HUM, which can arguably claim to be in the healthcare business, would insist on running the show. Surprise! 

Thanks for reading. See you next time.

Also too: Get thee to Generic Hospice Blog.

*For education only. This is not financial advice.

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