Health Net internal magazine

1. Quarterly Magazine for Health Net Associates • Winter 2007
Health Net
Federal Services
a top performer and partner
Health Net outlines
multiyear plan for
a prosperous future
at 9th Annual
Investor Conference
Associate survey
results shape
Health Net’s
to-do list
COVER STORY:
Theaccesscrisis–
Insuringtheuninsured
Inside:

2. PERFORMANCE
Progress and achievements that
support Health Net’s business
strategy and financial goals
GROWTH
Efforts to expand and increase
the quality of Health Net’s
business
GREAT PLACE TO WORK
Examples of a high-performance
environment that supports
associates and serves
customers well
Survey results shape Health Net’s to-do list
Associate insights guide annual and long-term goals
page 14
Celebration of Children reaches 2,500 kids
Six sites sponsor festivities
page 11
The access crisis–Insuring the uninsured
page 4
Supporting those who support our heroes
HNFS Giving Program targets families of active duty,
retired and reserve military members and veterans
page 10
Published by: Health Net, Inc.,
Corporate Communications
21650 Oxnard Street
Mail Code CA-102-22-07
Woodland Hills, CA 91367
We welcome your ideas and
feedback. Contact Betty Henry,
Linda Lalande or Margaret Longo
at Connections@healthnet.com.
For internal distribution only
Health Net, Inc. is among the
nation’s largest publicly traded
managed health care companies.
Its mission is to help people be
healthy, secure and comfortable.
For more information, go to
www.healthnet.com.
This publication contains forward-looking statements
within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and Section
27A of the Securities Act of 1933, as amended, that
involve a number of risks and uncertainties. All
statements, other than statements of historical
information provided herein, may be deemed to
be forward-looking statements. Readers are cautioned
not to place undue reliance on these forward-looking
statements. The company undertakes no obligation to
publicly revise these forward-looking statements to
reflect events or circumstances that arise after the
date of this publication.
Did you know?
MHN– More than three decades of making a difference
page 16
Images of the themes that unite us
Look for these icons to identify Health Net’s three important themes. The icons are used
in communications about what is going on in the company and how we are succeeding.
Issue Highlights
Survey
Results

3. Dear Associates,
Welcome to this year’s first issue of Connections, our quarterly
associate magazine. It’s going to be an interesting year in the health
care industry–there is renewed focus and much discussion on insuring the
uninsured–and Connections is just one of many ways you can keep up with
the news.
This issue’s main feature story is an overview of recent developments
in the uninsured debate. I’ve been working with the Policy Committee of
America’s Health Insurance Plans. We announced a multifaceted proposal
to address this issue in November, and many state governments and other
organizations are now stepping up to the plate. Only time will tell where
this will lead, but Health Net is committed to being a part of the solution.
This issue also focuses on Health Net’s Federal Services business unit.
Our magazine is picking up where we left off with the last issue–profiling
our various businesses to help associates gain insight into the wide range
of services we provide to our customers. Be sure to read the page 10 story
on the HNFS Giving Program–a program that focuses on quality-of-life
issues for military families and veterans. I am particularly proud of this
fine example of how Health Net gives back to the community.
This issue underscores our efforts to become a great place to work
with a follow-up story on our 2006 Associate Survey. You will also find
more on our growth and performance goals in a story about our most
recent Investor Conference.
Finally, be sure to take a look at the review of this year’s Celebration
of Children. We celebrated with more than 2,500 children during the
holiday season. Thank you again to the many associates who gave so
generously of their time and money to support these splendid events.
Sincerely,
Jay Gellert
President and CEO
Health Net, Inc.
winter 2007 connections 3

4. connections winter 20074
The insurance void and its critical, circular
consequences
While Jeff didn’t know it at the time–and certainly
wasn’t doing it intentionally–he was contributing
to one of the most pressing problems facing our
nation today.
According to the most recent U.S. Census statistics
(2005), Jeff is among the more than 46 million
Americans who lack health insurance for at least
part of the year–a startling statistic–up from
40 million in 2000. Several factors have caused
this significant slice of the American population
to be uninsured:
• A growing number of U.S. employers, particularly
small businesses, have stopped providing their
employees with health coverage. While 38
percent of American workers are employed by
small businesses, less than two-thirds of such
firms now offer health benefits, according
to a January 2006 report released by the
Henry J. Kaiser Family Foundation.
• Part-time employees and contract workers also
are unlikely to receive health benefits.
• The majority of the uninsured simply can’t afford
to pay for their own insurance. In fact, according
to a recent estimate by the U.S. Senate Rules
Committee, nearly half of all personal bankruptcies
nationwide are related to medical costs.
• While most uninsured individuals and families
are struggling financially, their incomes often
are too high to qualify for state or federal health
care programs.
More than 46 million Americans don’t have health
insurance. Obviously, the uninsured are affected,
but so too are people who have insurance, those
who provide insurance and professionals who
deliver medical care.
Jeff Marlis,* a 33-year-old married father of two, knew
something was wrong. For more than a week, Jeff, who
works for a small landscape design firm, had been
coughing seemingly nonstop. His chest hurt, and
throughout the day he felt short of breath. Assuming
he just had a bad case of the flu, Jeff bought an assort-
ment of over-the-counter remedies and hoped for the
best. Without health insurance or enough ready cash
to pay for a doctor’s visit, he really had no other choice.
Until his temperature hit 102.5 degrees. That’s when
Jeff’s wife rushed him to the emergency room, where
he was swiftly diagnosed with severe pneumonia. Four
days–and more than $10,000 later–Jeff was released.
*Name changed to protect privacy.
Theaccesscrisis–Insuringtheuninsured

5. 5
ElementsoftheAHIPproposal
• Expand the State Children’s Health Insurance
Program to make eligible all uninsured children
from families with incomes under 200 percent
of the Federal Poverty Level, for example–
$20,000 for a family of four in the 48 contiguous
states and the District of Columbia
• Improve and expand Medicaid to make eligible
all uninsured adults, including single adults
with incomes under 100 percent of the
Federal Poverty Line
• Establish a Universal Health Account (UHA)
to allow all individuals to purchase any type
of health care coverage and pay for qualified
medical expenses with pre-tax dollars, with
federal matching grants for contributions
made by working families to the UHA
• Enact a health tax credit of up to $500 for
low-income families who secure health
insurance for their children
• Institute a new $50 billion Federal Performance
Grant to assist states in expanding access to
coverage
“Thankstotheeffortsoftheseniorleadershipofour
industry,wehaveestablishedasetofpracticalpolicy
initiativesthatcan,forthefirst
time,providemillionsof
uninsuredAmericanswith
accesstoaffordablehealth
insurancecoverage.”
JayGellert,presidentandCEO,
HealthNet,Inc.
So what happens when uninsured individuals
fall ill? Jeff’s story, unfortunately, is all too typical.
The uninsureds’ primary source of care becomes
the emergency room, and often they don’t arrive at
the ER until their condition has reached a relatively
acute state. According to the Institute of Medicine
(IOM), the uninsured are 30 percent to 50 percent
more likely to be hospitalized for an “avoidable
condition,” at an average cost of $3,300. The IOM
additionally points out that, because the uninsured
generally can’t pay these medical bills, hospitals
end up providing approximately $34 billion worth
of uncompensated care annually.
These shortfalls set in motion a series of critical
circular consequences. In an effort to fill the financial
gap created by uninsured patients, hospitals ask for
more from those with insurance. This practice, called
cost shifting, essentially amounts to a hidden tax
on the insured, whose medical bills and premiums
increase to cover the shortfall from the uninsured.
As bills and premiums rise, the number of employers
and individuals able to shoulder these higher costs
decreases, and the ranks of the uninsured consequently
increase.
Health Net joins thought leaders
to break the cycle
Seeing the urgent need to break this deteriorating
cycle, Health Net–along with other members of
America’s Health Insurance Plans (AHIP)–is speaking
out and presenting possible solutions to what has
become a coast-to-coast crisis in America.
Health Net, however, is more than
merely a member of AHIP, the national
association that represents nearly
1,300 health insurance companies.
Jay Gellert, Health Net, Inc.’s president
and CEO, is a member of AHIP’s board
and chairman of the organization’s Policy
Committee. In this role, he was intimately
involved in the development of AHIP’s
multipronged health care reform proposal.
First presented in November of last year
(see page 7, “Jay Gellert introduces AHIP
proposal”), the proposal’s intent is to
expand access to health insurance coverage
to all U.S. children within three years and
to 95 percent of uninsured adults within
10 years.
AHIP brochure titled “We believe
every American should have access
to affordable health care coverage.”
winter 2007 connections

6. connections winter 20076
California leads other states in tackling the
uninsured issue
While Connecticut, New York and Massachusetts all
are forging solutions to their own issues with the
uninsured, California Gov. Arnold Schwarzenegger
began 2007 by presenting a bold health care reform
plan. As the most populous state with the largest
number of uninsured–6.5 million and growing–
California is garnering national attention for taking
urgent and aggressive steps to address the problem.
Major components of the governor’s plan include
these elements:
• Provide low-income individuals with
affordable coverage
• Increase Medi-Cal rates significantly
• Improve insurer and hospital efficiency
• Enhance tax breaks for individuals and
employers who purchase insurance
• Require physicians and hospitals to contribute
to the cost of coverage
Moving forward
Commenting on the California proposal, Gellert
notes, “Gov. Schwarzenegger’s plan brings to life
many of the state-based recommendations we’ve
proposed through AHIP. To move it forward, the
governor will need to make sure that we stay on
course and openly confront both the strengths
and weaknesses of his proposal in the next phase.
If he succeeds,” he adds, “California can lead the
nation in this most fundamental area for many,
many years to come.”
* Data taken from AHIP’s November 2006 survey
of American adults regarding universal health care coverage.
Responses confirm strong support for pursuing viable solutions.
For details, refer to www.ahip.com.
Sample AHIP print ad
Would you prefer to improve our health care system by:
building on the current system of shared responsibility
between the federal government and the private sector,
or replacing the current system with a new system that
is run entirely by the federal government?
Which of the following issues would you say should be the
top domestic priority for Congress to address next year?
Surveysays*...
Providing access to affordable health care
Improving the quality of our educational system
31%
17%
Combating illegal immigration
Fighting crime & drugs
Cutting taxes
15%
10%
6%
Reducing the deficit
5%
Protecting the environment
5%
Don’t know/no opinion
Replace with government-run system
Modify current system
61%
24%
13%

7. On Nov. 13 of last year, Health Net, Inc. President
and CEO Jay Gellert, who chairs America’s Health
Insurance Plans’ (AHIP) Policy Committee, helped
unveil the organization’s innovative proposal to
expand access to health coverage for America’s
uninsured. Following are excerpts from his
presentation:
“Let me start by thanking my many colleagues
who spent considerable time creating this proposal.
It presents an approach that will expand access to
health insurance coverage to all Americans. This
is the most critical health care policy issue of the
day. Our goal is, quite simply, to put forward a set
of concrete, comprehensive proposals that address
the issues of coverage and access. As health plans,
we believe it’s our responsibility to provide workable
suggestions so the nation can solve this problem.
“Two key components of this proposal are, one,
it builds on the strength of the current health
care system; two, it’s technically achievable and
politically feasible.
“It outlines viable roles for the federal government,
state governments, employers, insurers, providers
and individuals. It is socially responsible in that it
leads to universal coverage. At the same time, it’s
incremental and begins by making a commitment
to cover all kids within three years. And finally,
it includes other reforms that would allow us to
address cost containment, quality and prevention
while simultaneously expanding access.
“Our Policy Committee recognized from the start
that the country will need to achieve these goals in
stages, and so we established a Phase One goal of
covering all kids by building on the strength of
existing programs such as SCHIP [State Children’s
Health Insurance Program]. Beyond that, we’re
proposing the passage of federal legislation that
sets out very specific federal responsibilities and
funding support. We are confident that the states
are ready to step up with innovative approaches
that will meet these goals and address state-
specific challenges.
“Our plan also sets out a public/private structure
that will establish minimum eligibility standards
for public programs and a means to subsidize the
purchase of coverage by working families. Most
importantly, in addition to calling for covering all
kids within three years, we propose covering 95
percent of adults within 10 years.
“Looking forward, we will be actively promoting
these principles as viable approaches to providing
coverage to the uninsured and as a means of opening
the door to other fundamental system reforms. By
reaching out to policy makers, opinion leaders and
the public, we hope to play a constructive role in
this debate, helping the new Congress and the
states come together to solve this most pressing
problem. We believe it can be done.”
winter 2007 connections 7
JayGellertintroduces
AHIPproposal
“Ourgoalis,quitesimply,toputforwardasetof
concrete,comprehensiveproposalsthataddressthe
issuesofcoverageandaccess.Ashealthplans,we
believeit’sourresponsibilitytoprovideworkable
suggestionssothenationcansolvethisproblem.”

8. connections winter 20078
The quotes above are excerpts from notes sent
to HNFS, and they illustrate well what is unique
about this Health Net division: its beneficiaries.
Numbering nearly 3 million, HNFS beneficiaries
are a group with distinct needs not necessarily
mirrored in Health Net’s commercial membership.
Although this can prove challenging for HNFS
associates, they take pride–and find meaning–
in serving those who serve our country.
HNFS history
Through HNFS, which was founded in 1988,
Health Net became the first U.S. company to
develop comprehensive managed care programs
for military families. The Department of Defense
(DoD) currently divides its population into three
regions to administer the TRICARE program. HNFS
is the TRICARE North Region contractor and also
contracts with the U.S. Department of Veterans
Affairs (VA).
Under the current TRICARE contract, which runs
to March 2009, HNFS serves military families in 23
states and the District of Columbia, and serves the
VA nationwide with a variety of programs and
services. HNFS has 1,700 associates in 95 offices
across 32 states, with corporate headquarters
in Rancho Cordova, Calif., and the North Region
office in Arlington, Va.
The future of HNFS
HNFS enters 2007 solidly positioned for continued
growth. As HNFS President Steve Tough recently
pointed out at Health Net’s 2006 Investor Conference,
“We are the top performer in TRICARE and in
the VA. We have strong relationships with the
commanders at the DoD and the military treatment
facilities. The business is performing very strongly
at its core.”
Although HNFS contracts with the DoD and the
VA, as Tough notes, “This is really more than just
a contractual relationship. We are a true partner
with the DoD and the VA. Like commercial clients,
their greatest need right now is to manage health
care costs, so we are collaborating on disease
management and other programs. The military
views us as a thought leader and frontrunner in
the industry.
GROWTH
HNFS provides comprehensive managed care programs to nearly 3 million
eligible beneficiaries through TRICARE, the government-sponsored health
care program for veterans, dependents of active duty military and retired
military and their families. HNFS associates are keenly aware of the
special circumstances of this population. Serving the military
community makes working at HNFS especially meaningful.
“I just wanted to take a minute to let you know how
much I appreciate your being there to take care of my
family when I am unable to do so. Knowing that they
are being taken care of by the best makes me that
much prouder to serve you here in Iraq.”
–Active duty serviceman from the TRICARE
North Region
“My husband is a reservist called to active duty in
Iraq, and we miss him. When I needed to learn about
TRICARE, I was so confused. I don’t know what I would
have done without Health Net. Your employees helped
me to understand my health benefits and ease my
mind. Many thanks to you!”
–TRICARE North beneficiary, wife of reservist

9. “We have a great team that’s very customer-
solutions oriented. Many of our senior leadership
members have been with the program since its
early days and really understand this customer
and how the program works. ‘Make it your
business’ is the motto that they and other
HNFS associates demonstrate daily, giving the
best service possible.”
HNFS leadership sees many market
opportunities
According to Tough, HNFS is poised to grow the
government business by:
• Expanding several HNFS programs for the VA
• Gaining greater access to National Guard
members and reservists
• Helping the DoD manage the health care costs
of military retirees age 65 and older
• Partnering with MHN, Health Net’s behavioral
health division, to address the growing need
for mental health support as soldiers contend
with post-traumatic stress disorder and the
reintegration process (see MHN article, back page)
“Endlessly and fearlessly, they support us with everything
they have. Stateside and thousands of miles away, in the
freezing cold and in 115-degree heat, in the heat of battle
and in extreme boredom, they persevere. I am very proud
to work for Health Net Federal Services and support our
military men and women, their families and our retirees
who’ve served so proudly.”
Marian A. Alvarez, Quality Assurance auditor
HNFS revenue
19% of total
$2,376,000
Total Health Net premium revenue
(fiscal year 2006, total dollars in thousands)
$12,740,754
Total Health Net membership
(as of 12/31/06)
6,629,0000
winter 2007 connections 9
Why We Are Here campaign
keeps military clients front
and center
Last year, HNFS launched a campaign called
Why We Are Here to provide its associates
insight into the lives of TRICARE beneficiaries,
many with family members serving overseas in
Iraq or Afghanistan.
Jim Woys, president, Government and Specialty
Services, explains: “Knowing you’re making a
difference in the life of a serviceman or service-
woman helps make HNFS a great place to work.
A reminder about who these people really are
helps.” About every six months, the HNFS
Communications team prepares new materials–
tent cards, posters and actual postcards from
the servicemen and servicewomen–to spotlight
military beneficiaries.
“These visual aids have had an effect on call
center and other associates, especially in the
way they’re able to understand the person on
the other end of the phone,” says Molly Tuttle,
director of Communications, HNFS.
HNFS membership
2,930,000
44% of total

10. 8
connections winter 200710
Health Net’s TRICARE North contract is pay-for-
performance, and our excellent performance has
been well rewarded. What happens to the award
fee bonus? Health Net Federal Services (HNFS)
senior leadership agreed that a portion–more
than $1 million in 2006–should be designated
for an HNFS Giving Program.
Designed to “support those who support our
military heroes,” the Giving Program focuses on
quality-of-life issues for military families and
veterans. Because Health Net’s core competency
is health care, the program’s mission is to support
organizations that promote physical and mental
health as well as better care for the injured or
critically ill. “There are so many great opportunities
to give–the hardest part is saying no,” says Sue
Schwartz, the program director. “But, we’ve chosen
to support the families of those who serve.”
By sponsoring fundraising events, supplying the
enthusiastic support of Health Net volunteers and
making substantial monetary contributions, the
program aided 13 organizations in 2006. Some of
the highlights:
• A $300,000 donation helped six Armed Services
YMCAs provide educational, recreational and
support services for junior enlisted military
families in the TRICARE North Region.
• With a $33,000 donation to the Fisher House™
Foundation, which builds “comfort homes”
for families of military patients, Health Net
sponsored a golf tournament raising more than
$475,000 for a new home in Richmond, Va. In
addition, HNFS gave $100,000 for a home at
Fort Campbell, Ky.
• HNFS donated $50,000 for a hospice suite at
Walter Reed Army Medical Center for terminally
ill service members diagnosed with cancer. The
in-hospital suite provides patients a comfortable
place to spend their last weeks with family and
friends.
• HNFS sponsored the 20th Annual Disabled
American Veterans Winter Sports Clinic in
Snowmass, Colo., and the 26th National
Veterans Wheelchair Games in Anchorage, Ala.
These events recognize the physical challenges
disabled vets face and honor their determination
and courage.
HNFS also supports national organizations
and local events, such as the March of Dimes,
WalkAmerica, Junior Achievement and Celebration
of Children. Subregions in TRICARE North also have
a $10,000 local budget to support community
events that match the Giving Program mission.
“This is something we owe our military and
veteran beneficiaries,” says Jim Woys, president,
Government and Specialty Services, “to thank
them for their service and their sacrifice to our
nation. It isn’t charity; it’s a privilege.”
HNFS Giving Program targets families
of active duty, retired and reserve
military members and veterans
Supporting
those who support
our heroes

11. winter 2007 connections 11
GREAT PLACE TO WORK
Celebration of Children reaches 2,500 kids
Trumbull, Conn.: Sheila Dukes, executive
assistant to Lauren Casalveri, Process
Improvement, HNNE, paints the face of
one of the children.
Tigard, Ore.: HNOR elves (left to right) Cindy
Fineran, VP, Sales; Lynn Pettit, director, HNPS-
NW; Jaddua Ross, account manager; Win
Weaver, Utilization Management coordinator.
East Brunswick, N.J.: Jennifer
Bajor, investigator, Program
Integrity, HNNE, braces for
the pinãta to fall.
Tempe, Ariz.: HNAZ’s Mrs.
Claus, Tanjia Tucker, clerical
specialist, Sales.
Rancho Cordova, Calif.: HNFS President
Steve Tough waits in line for Santa with
two of the guest children.
Tigard, Ore.: HNOR guest happily
departs with her gifts.
Woodland Hills, Calif.: (left to right) HNI Chairman of the Board,
Roger Greaves with his wife, Erika, Celebration of Children organizer
and national chairperson; Stephen Lynch, president, Regional
Health Plans, as Santa; Francine Hans-Vince, executive assistant to
the CEO; HNI President and CEO Jay Gellert.
Six sites sponsor festivities
Gingerbread houses, puppets, dancing and
cupcakes. Laughter, music and plenty of hugs. All
of this and more were in store for the busloads
of children who made their merry way to the
six hotels–stretching from coast to coast–that
hosted Health Net’s 2006 Celebration of Children.
“We reached 2,500 children this year–a record
number in the 15 years we’ve been holding this
event,” says Celebration of Children organizer and
national chairperson Erika Greaves, wife of Roger
Greaves, Health Net, Inc. chairman of the board.
“Thanks to the efforts of our generous associates,
we had 2,000 children in attendance and were
able to donate an additional 500 gifts to the
agencies that had recommended the children
who were invited. I also want to thank local
Health Net executives for playing the role of
Santa at each site.”
Another milestone was
the number of volunteers.
“One thousand Health Net
associates either wrapped
presents or helped at the events,”
says Tom Smith, director, National
Meetings and Events. “We really
appreciate all that you did. It
made it a great party for these
kids who might not have had
such a bright holiday without
Celebration of Children. Thank you.”
According to Erika Greaves,
plans for next year are already
under way. “We’re adding a seventh
location, Washington, D.C., and will
include children from military families,” she says.
“We’re very grateful to all the associates who
kindly gave of their time, energy and money. We
look forward to being with you again next year.”

12. connections winter 200712
PERFORMANCE
Health Net outlines multiyear plan
Senior leaders address nearly 100 analysts and investors at Health
Steve Nelson Stephen Lynch Steve Tough Mark El-Tawil John Sivori Jim Woys
“We’ve gone through
this turnaround
process over the
course of the last
couple years, and
I think today’s
presentation
definitively says
that the turnaround
is over,” said Jay Gellert, Health Net, Inc. president
and CEO, at the 2006 Investor Conference. “We’ve
made investments for the future, and there are
some very clear opportunities ahead.”
Gellert concluded the presentation by outlining
four key points for analysts to keep in mind when
looking at Health Net performance in 2007.
First, there are multiple avenues of growth both
on the government side and on the commercial
side, Gellert said.
Second, Health Net has a segmentation strategy
to support qualitative growth. By focusing on areas
in which we have a competitive advantage, we can
continue to show growth but fundamentally alter
the quality of the growth.
Third, we have many opportunities for margin
expansion. As Gellert explained, “Throughout the
company, we’re not below the median in terms of
medical loss ratio. We can move to the median in
some key places and begin to get margin expansion.”
Fourth, the debate over coverage for the nation’s
uninsured may be a factor. “We are positioned
now so that we can talk about changing the
dynamic of coverage–doing it in a way that’s
good public policy and also good for our business,”
Gellert said.
This year’s presentation to analysts and investors
at the Four Seasons Hotel in Westlake Village,
Calif., showcased detailed presentations from
six senior leaders:
• Steve Nelson, president, Health Net of the
Northeast;
• Stephen Lynch, president, Regional Health Plans;
• Steve Tough, president, Health Net Federal
Services;
• Mark El-Tawil, Chief Medicare officer;
• John Sivori, president, Health Net Pharmaceutical
Services; and
• Jim Woys, acting CFO, Health Net, Inc., and
president, Government and Specialty Services.
Jay Gellert

13. winter 2007 connections 13
“We do things that
nobody else does.
We’re not just a strong
regional player, but a
strong national player
in influencing public
policy and the debate
on solving the nation’s
health care problems.”
Roger Greaves, chairman of the
board, Health Net, Inc.
“Health Net is unique in the industry,” said Roger Greaves,
chairman of the board, Health Net, Inc. “We do things that
nobody else does. We’re not just a strong regional player, but a
strong national player in influencing public policy and the debate
on solving the nation’s health care problems. The analysts are
saying that Jay and our management team have learned how to
combine what we do with an eye toward public policy. None of
our competitors are doing that.”
“The analysts were uniformly positive,” said David Olson,
Investor Relations officer and senior vice president, Corporate
Communications. “They felt very good about how tight our
story was, how it was consistent and how it’s improving. It
was a very, very positive reaction across the board.”
Joshua Raskin of Lehman Brothers, Inc. agreed: “It’s always
impressive to see the entire management team come out and
present a coordinated message. One of the impressive parts
has been the consistent story.”
Justin Lake, an analyst at UBS Securities, echoed Gellert’s
earlier comments: “Clearly the company is past what we would
call ‘a turnaround stage’ in the investment community. I think
the company has done a great job of presenting the opportunities
and what needs to be done to get there.”
“Now they [investors and analysts] want to see us execute and
hit our goals for 2007,” concluded Olson. “It’s going to require
effort on everybody’s part–focused, determined effort every
day. If we do that, we’re going to be rewarded by Wall Street.”
for a prosperous future
Net’s 9th Annual Investor Conference
Jay Gellert speaking with analysts and investors.
Investment analysts Greg Nersessian, Credit
Suisse Securities (above, with Gregg Genova,
Deutsche Bank, in the background), and Christine
Arnold, Morgan Stanley (below), ask questions at
Health Net’s 9th Annual Investor Conference.

14. Data for decision making
“What we learn from our survey
is invaluable–it turns hearsay into
facts,” says Jay Gellert, Health Net,
Inc. president and CEO. “A few
observations or a couple of
examples may begin to tell a story,
but they’re not enough for sound
decision making. Associate input from across the
company verifies or disproves what we think we
know, and it uncovers what may not be obvious.”
Health Net associates understand this and have
always taken the survey process seriously. “We’ve
seen remarkable participation with more than
87 percent of associates taking part in 2006 –
a world-class participation rate,” Gellert asserts.
“With such a large response, we get a clear picture
of what’s true for the enterprise and also what are
regional or business unit issues.”
“Survey results were instrumental in helping
us set priorities for Health Net of the Northeast
(HNNE),” says Steve Nelson, HNNE president. “Our
performance turnaround over the last two years is
the result of focused hard work, but our starting
point was knowing where and how we could best
move the meter. Our associates told us a lot through
the survey.”
Knowledge to compete
While the survey paints an
annual portrait of Health Net,
it also creates a competitive
scorecard. “We need to know
how we stack up,” says Gellert.
“Our customers, investors and
associates have a choice–and
we want it to be Health Net. The survey is our
annual check-up to help us stay in the game.”
Data for
decision-
making
Knowledge
to compete
Survey results shape Health Net’s to-do list
Associate insights guide annual and long-term goals
GREAT PLACE TO WORK
Health and fitness…
financial security…
happiness and well-being…
We all have goals. To achieve
them, we must first define them,
then track our progress and
adjust our actions accordingly.
Companies are no different,
but they need their employees’
help to succeed. That’s why
smart companies seek their
employees’ input–and that’s
precisely why Health Net
conducts its annual
Associate Survey.
Eliminateduplication Simplify
processes
connections winter 200714
Local leadership will present detailed 2006 survey results.

15. winter 2007 connections 15
Culture of performance
Staying in the game is a continuous
process. The survey enables Health
Net to set improvement targets so
we progress and don’t backslide.
“We motivate improvement through
associates’ performance goals,” says
Karin Mayhew, senior vice president,
Organization Effectiveness. “Health Net leaders
and managers also have special accountability for
building a performance climate.”
What is climate?
“Climate is the organization’s
environment, and the survey helps
us measure it,” continues Mayhew.
“Ideally, it’s an environment in
which associates can consistently
perform at their best.”
“When climate is good, associates
choose to engage their hearts and minds because
they see long-term benefit for themselves, the
company and its customers,” says Stephen Lynch,
president, Regional Health Plans. “I’ve experienced
firsthand in Oregon and California and seen in
Arizona how creating a positive work environment–
and the many things that means–adds tangible
benefits to the bottom line.”
Research shows that when leaders and managers
create a positive work climate, it affects performance–
increasing profit, earnings per share and other
measures.
That research is borne out at Health Net. Since
2002, our stock price has closely tracked with
achievement of our climate goals. It’s also why
Health Net has focused on leadership development
as a first and foundational step in building our
performance culture. Health Net’s leadership
development courses began in 2003 and continue
to this day.
Making significant progress
“When we began the survey in 1999,
Health Net was concerned with
survival,” says Mayhew. “We were a
collection of companies that didn’t even
have an integrated e-mail or payroll
system. Nevertheless, we committed to
begin our journey to become Jay’s vision
of a profitable company with its own identity that
would make a difference and aspire to greatness.”
We know Health Net leaders are succeeding in
engaging associates with this vision–through Town
Halls, HN Connect, Connections and in day-to-day
interactions–because in 2006 associates over-
whelming said they understand Health Net’s goals
and their roles in achieving them; believe Health
Net is doing the right thing to be successful in the
future; and are proud to work for Health Net.
What’s next?
From the survey, we know what
our current to-do list looks like.
We need to focus on the following
areas in addition to sustaining past
progress:
• Simplifying processes
• Eliminating duplication of effort
• Providing resources to get the
job done
Our COMPASS system, introduced in 2006, will
help us with two of these areas. It will allow us
to compare our goals across the enterprise more
systematically to weed out duplication. Being more
efficient and aligned in our goal setting will free up
time and resources to address other parts of our jobs.
COMPASS’ TALEO staffing component is assisting
with career development at Health Net–another
survey theme for several years. TALEO helps managers
define jobs and administer the staffing process.
Associates can use it to learn about opportunities
within the company. COMPASS’ Learning Management
System, to be introduced later this year, will help
identify the specific skills and competencies needed
to successfully build a career at Health Net.
“It’s like building a house,” says Mayhew. “You
can’t put the roof on until the walls are built.
Some things have to happen first for others
to work. We’re constantly looking at what
the business is trying to accomplish–and
the biggest barriers standing in our
way. Then, each year, leadership
agrees and commits to what we
are ready to accomplish.
“It’s a sequenced process,”
Mayhew adds, “and we depend on
associates to keep us on track. The
leadership team thanks associates
for their candor and engagement.
It will enable us to work together
to make this a great place to work.”
Culture of
performance
What is
climate?
Making
significant
progress
What’s
next?

16. Since 1974, Managed Health Network (MHN),
Health Net’s behavioral health services subsidiary,
has been making a positive difference in people’s
lives.
• One of America’s oldest and largest providers
of managed behavioral health care, MHN’s
nationwide provider network includes 45,000
licensed practitioners and 1,400 hospitals and
care facilities.
• MHN’s 1,100 associates serve members from more
than 850 organizations, including Fortune 500
companies, government agencies, health plans,
insurers and Taft-Hartley Trust Funds.
• Headquartered in Point Richmond, Calif., MHN’s
president and CEO is Steve Sell.
Integrated services
MHN is committed to helping members and
employers identify and resolve behavioral health
issues. Its integrated online services can be found
on HN Connect > Business Units > MHN > Member
Services and include the following:
• Employee Assistance Programs, including the
one offered to Health Net associates
• Individual and group health coaching
• Wellness training and professional development
• Disease and care management
• Domestic abuse victim advocacy programs
• Health advocacy/care integration
Pursuing growth
MHN launched MHN Government Services (MHNGS)
in January 2006. Already MHN’s fastest-growing
segment, MHNGS is providing an extensive menu of
counseling and advocacy services to the U.S. Army,
Navy, Air Force and Marines. For example, MHNGS
helps service personnel and their families cope
with issues related to deployment and reintegration
following active duty. And it will soon offer a new
parent-support program for military families.
MHNGS also responds to emergencies. For
example, when hurricanes Rita and Katrina tore
a path of destruction across our nation’s Gulf
States, MHNGS quickly dispatched clinical and
financial counselors to aid affected Navy personnel.
An MHNGS contingent remains in place as part of
the ongoing recovery efforts.
Strong revenue and membership
Driven by revenue expansion and positive health
care trends, MHN recorded robust numbers for 2006.
• Overall, MHN revenue grew by 15 percent, to
$290 million.
• Leading the way toward MHN’s strong financial
showing was the MHNGS division, which
increased its revenue 126 percent, up to
$53.4 million.
• MHN’s total membership stands at nearly
11 million–thanks to almost 3 million added
by MHNGS, and including TRICARE members
who use MHN’s behavioral health network.
connections winter 200716
MHN–More than three decades
of making a difference
Did you know
Associate resources
Employee Assistance Program–confidential and toll-free 24/7
• California associates outside Sacramento: (800) 243-8899
• California associates in the Sacramento area and all
other associates nationwide: (800) 977-7964
• TDD callers: (800) 327-0801
?
MHN online member services can be reached through
HN Connect > Business Units > Member Services.