Humana

Humana Inc.

Guidance when you need it most
Type	Public
Traded as	NYSE: HUM S&P 500 Component
Industry	Managed health care
Founded	August 18, 1961 (1961-08-18) (as Extendicare Inc.) Louisville, Kentucky, U.S.
Headquarters	Humana Building Louisville, Kentucky, U.S.
Key people	David A. Jones, Sr. and Wendell Cherry, co-founders Bruce Broussard, CEO and President
Revenue	US$ 41.313 billion (2013) [1] US$ 39.126 billion (2012) [1]
Operating income	US$ 2.061 billion (2013) [1] US$ 2.016 billion (2012) [1]
Net income	US$ 1.231 billion (2013) [1] US$ 1.222 billion (2012) [1]
Total assets	US$ 20.735 billion (2013) [2] US$ 19.979 billion (2012) [1]
Total equity	US$ 9.316 billion (2013) [2] US$ 8.847 billion (2012) [1]
Number of employees	52,000 (1Q 2014)[3]
Website	www.humana.com

Humana Inc. is a for-profit American health insurance company based in Louisville, Kentucky. As of 2014 Humana has had over 13 million customers in the U.S.,^[4][5] reported a 2013 revenue of US$41.3 billion,^[6] and has had over 52,000 employees.^[3] In 2013, the company ranked 73 on the Fortune 500 list, which made it the highest ranked (by revenues) company based in Kentucky. It has been the third largest health insurance in the nation.^[7]

The U.S. Dept. of Health and Human Services investigated Humana in 2009 for sending flyers to Medicare recipients that the AARP characterized as deceptive. The company's managed care model has also been criticized for ethical lapses and limitations.

The health insurer Aetna said on July 3, 2015, that it had agreed to acquire its smaller rival Humana for $37 billion in cash and stock.^[8]

History

1961-1983: Nursing homes and hospitals

Lawyers David A. Jones, Sr. and Wendell Cherry founded a nursing home company in 1961. The company known in 1968 as Extendicare Inc., became the largest nursing home company in the United States. In 1972, Jones and Cherry sold the nursing home chain, to purchase hospitals.^[9]

In 1974, the partners changed the corporate name to Humana Inc.^[9] It grew in the following years, both by business and in 1978 through the takeover of American Medicorp Inc., which doubled the company's size, and growing into the world's largest hospital company in the 1980s. During the mid-1970s, the company used a fast-track construction process to complete and open one hospital a month. During this period, Humana developed the double corridor model for hospital construction. This design minimized the distance between patients and nurses by placing nursing support services in the interior of the building with patient rooms surrounding the perimeter.

1984-present: Health insurance

As the American health care system changed in the 1980s, "one of its hospitals in Arizona lost a contract with the largest health-maintenance organization in the area [and] Humana created its own health insurance plan.^[9]

In 1993, Humana had become the largest hospital operator in the country owning 77 hospitals. Humana executives spun off hospital operations from health insurance operations, to create Galen Health Care. The following year they sold the 73 hospitals of Galen Health Care Inc. to Nashville-based Columbia Hospital Corporation of America for $3.4 billion.^[9]

In 1998, one year after Jones has stepped aside as CEO, United Healthcare made an unsuccessful attempt to acquire Humana.^[9] United's effort failed when it reported an almost billion-dollar quarterly loss. In 2001, Humana was a cofounder of Availity.^[10]

In 2005, Humana entered into a business partnership with Virgin Group, offering financial incentives to members for healthy behavior, such as regular exercise.

On November 16, 2006, The Centers for Disease Control and Prevention (CDC) and Humana Inc. partnered to expand on traditional private-sector approaches to population health management.^[11]

In 2006, Humana launched an education campaign to market Medicare Advantage (MA) and Prescription Drug Plans (PDP) nationwide to Medicare eligible consumers, following the passage of the Medicare modernization act. The same year Humana launched RightSource, a national mail-order retail pharmacy business.^[9] In its March 2008 issue, Fortune Magazine named Humana one of the Top 5 Most Admired Healthcare Companies in the United States.^[12]

In 2010, Humana bought Texas-based Concentra Inc., which owns urgent-care and physical therapy centers, for $790 million, effectively returning to health care services.^[9] In May 2011, Humana announced it would be using mobileStorm to transmit protected health information to patients.^[13]

In March 2015, Humana announced the sale of Concentra to private equity firm Welsh, Carson, Anderson & Stowe and Select Medical Holdings Corporation for about $1 billion, with proceeds to fund a "$2 billion share buyback program and other corporate spending".^[14]

In July 3, 2015, Aetna announced that it will acquire Humana for $37 billion in cash and stock (approximately $230 a share at that time). Aetna and Humana shareholders will own 74% and 26% of the new combined company.^[15] Aetna Inc Chief Executive Mark Bertolini expects the deal to close in 2016.^[16]

Corporate affairs

Locations

The Humana Building in Louisville, Kentucky is an example of postmodern architecture designed by Michael Graves and completed in 1985.

Humana's mail-order facility, Humana Pharmacy has operated out of Phoenix, Arizona and West Chester, Ohio.Humana's call centers are located in Cincinnati, Ohio and other areas.

Sponsorship

PGA Tour player David Toms and LPGA player Nancy Scranton are both spokespeople for Humana.^[17] Humana is the official health benefits provider of the PGA Tour and Champions Tour.

The Humana Distaff Handicap is a Grade 1 race for thoroughbred fillies and mares, four-years-old and up. The race is run each spring on Kentucky Derby day at Churchill Downs and set at a distance of 7 furlongs for a purse of $250,000.

Humana is the presenting sponsor of the Grand Ole Opry.^[18]

Since 1979 Humana has been a principal sponsor of the annual Humana Festival of New American Plays in Louisville, Kentucky.^[19]

Humana Military Healthcare Services

In 1993 Humana founded Humana Military Healthcare Services (HMHS) as a wholly owned subsidiary.^[9]

From 2004-2009, HMHS was the managed care contractor for the Department of Defense Military Health System TRICARE South Region. In 2009, HMHS' Managed Care Support Contract was awarded to United Military and Veterans Services, a subsidiary of UnitedHealth Group. HMHS protested that decision and the Government Accountability Office upheld the protest in late 2009. In 2011, HMHS regained the five-year contract to administer medical benefits to military members and families in the South region, a contract worth $23.5 billion.^[9]

Controversy

In 1987, Humana sued NBC over a story line in the television medical drama St. Elsewhere whereas the hospital was to be sold to a for-profit medical corporation and renamed "Ecumena", with subsequent changes to the hospital, both positive and negative, emanating from that change. Humana was successful at forcing NBC into showing a disclaimer at the beginning of the September 30 episode saying that the drama had no connection whatsoever with Humana.^[20]

On May 30, 1996, Linda Peeno, a physician who was contracted to work for Humana for nine months, testified before Congress as to the downside of managed care. Peeno said she was effectively rewarded by her employer for causing the death of a patient, because it saved the company a half-million dollars. Peeno stated that she felt the "managed care" model was inherently unethical.^[21]

In 1999 season One of Michael Moore's The Awful Truth (TV series) featured Humana refusing to pay for a diabetic patient with pancreatic failure needing a transplant.^[22] A contradictory policy stated that all of this man's diabetes related expenses were covered by his plan, but another section stated that it did not cover organ transplants. Moore conducted a fake funeral on the front steps of the Humana building and three days later, Humana changed their policy and authorized the man's treatment..

Michael Moore's 2007 documentary Sicko used the video of Linda Peeno's testimony. On June 28, 2007, Humana declared that Peeno was never a Humana "associate" (permanent, full-time employee), but rather a "part-time contractor". Humana disputed portions of her Congressional testimony by saying that because the patient's healthcare plan did not cover heart transplants, denial of coverage was valid.^[23]

On September 21, 2009 the U.S. Department of Health and Human Services opened an investigation into Humana mass mailings to elderly Medicare recipients.^[24] The mail was made to appear to contain official information about Medicare Advantage and prescription drug benefit information, but instead alleged that core Medicare benefits could be cut by the Obama administration's healthcare reform,^[25] a claim refuted by John Rother, AARP's executive vice president.^[26] Douglas Elmendorf, the head of the Congressional Budget Office (CBO) supported the claim that Medicare benefits could be cut,^[27] but his comments were in reference to just one of several congressional bills. CBO estimates of another healthcare reform bill found that changes to premiums would vary.^[28] The Centers for Medicare and Medicaid Services instructed Humana to cease all such mailings to Medicare plan members pending an investigation.^[25] HHS Secretary Kathleen Sebelius, in a letter to the insurance industry, threatened that bad actors may be excluded from new health insurance markets that were to open in 2014. Senate Republicans pointed out in a letter to Sebelius, that a 1997 directive from the Centers for Medicare and Medicaid Services explicitly allowed HMOs to tell members about legislation and urge them to express opinions.

See also

• Top 100 Contractors of the U.S. federal government
• List of major employers in Louisville, Kentucky

References

External links

• Official website

• • Business data for Humana: Google Finance
  • Yahoo! Finance
  • Reuters
  • SEC filings
• Humana Military website
• RightSourceRX.com