Humana Inc. is a for-profit American health insurance company based in Louisville, Kentucky. In 2021, the company ranked 41 on the Fortune 500 list,[2] which made it the highest ranked (by revenues) company based in Kentucky. It has been the third largest health insurance provider in the nation.[3]
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[4] but walked away from the deal after a court ruling that the merger would be anti-competitive.[5]
1961–1983: Nursing homes and hospitals
Lawyers David A. Jones Sr. and Wendell Cherry founded a nursing home company in 1961.[6] 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.[7]
In 1974, the partners changed the corporate name to Humana Inc.[7] The name was meant to change public perception from ‘warehousing’ or indifferently treating people to providing a higher-level of human care and, by extension, more humane care.[8] It grew in the following years, both by business and in 1978 through the takeover of American Medicorp Inc.,[9] which doubled the company’s size, and growing into the world’s largest hospital company in the 1980s.[10] 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.[citation needed]
1984–present
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.”[7]
In 1993, Humana had become the largest hospital operator in the country, owning 77 hospitals.[citation needed] 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.[7]
In 1998, one year after Jones had stepped aside as CEO, United Healthcare made an unsuccessful attempt to acquire Humana.[7] Humana pulled out of the acquisition after United stock dropped $2.9 billion in value.[11] In 2001, Humana was a cofounder of Avality.[12]
In 2005, Humana entered into a business partnership with Virgin Group, offering financial incentives to members for healthy behavior, such as regular exercise.[13]
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.[14]
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.[15] The same year, Humana launched RightSource, a national mail-order retail pharmacy business.[7] In March 2008, Fortune Magazine named Humana one of the Top 5 Most Admired Healthcare Companies in the United States.[16]
In 2010, Humana bought Texas-based Concentra Inc., which owns urgent-care and physical therapy centers, for $790 million, effectively returning to healthcare services.[7] In May 2011, Humana announced it would be using mobileStorm to transmit protected health information to patients.[17]
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.”[18]
In July 2015, Aetna announced that it would acquire Humana for $37 billion in cash and stock (approximately $230 a share at that time). Aetna and Humana shareholders would own 74% and 26% of the new combined company, however the merger was blocked by a federal judge in January 2017.[19][20] In February 2017, Aetna Inc. and Humana Inc. quashed a $34 billion merger agreement after judges ruled against the merger for a second time.[21]
In July 2018, Humana joined two private equity firms in the acquisition of Kindred Healthcare. The deal provided Humana with a 40% stake in the company’s home health, hospice and community care businesses, called “Kindred at Home,” for approximately $800 million.[22][23] In August 2018, Humana announced the creation of a digital health and analytics division called Humana Studio H.[24]
In December 2019, the company announced it would acquire Enclara Healthcare from Consonance Capital Partners and Enclara management.[25]
In 2021, Susan Diamond, formerly occupying an interim position, was announced to be the new permanent CFO. Her appointment to the position comes with the company’s focus being turned towards the home healthcare business, acquiring in April of the same year a 60% stake in Kindred at Home, an in-home care and hospice business.[26][27][28]
In April 2022, it was announced Humana would sell a 60% interest of its Kindred at Home division to the private investment company, Clayton, Dubilier & Rice, for $2.8 billion USD.[29]