Word: humana
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Dates: during 1980-1989
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...Louisville lawyers, David Jones and Wendell Cherry, started Humana in 1962 with one Kentucky nursing home and $1,000 of borrowed money. Their business strategy was to bring innovative management techniques to a field noted more for compassion than cost efficiency. Says Cherry: "When I started to talk with physicians about what we were doing-marketing to the customer-some didn't like the word customer...
...Humana sold its nursing homes, then numbering 41, for $ 14 million in order to concentrate on hospitals. Jones and Cherry at the time were buying a hospital a month, mostly from groups of doctors. Investor-owned hospitals were not a new phenomenon; doctors had been running them for decades. What was new was the idea of linking them in large chains...
...Today Humana has general hospitals from Geneva to Anchorage. Though Jones, 52, and Cherry, 49, resist the notion that their chain was modeled on the McDonald's restaurant company, the two corporations are based on similar retail philosophies. Humana's guidelines: consistency, quality and high-volume, affordable care...
Last year Humana launched an insurance plan for companies as a way of boosting business in its hospitals. Humana Care Plus guarantees employers that their medical costs will rise no faster than the Consumer Price Index for at least four years. Health care prices are currently rising more than twice as fast as the CPI. Employees enrolled in the insurance plan can use any hospital, but the deductibles they pay will be lowest if they choose a Humana facility. More than 200 companies and organizations have enrolled about 65,000 people in the program...
...difference between nonprofit hospitals and companies like Humana is that the large chains usually make better use of cost-cutting measures, including centralized billing and inventory controls. They can get the benefits of economies of scale by buying bandages and other supplies in huge volumes at discount prices. Profitmaking hospitals have no monopoly on cost-effective management, but they have more incentives. Says Humana Chairman Jones: "Making a profit is never an end. It's a requirement. Any hospital has the same opportunity...