Humana's evolution from nursing homes to health insurance

Humana was founded in 1961, and was originally a nursing home company (Investor, 2013). David A. Jones, Sr. And Wendell Cherry were the founders (Investor, 2013). In the beginning, the company was called Extendicare (Investor, 2013). In the early 1970s the company moved into purchasing hospitals, and had become the largest hospital company in the world by the 1980s (Investor, 2013). In 1974 the Humana name was taken by the company, and in 1978 the size of the company was doubled because it took over American Medicorp (Investor, 2013). A fast-track plan was used throughout the 1970s, and during that time the company was opening one hospital every month (Investor, 2013). That is much faster than the norm for the industry, and Humana did something else very significant during that time. It developed a design for hospitals that used a double corridor instead of just a single one (Investor, 2013). In other words, there were patient rooms on both sides, all around the perimeter. The nursing and support systems were placed into the middle, which minimized the distance between nurses and their patients. That made patient care much more efficient, and helped nurses accomplish more in the time they had available to work with those patients.

Improving patient care was a cornerstone of everything Humana was doing (Humana, 2011; Investor, 2013). In 1985, the Humana Heart Institute was built in Louisville (Investor, 2013). During the 1990s, Humana decided to spin off its hospital operations from the health care benefits segment of its company. In 1993, it accomplished this by creating Galen Health Care (Investor, 2013). That part of the company later merged with Columbia/HCA (Investor, 2013). Since the health care benefits focus of the company, there have been many changes and improvements. These included a mail order retail pharmacy (RightSourceRX, 2013), a business partnership with Virgin Group, and an education campaign for Medicare Advantage and a Prescription Drug Plan (Medicare, 2013; RightSourceRX, 2013). The company is clearly focused on the future and everything it can provide for its customers.

Inputs

The three most important inputs for the company are people, finances, and information. These are all vital because they work together to keep Humana moving forward in an increasingly global society. The people who work with a company are highly valuable (Sullivan & Sheffhrin, 2003). These include everyone from the top level executives all the way down to the smallest position. There is no employee who is really more important than another, because they are all needed in order to make sure that a company continues to grow (Sullivan & Sheffhrin, 2003). Additionally, a company is not able to continue to move forward without finances. The best ideas cannot get off the ground if the money is not there to advance them. Humana has been fortunate in this regard. It grew and developed so fast because it was making the level of money necessary to do this. Without that level of funding, it may not have grown into the large and important company it is today, which could have harmed a large number of people who needed its services.

Information is another input that a company cannot do without (Sullivan & Sheffhrin, 2003). For Humana, the information it received helped it to decide where to build hospitals, how to build them, and how they should be staffed and operated in a way that would provide both a good profit and strong patient care (Humana, 2011). Because Humana was willing to focus on good information and use what was offered to it, the company was better able to pick and choose what mattered to it. In turn, that helped the company executives decide which direction to take the company throughout each decade and into the next one. Moving from nursing homes to hospitals to insurance services worked because that was the direction in which the market was moving. Following the market is important, but being ahead of the market can be even more valuable for a company that is interested in moving forward, especially if the company is moving ahead rapidly and/or attempting to stay ahead of its competition (Sullivan & Sheffhrin, 2003).

Processes

The three most important transformation processes the company engages in are growth, acquisitions, and diversification. These are important because they all help the company move forward. By growing, the company is able to focus on a larger segment of the population. It can adjust or even expand its demographic, helping it grow in a way that is healthy instead of just expanding too much. Companies that grow unchecked end up with too large of a company without enough profit, which can cause them serious hardship (Sullivan & Sheffhrin, 2003). Acquisitions are important, as well. Taking over other companies can cause a company like Humana to grow rapidly, and that can really give a company a jump start that it would otherwise not have had. When a company like Humana diversifies, it also transforms. Humana went from a nursing home company to a hospital company to an insurance company because it changed with the times and met the demands of the market.

Conclusion

From studying Humana, one can see that there are several takeaways from the organizational analysis performed here. Humana is a company on the move. It has been that way since the beginning, and will continue to be that way into the future. The growth of the company, especially during the 1970s when it was opening a hospital every month, is so impressive that it is almost staggering. However, that is not the only thing about the company that is so significant. It should also be noted that Humana was on the move in the right way. Instead of just doing the same thing all the time, the company started diversifying and moving into different but related areas.

These included health care benefits and insurance, which is what the company does not. It also included pioneering research, though, along with taking over other companies that they could acquire or merge with to keep growing. In order to really study a company, it is very important to understand all that it has to offer and where it has come from based on its creation. Without a clear understanding of Humana's past and how the company has developed over its lifetime, a strong analysis of where it is at the present time and where it might end up in the future would be too difficult to address. Projections for the future are important when determining the direction a company should take to continue to grow and develop as its industry changes.