David Jones, Health Care Entrepreneur Behind Humana, Is Dead at 88 – The New York Times

By | September 21, 2019

David A. Jones, who with a partner built Humana from a single nursing home into a health insurance behemoth, died on Wednesday at a rehabilitation facility in Louisville, Ky. He was 88.

A company spokesman said the cause was complications of multiple myeloma.

In Louisville, a city known mostly for thoroughbred horses and bourbon, Mr. Jones and Wendell Cherry, a friend and fellow lawyer, brought health care assertively into the foreground.

In the 1960s, they built the nation’s largest nursing-home chain. After selling the homes in the early ’70s, they created Humana, one of the biggest hospital chains in the United States. And in the 1990s, after Mr. Cherry’s death, Humana spun off the hospitals as Mr. Jones led the company’s drive into health insurance. It is now the fourth-ranked company in the industry.

Over more than 40 years at Humana, Mr. Jones became an influential business and civic leader and a confidant to the Senate majority leader, Mitch McConnell of Kentucky. Mr. Jones and his family have been strong supporters of Mr. McConnell’s political career, Politico has reported, and Mr. McConnell, a Republican, secured millions in funding for a 4,000-acre park in Louisville, Parklands, which was championed by Mr. Jones.

“I can say without exaggeration,” Mr. McConnell said on the Senate floor on Wednesday, “that David Jones was the single most influential friend and mentor I’ve had in my entire career.”

CreditLin Caufield/Humana

Mr. Jones was a genial but extremely competitive executive. During the years that Humana owned hospitals, several in Louisville, he vigorously defended the for-profit hospital model, contending that Humana’s facilities could deliver better care at lower costs.

“The notion that being nonprofit adds some weight to what you do is baloney,” he once said.

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In 1984, Humana boldly lured the artificial heart experiment program run by Dr. William DeVries to Louisville from the University of Utah. Mr. Jones pledged that Humana would fund 100 implantations of the Jarvik 7 artificial heart.

Dr. DeVries performed the second implantation of the mechanical heart at a Humana hospital in Louisville, attracting enormous media attention. (He had done the first in Utah.)

“There was a halo effect,” Mr. Jones told The Courier-Journal of Louisville. “People thought if they can handle artificial hearts they can probably handle almost anything else.”

But the program fizzled out after Dr. DeVries had implanted only a few artificial hearts. He left Humana in 1988.

Humana’s rapid growth, unsurprisingly, displeased some of its nonprofit rivals.

“The company’s philosophy toward their competitors is ‘We’ll run over them, or through them, or around them,’” Richard Abell, the administrator of St. Anthony Hospital in Louisville, told The Washington Post in 1985.

Mr. Jones was sensitive about any articles in The Courier-Journal — including an eight-part series in 1985 — that he felt cast Humana in a negative light.

“David was very well respected and a little bit feared,” Paul Janensch, a former executive editor there, said by phone. “He had a temper. He was very demanding and not very subtle.” Mr. Jones was, he added, “very protective of the company’s reputation.”

Mr. Jones’s belief that Humana could be cast as a villain was underscored in 1987 when he pressed a federal lawsuit against NBC demanding that “St. Elsewhere,” a series about a hospital in Boston, stop using “Ecumena” as the name of the fictional facility’s callous new owner.

“I don’t want a name on their hospital that sounds in any way like Humana,” Mr. Jones said at a news conference after NBC agreed to cease using “Ecumena” by the end of the season, “because Humana operates outstanding hospitals, it does terrific work, and I don’t know what their hospital does.”

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A few years later, after ABC News reported that Humana had overcharged patients for a wide range of hospital supplies, from crutches to Vaseline, Mr. Jones testified in Congress that the company’s supply prices had to be viewed in a broader context.

“We are not a drugstore,” he testified. “We provide these items as part of the entirety of our patient care, and, for better or for worse, we price them and charge them only as an integral component of the total cost of patient care.”

David Allen Jones was born on Aug. 7, 1931, in Louisville. His father, Logan, was a laborer, and his mother, Elsie (Thurman) Jones, was a clerk for the Census Bureau.

After studying accounting at the University of Louisville, which he attended on a Navy R.O.T.C. scholarship, Mr. Jones spent three years in the Navy. He then graduated from Yale Law School and joined a hometown law firm, Wyatt, Grafton & Sloss, where he met Mr. Cherry.

“The pay was miserable, but the experience was fabulous,” Mr. Jones said in an interview in 2014 for an oral history at the University of Kentucky.

Looking to earn more money to support his growing family, he spoke to another young lawyer who was somehow able to afford an expensive house once owned by a local corporate executive.

“I built a nursing home,” Mr. Jones said the lawyer told him. “I ran back to my buddy Wendell and said, ‘Let’s build a nursing home.’ There was no forethought in it.”

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Each man borrowed $ 1,000, and with other investors their first nursing home got built.

Within a few years they had a chain of about 50 homes, called Extendicare, which they took public in 1968 at $ 8 a share. By the end of the year the share price had multiplied tenfold.

In the early 1970s — after ending a losing venture in trailer parks — they sold the nursing homes and started to buy and build hospitals. Even as Mr. Jones and Mr. Cherry were amassing a chain, eventually named Humana, that grew to about 100 hospitals, they saw a need to shift direction again.

Humana had been operating health insurance plans since the mid-1980s, supplying its hospitals with a constant stream of insured patients. The arrangement in some cases led Humana’s insurance companies to push doctors to hold down costs, prompting the doctors to rebel by boycotting the company’s hospitals.

Humana spun off the hospitals in 1993 to a new company, Galen Health Care (which later that year was sold to Columbia Health Care for $ 3.4 billion). Mr. Jones took control of a Humana that was dedicated entirely to health insurance.

In 1998, Mr. Jones agreed to sell the company to UnitedHealthcare for $ 5.5 billion. But the sale was never completed; the deal ended a few months later after United reported an unexpected $ 900 million charge in its second quarter, causing its stock to plunge.

Mr. Jones retired as Humana’s chairman in 2005 and focused on nonprofit work on behalf of the Parklands project, the Louisville Public Libraries and the Actors Theater of Louisville.

He is survived by his daughters, Susan and Carol Jones; his sons, David Jr., Dan and Matt; 11 grandchildren; a sister, Jean Donoho; and a brother, Clarence. His wife, Betty Lee (Ashbury) Jones, died last month.

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