LOUISVILLE, Ky. (WDRB) -- For the last several years, Louisville-based health insurance giant Humana Inc. has pursued a strategy of not only insuring people, but providing their health care — opening hundreds of primary care clinics and buying the biggest provider of in-home care in the country.
But when David Jones Jr. joined Humana's board of directors in 1993, the company was doing the opposite: fleeing from health care, and into insurance.
Jones Jr., the son of the late Humana cofounder and longtime CEO David A. Jones, kept his seat on the board through Humana's evolution from a hospital company to an insurance powerhouse worth about $60 billion.
Now, as the pendulum of the company's 62-year history swings back toward healthcare services, the younger Jones is finally leaving Humana's board after 30 years.
Humana revealed in its annual proxy filing this month that Jones isn't among the board nominees who are set to be installed at the company's annual meeting April 20.
Jones, 65, told WDRB that moving on from Humana's board — where he is the longest-tenured director by ten years — is "something I have been background-processing for a while."
"The things I felt like I had the opportunity to contribute have largely been contributed, and the company is in great shape," he said. "I'm proud of the board that we have, and I'm excited about the strategy. But, you know, we all have a limited number of days and to everything, there is a season … It's just the right time."
Jones has had an extraordinarily long tenure on Humana's board, one that has long outlasted his family's status as a significant holder of the company's stock. The average tenure of an S&P 500 company board member is about 10 years, according to The Conference Board, which tracks corporate governance practices.
But Jones' pending departure will nonetheless sever a historical tie, not only to Humana's patriarch but also to its hometown. While Jones' father built Humana in his native city — and the company still employs 9,000 to 10,000 people in the metro area — Jones is the only Louisvillian remaining on Humana's board.
Jones, a former chairman of the Jefferson County school board, whose primary job is running his Louisville-based venture capital firm Chrysalis Ventures, will remain involved in Humana's local philanthropy as a director of the Humana Foundation, the company's charitable arm.
In a statement for this story, Humana and its board said they are "extremely grateful to Mr. Jones for his decades of leadership and service to the company that will forever be linked to his family."
"We look forward to his continued involvement with The Humana Foundation, where his passion for civic engagement and his unwavering commitment to Louisville will increasingly help The Foundation create more healthier communities," the company said.
In a wide-ranging interview at Chrysalis Ventures' downtown office last week, Jones played down the significance of his departure. Despite his father's outsize role in building the company — David A. Jones led Humana from the 1960s until his retirement from the board in 2005 — Jones Jr. noted that it "has never been a family business," even decades ago when his family owned a much larger stake.
"Symbolism is good. I love history. But, I mean, at some point — if the company has a really long lifespan — all the connections are going to be pretty tenuous," he said.
'Your dad is all alone running that company'
Jones, the oldest of five children, said it wasn't his father, but one of Humana's independent board members, who first raised the idea of Jones joining the board in the early 1990s.
Humana "wasn't in great shape" at the time, Jones recalled.
The company owned more than 70 hospitals around the country and was also an emerging player in a form of prepaid insurance called a health maintenance organization, or HMO.
David A. Jones thought the two businesses would complement each other, with the HMOs feeding patients to Humana's hospitals. But, as the Washington Post reported in 1993, "the strategy didn't work."
Under the harsh scrutiny of Wall Street, Humana decided to spin off the hospitals — which then provided the vast majority of its revenue and profits, according to Jones Jr. — to focus on what he called its "tiny" and money-losing insurance business.
What's more, David A. Jones was still reeling from the untimely death of Wendell Cherry, with whom he had co-founded Humana as a nursing home operator in 1961, Jones Jr. said.
The younger Jones was living in Washington D.C. and working as a U.S. State Department lawyer when Humana board member Michael E. Gellert took him to lunch to make the case for his moving his young family back to Louisville.
"He basically said, 'Your dad is all alone running that company right now,'" Jones recalled Gellert telling him. "… 'You're the oldest son; you've probably figured out how to work with your dad somehow over time, or at least how tell him no. And, you know, maybe you should get involved in some way.'"
At the time, the Jones family didn't have a controlling stake in the company, but they were nonetheless the largest shareholders, with his father owning more than 5% of the stock and firmly in the driver's seat.
Initially, David A. Jones wasn't sold on the idea of his son getting involved in the company. The younger Jones recalled that his dad wanted his children to pursue their own goals rather than fulfilling his. "He didn't want me to feel obligated," Jones said.
The timing was fortunate, however. Humana was plowing new ground, and the younger Jones benefited from what his father called "the confidence of total ignorance."
"When I joined the board, the truth is, the company didn't understand the insurance business very well. And I didn't understand it at all," Jones recalled. "So the advantage I had was, I was young enough that people didn't think I wanted their job; they thought I was genuinely ignorant, and it would be useful for them to explain how things work.
"So I was able to go around to all the major markets, to meet with people and just ask them to explain, 'What do you do?' and to go on sales calls, to go visit the doctors' offices, to go to the call centers … That was beneficial, not only to my dad, but to the whole board, to have somebody actually learn this new business from the ground up."
A decade later, Humana began building the franchise that now accounts for its rich market value. Jones Jr. chaired the company from 2005-2010, when Humana found its niche in covering elderly people through the government's privately run program called Medicare Advantage.
That Medicare franchise made Humana an attractive target to rival insurer Aetna in 2015, but the proposed $37 billion sale of the company fell apart in 2017 when a federal judge ruled it anti-competitive.
Since abandoning the merger, Humana has focused on building an integrated health care/insurance business. The basic premise is that helping seniors stay healthy will also redound to the bottom line. Its rivals, including Aetna, are pursuing a similar strategy.
"Now the company has embarked on really the next transformation, which is kind of 'Back to the Future,'" Jones said.
As chairman of the board's nominating committee since 2012, Jones said he has worked hard to bring in board members who fit Humana's current strategy, with expertise in clinical matters, digital health and "transformation."
Meanwhile, his own claim to "legitimacy" on the board — his significant stock ownership — has also diminished, as he has sold off and gifted shares.
Jones owns 43,240 shares, which are worth about $21 million, according to Humana's annual proxy statement. In 2005, he owned more than 500,000 shares, which today would be worth about $250 million.
"The only reason I was on the board was because I was a good representative of the shareholders, because I owned a lot of shares," he said. "And I cared about what happened. ... I don't think my shares are more important than anybody else's shares."
'The next generation is going to be great'
Jones said despite he and his father's affections for Louisville, his responsibility to the other shareholders compelled him to vote to sell the company — not only in 2015 to Aetna but in an earlier failed merger with United Healthcare in 1998.
In either case, Humana's absorption into a larger company headquartered elsewhere could have been devastating to the city.
"I was sad in each case, (and) concerned in each case," Jones said. But, "If a high offer is made that is in the interest of the shareholders, you've got to do your job."
Looking back on the failed Aetna deal, Jones said the merger made a lot sense for Humana's investors, but for Louisville, it's "pretty unambiguous" that it turned out better to remain the home of a Fortune 50 company trying to executive a sophisticated strategy in a complex industry.
"We've got a lot of knowledge, a lot of talent that we didn't have even five or six years ago in the company in Louisville. ... So, I think it's been much better for the company to be independent, and therefore, for Louisville," he said.
Even so, Humana's connection to the city has become tenuous in the post-pandemic era of remote work, as WDRB documented last year.
Many top executives, including the just-hired president of Humana's healthcare division, are based in Washington, D.C., where the company recently outfitted a new office. CEO Bruce Broussard sold his Louisville condo in 2020 in a private transaction, WDRB reported.
Humana has also greatly shrunk its footprint in Louisville's downtown, giving up dozens of floors of leased office space and even donating an office building.
Jones said the fluidity of professional work is a reality for all corporations, and Louisville also benefits from people who work remotely for companies headquartered elsewhere.
"Where is anybody today? I mean, that's not a Humana issue," he said.
At the same time, Jones stressed that Louisville remains home to many "really important players" for Humana, including the company's chief financial officer, Susan Diamond; chief administrative officer, Tim Huval and chief legal officer, Joe Ventura, among others.
"What I would say to Louisville is, get to know the actual Louisvillians who are running Humana today," he said. "... I think that is a kind of mantra that needs to carry over more."
As he winds down his association with Humana, Jones said he plans to take a cue from his father, who never dwelled on the company's direction once he left in 2005.
"He was proud of what he'd done at Humana. He loved the people. He stayed in touch with people, but he didn't give the company a backward glance," Jones said. "(He thought) 'the next generation will do a great job,' ... That's my model here. The next generation is going to be great."