And a fourth is going on right now, according to Mike McCallister, the company's CEO. "We have a track record of being able to transform our company in a very large-scale way," he says. "New technologies are providing us not just with information, but with actionable information. That's something this industry hasn't had in the past and it sets the stage for us to transform ourselves yet again."

That change is best symbolized by the company's newest product offering: Emphesys, an all-digital health plan that uses virtually no paper. After its launch this summer in Memphis, Tenn., Emphesys will be rolled out to all of Humana's markets over the next several quarters.

"Humana is the most experienced, and among the savviest, purchasers of disease management services anywhere in the country," says Al Lewis, executive director of the Boston-based Disease Management Purchasing Consortium and an editorial advisor for Managed Healthcare Executive.

By 1972, the company (then known as Extendicare) had acquired nine other hospitals and completely divested itself of its nursing home business. By 1974, the name was changed to Humana, which became the largest hospital business in the nation by the early 1980s. From the mid-1980s through 1993, Humana became an integrated company, with operations in both the hospital and HMOs industries. In 1993, the company spun off its hospital business and has been concentrating on the health insurance side ever since.

Mike McCallister has been with Humana since 1974, so he's been through all of these changes and is not the least intimidated by undergoing another one. In fact, he looks forward to it eagerly. "It's an exciting time for us," the Shreveport, La., native told me during the interview in his Louisville office. "The economy is uncertain, and healthcare costs are beginning to really accelerate again to the point where there have to be some new solutions. We've all been doing the same things in this industry for the last 15 years, and it's obviously not working anymore.

"Healthcare is a wonderful business that the American public needs. Technology is transforming the industry in ways we are just beginning to grasp and use. We are a company that has shown it can reinvent itself and step up to a new kind of business, so it's a great time for Humana."

This most recent change that McCallister refers to isn't quite the same as the others; Humana is firmly entrenched in its role as a health insurance company. But it's easy to hear the excitement in his voice when he talks about the changes that information technology is ushering into the healthcare arena.

"We began by establishing separate project units to ensure focus," he says. "We gave them a really straightforward mission: Develop the best benefit offering you can come up with, using the best in class for every technology application that's out there. We wanted a fully electronic environment and real-time capability, and we have those things. We also sought to remove the administrative 'noise' from the system."

The technology partners Humana settled on include The TriZetto Group, Oracle, WebMD, Microsoft and Electronic Data Systems. CorSolutions, a disease intervention company, was brought in to help provide Internet capabilities for Humana members.

Some of the "noise" those companies worked to eliminate includes paper-based explanation of benefit forms and administrative processes like retroactive additions and deletions to the roster of members.

"Those two things produce a tremendous amount of expense and mistakes," he says. "With Emphesys, they just don't exist. Nor do we send paper bills to employers. It's a purely digital environment."

To allay employers' concerns about how effective the system actually is, Humana made major elements of the product available to its own workforce before it was released on the market.

"We have more than 14,000 employees in 18 states," McCallister says. "We apply a lot of our thinking to our own benefit offerings to assess effectiveness. We adopted electronic enrollment for all of our employees last year. We printed no paper-none.

"Employers are saying to us, 'What else do you have? Because I can't afford to keep paying you 15% more every year for the same thing we have now.' One of the benefits of real-time, electronic information is that we'll be able to show employers how to go about changing their long-term cost trend."

'Put it in writing' McCallister was the head of Humana's disease management task force when the company really began to look closely at its disease management options. The first decision it had to make is the same as most other plans: build or buy?

"We decided that we're a health benefits company, first and foremost," he says. "We are in the business of aggregating purchasing power and spreading risk over large groups of people. Disease management is not a core competency for us, but there are a lot of bright people out there who make DM their sole focus."

Although the decision to outsource the services might have been easy, choosing which vendors to use was an exhaustive process. "In 1995, we searched coast to coast for every company that claimed space in the disease management world, and during the course of a couple months, brought them in to talk to us."

That detailed search gave the company some valuable experience, and, although Humana's DM program has only existed for six years, that makes them a veteran in the newly emerging field, according to Al Lewis.

"They are closer to the industry-through their own contacts, Consortium contacts, and those of the Disease Management Association of America-than anyone else," Lewis says. "They've negotiated more contracts than anyone else. They have a reputation for delivering the patients they say they will, in a timely way, and they have an excellent data warehouse. They also now have a reputation for nurturing and working with their vendors to expand the scope of their programs. Finally, the decision making is clearly located in medical management, so they can decide things quickly."

McCallister also credits much of the success to his company's stringent contracting practices and insistence on accountability. "We've been very forceful with having our vendors put their money where their mouths are. If they believe they can take things from 'here' to 'there,' we build it into the contract.

"We're not believers in Hail Mary passes. We took some chances with some companies early on, because we believed they could produce the results they said they could. But we're not out there just looking for a relationship. We want something in the contract that's nailed down to performance."

DM is another area whose potential McCallister expects to be maximized by new developments in information technology.

"We're just at the beginning of what can ultimately be accomplished with disease management," he says. "The healthcare system does not pay physicians to educate patients, so results are spotty at best. I believe that's the role for us as the health plan: information gatherer, information provider, and communications cornerstone.

"Right now, people with severe illnesses go to a number of Web sites and try to find consensus on the advice those sites provide. Then they carry it all into their doctor's office, and the doctor has to 'talk them off of the Internet.' To be actionable, this information must be better-organized and specific to the individual.

"Some people believe that patients are so concerned about privacy that they will reject the use of their information by their insurer, but we've found the exact opposite. If people are sick enough, they want all the help they can get.

Physicians also want help with patients who need information and guidance. We accept that role because through coordination, information and education, we can bring some rational decision making back to the healthcare system. This results in dollars being spent effectively. Everybody wins."

A piece of the puzzle The common denominator that was present in virtually all of McCallister's comments might have been the potential of information technology, but he stressed that it is just a piece of the puzzle.

"We don't have a 'technology strategy' at Humana," he says. "We have an overall strategy that technology empowers. It's a significant piece, but that's all it is.

"Our strategy is to develop benefits structures that are powered by technology and information in a way that engages the consumer in the cost and effectiveness of healthcare as they move through the system.

"We want consumers to start acting like consumers. We want them to know what their options are, from a quality and cost perspective. We want them to start making the kind of judgments they make in every other phase of their lives when they have a purchasing decision.

"That's what's coming; I'm absolutely convinced of it. And this company is being built around the philosophy.

"We didn't always have ways to interact with, educate and inform people about their choices and costs," he says.

"But now we have a wonderful new environment in which to communicate and gather information. It's a new opportunity and a new day."

The above photo, showing the soot-covered and virtually abandoned streets of New York on September 11, was taken by a member of Mike McCallister's party.

Mike McCallister and nearly 30 other Humana employees will remember, too-because they were on the streets of Manhattan that morning, dodging the flying debris from the attacks.

The Louisville-based MCO had planned a press conference for that morning to announce the release of Emphesys, the company's new all-digital health plan. The group was spread out between several hotels, but many were staying in the Marriott at 3 World Trade Center-a building that collapsed into rubble a short time after the two WTC buildings were destroyed. "There were about 30 of us [in Manhattan], and we were very fortunate that we didn't have anyone involved in the actual disaster itself," McCallister says.

Aware that a tragedy of that magnitude would effectively paralyze the Manhattan traffic (notorious even under normal circumstances), McCallister quickly walked to 55 Broad Street, five blocks away, where the press conference was scheduled for later that morning. The Humana group waited until early that afternoon, when the dust from the Towers' collapse had settled, before leaving 55 Broad.

'it was like science fiction'

"Once we had our group together and decided to start walking north, we tore up tablecloths, dipped them in water to get them wet, and then wrapped them around our heads to cover our noses and mouths from the dust and soot.

"We looked like something from a science fiction movie . . . 30 people with their faces covered, walking down the middle of a completely abandoned street. There were no people and no cars, just dust and debris. It was a surreal moment, to say the least."

Through the dust and smoke, one of the members of the group spotted a tour bus and driver parked on the side of the road. The 28-passenger bus was empty, and they convinced the driver to take them as far as Pennsylvania. "We tried to talk him into taking us all the way back to Louisville, but since that's a 800-mile trip each way, he thought we were a little strange. But we were very lucky he agreed to take us all the way to Harrisburg, Penn. At the time, we didn't even know if we were going to be able to get off the island, because none of the bridges or tunnels was open. But we decided to try, and as soon as we got in sight of the George Washington Bridge, they opened it."

Meanwhile, Humana employees back in the corporate office in Kentucky arranged for a different bus to pick the group up in Harrisburg. Finally, 19 hours after their nightmarish walk down 55 Broad Street, McCallister and his colleagues made it back home.

Although it was a harrowing experience that none of them will ever forget, they also realize how lucky they were, and how many others weren't as fortunate. "Our experiences were only inconveniences, compared with what so many other people suffered in this tragedy," McCallister says.