McCallister, Michael B. 1952–

Michael B. McCallister
1952–

President and chief executive officer, Humana Incorporated

Nationality: American.

Born: May 27, 1952, in Shreveport, Louisiana.

Education: Louisiana Tech University, BA, 1974; Pepperdine University, MBA, 1983.

Family: Married Charlene Gray; children: two.

Career: Humana Incorporated, 1974–1975, finance specialist; Community Hospital, Humana Incorporated, 1975–1978, executive director for finance; Humana Hospitals in Huntington and West Anaheim, California, 1978–1985, executive director; Humana Hospitals in West Hills and Canoga Park, California, 1985–1988, executive director; Humana Hospital, Phoenix, Arizona, 1988–1989, president; Human Health Care Plans, Phoenix, Arizona, 1989–1992, vice president; Humana Health Care Plans, San Antonio, Texas, 1992–1996, vice president; Humana Incorporated, 1996–1997, division president for Texas, Florida, and Puerto Rico; 1997–1999, senior vice president, health systems management; 1999–2000, senior vice president and office chairman; 2000–, president and chief executive officer.

Awards: Tower Medallion Award, Louisiana Tech University, 2003.

Address: Humana Incorporated, Humana Building, 500 West Main Street, Suite 300, Louisville, Kentucky 40202-4268; http://www.humana.com.

■ Michael B. McCallister climbed the ladder at Humana Incorporated for 26 years before being named its president and chief executive officer in 2000. As the company grew into one of the largest hospital and health-care companies in the United States, McCallister held a series of executive positions at different hospitals in California, Texas, and Arizona. He rose to upper-level management positions during the 1990s, making his mark as a senior vice president during a time when the company faced large financial losses. After McCallister became president and CEO of the company in 2000, he led the company's turnaround through such innovative ideas as paperless health care management products and consumer-driven health-care plans.

EDUCATION AND EARLY CAREER

McCallister was born in Shreveport, Louisiana, in 1952. He remained in his home state to attend college at Louisiana Tech University in Ruston, graduating in 1974. At the time McCallister completed his degree, Humana was less than 15 years old. The company, originally called Extendicare, was formed in 1961 by two young lawyers and other investors who developed, owned, and operated a nursing home business. For the remainder of the 1960s the company acquired more nursing homes and expanded its business to include hospitals. By 1974 Extendicare had purchased about 10 hospitals and changed its name to Humana.

McCallister joined Humana in 1974 as a finance specialist, working in the company's headquarters in Louisville, Kentucky. After a year he returned to Louisiana to serve as executive director of finances for Community Hospital in Springhill, which was a branch of Humana. In 1978 McCallister moved again, accepting a position as executive director for Humana hospitals in Huntington and West Anaheim in California. He remained there from 1978 through 1985, during which time he earned an MBA degree from Pepperdine University in Malibu, California.

Humana grew rapidly throughout the 1970s. By the early 1980s it was the world's largest hospital company, owning more than 80 hospitals. McCallister saw the company's growth at first hand, which later helped him deal with change inside the corporation after he moved into upper-level management positions. In 1985 he moved to Humana Hospitals in Canoga Park, California, and served as executive director there until 1988.

MOVING INTO UPPER MANAGEMENT

McCallister became the president of Humana Hospital in Phoenix, Arizona, in 1988. During the following year, he was elected to serve as Humana's vice president for Humana Health Care Plans in Phoenix, where his job required him to integrate health care and hospital plans. McCallister was transferred to San Antonio, Texas, in 1992 to serve in the same capacity. Humana then spun off its hospital business in 1993 to form a new company known as Galen Health Care, Incorporated. After Humana left the hospital business, McCallister's position in San Antonio was concerned only with health care.

McCallister remained in San Antonio until 1996, when he was named president of the company's Division I, which included its operations in Texas, Florida, and Puerto Rico. In 1997 he became senior vice president for health systems management at the company's headquarters in Louisville. He held that position through 1999, when he was appointed Humana's senior vice president and office chairman, reporting directly to company chairman David A. Jones.

McCallister distinguished himself in the late 1990s. He oversaw Humana's large-group commercial, Medicare, Medic-aid, workers' compensation, and military health care businesses. He worked closely with David A. Jones, the company's chairman and interim chief executive officer, to develop a plan to improve the company's performance. Humana faced huge losses in 1999, and McCallister was largely responsible for putting its turnaround plan into action. Although the company expected to post overall losses, it also experienced significant gains in gross revenue. "Mike's role in producing these results was absolutely essential," Jones said of McCallister (February 3, 2000).

PRESIDENT AND CEO

Humana named McCallister as president and chief executive officer in 2000. "I look forward to working with my colleagues to continue building on the momentum we have established in the last several months [in 1999]," McCallister said when he took the helm (February 3, 2000). McCallister indicated that the company would focus on its core health insurance businesses and sell off its peripheral assets. McCallister's role as president and CEO began on a sour note, however, when he announced that the company had lost $382 million in 1999. Although the results were not unexpected, McCallister felt compelled to pledge that the company would return to profitability.

McCallister promoted several innovations that gained the attention of the healthcare community. In 2001 he introduced an all-digital health plan computer product called Emphesys, which was designed to transfer all medical provider transactions to the Internet and eliminate the use of paper. "We have a track record of being able to transform our company in a very large-scale way," McCallister said in 2001. "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" (Managed Healthcare Executive, November 1, 2001).

During the following year, McCallister unveiled a revolutionary consumer-driven healthcare plan. He recognized that managed care no longer provided cost savings; Humana's healthcare costs for its own employees had increased 19.2 percent in 2002 alone. The new consumer-driven plans allowed employees to make their own decisions about their healthcare plans, with employers contributing to each employee's tax-free personal account or allowance.

McCallister's strategies paid off for Humana, which experienced a 60-percent increase in profits in 2003. By 2004 Humana was ranked by Business Week as one of the top-performing companies in the United States.

See also entry on Humana Inc. in International Directory of Company Histories.

sources for further information

Benko, Laura B., "Uphill Fight for Humana's New Chief," Modern Healthcare, February 14, 2000, p. 8.

Groeller, Greg, "New CEO Hopes To Heal Humana," Orlando Sentinel, February 4, 2000, p. B1.

Hansen, Fay, "Driving Savings with Consumer-Driven Health Care," Workforce Management, February 1, 2003, pp. 36–40.

"Humana Names Michael B. McCallister President and Chief Executive Officer," press release, February 3, 2000, http://humana.softshoe.com/employment_ops/our_culture/vision_ceo.html.

McCue, Michael T., "The Paperless Evolution," Managed Healthcare Executive, November 1, 2003, pp. 22–28.

"Online Extra: A Sharp Eye on Humana's Health," BusinessWeek Online, April 5, 2004, http://www.businessweek.com/magazine/content/04_14/b3877648_mz073.htm.

—Matthew C. Cordon