Friday, December 07, 2007

Selling health care for fun and profit

Attention readers! All ten or fifteen of you, listen up!!
I have a great story for you to read and contemplate...

Yo, Dr. getting this?

I raised the question a few days ago whether selling medical care should be a profit-making enterprise or not. It seems to me that every dollar of profit paid out to shareholders is just another dollar that ultimately has to be added to the bill for health care delivery. Maybe I'm missing something, but the money has to come from somewhere.

Oh, and what about the money paid out to the thousands of people who work in tall buildings that are not hospitals or clinics? I'm thinking about insurance companies...What about the sales staff, the actuaries (wonder how their compansation stacks up with that of doctors?) and MBAs whose jobs have more to do with "managing" health care than delivering it? Where does all that revenue come from? Managing, by the way, includes deselecting whole populations of individuals considered "uninsurable" thanks to chronic (read "pre-existing") medical conditions or those covered by a competitor. (Think car crashes, where one company subrogates a claim to another company, or someone covered by a government plan...Medicare, for example, or welfare.)

Could it be medical bills, maybe?
Hello. Could it be coming from anyplace else?

Take a look at this story from Bloomberg and ask yourself: Where does one individual boss get off receiving "bonus" money that runs into millions because he did such an outstanding job swelling corporate profits when every crying dime of that money had to be derived from one source: your medical bill?

UnitedHealth, the largest U.S. insurer, is among at least 200 companies that have disclosed internal or federal probes of backdating, the practice of setting dates for stock options to magnify their value. McGuire was forced to resign as chairman and CEO of UnitedHealth in October 2006 after an independent law firm found evidence he participated in backdating. At one point, his vested shares were valued at $1.6 billion.

"The recovery of more than $920 million is an extraordinary event,'' said plaintiffs' attorney Chad Johnson in an e-mailed statement. "This result sends a clear message to corporate executives everywhere -- that if you abuse your position for personal gain at the expense of the shareholders, you will be held accountable by institutional investors.''

If approved by a court, the settlement with the pension funds would be the largest ever in a "derivative'' suit, in which investors seek reimbursement on behalf of a company, according to data compiled by Bloomberg.

This is the tip of a very big iceberg. I don't have the patience to read the details. Every few paragraphs I can't shake the nagging question that eats at my gut: Where in hell does all this money come from? Maybe somebody can set me straight. Maybe one of my readers can leave a comment and say, Hey, Hoots, chill out. That's not as much money as it seems. After all, they are in the business of seeing to it that the world's best health care delivery system remains well-run and performs at peak efficiency. Just think how much worse it might be if the government got into it.

If you have the stomach for it, go read
this post from the Health Care Renewal blog. I have been following it for several weeks now and the blogmaster is doing a workmanlike job, staying on task without going crazy.

It is remarkable that McGuire had to return so much money. How much of a fortune he still holds due to his tenure as leader of UnitedHealth is unclear. At one time, his stock option holdings were valued at a stratospheric $1.78 billion. Having to pay back some ill-gotten gains may serve as a minor deterrent to abuse by corporate health care leaders, although the prospect of still walking away with many millions may lessen this deterrent effect. Given that many miasmanagers of health care organizations walked away with no negative consequences whatsoever in the past, this settlement may mark some slight degree of progress.

I have nothing but admiration for some of the bloggers on my list. With the patience of a nurse in a psych ward, they go to their keyboards with calm professionalism, carefully and quietly spinning out piles and piles of compelling details with the hope that some day, somehow, their efforts will be read and appreciated by the right people.

1 comment:

vietnamcatfish said...

I thought for sure you would have a "Pearl Harbor" story today, but you fooled me.

A compelling question. Ponder is the key word here.

Give me a few days or weeks. v.c.