UnitedHealth Settles - The .005% Fine
UnitedHealth Group, the company doctors love to hate, rolled over in the lawsuit brought by 36 states for the insurer's claims processing practices, or lack thereof.
In the settlement, UnitedHealth will be pay $20 million to the 36 states. They will also start a three-year "process improvement" plan of quarterly reports and annual benchmarks to cut down on claims-payment errors, help speed payments and better field complaints. If the process improvement plan requirements aren't met, the managed care giant could pay up to $20 million more in fines.
In 2006, UnitedHealth made $4 billion in profit. I'm sure they'll feel the pain of that $20 million.
United We Stand, Together We Fall
After the oil companies, guess what is one of the most profitable companies in America? The answer is UnitedHealth, the biggest HMO in the country. The Wall Street Journal profiled UnitedHealth CEO Dr. William McGuire last month. It chronicled his talented management skills guiding the company to record performance.
The article also raised quite a stir over Dr. McGuire's uncannily timed stock option awards granted while the stock was down. Some may call this insider trading, some may call it just being lucky. After all, many people win the lottery multiple times.
As the country's largest HMO, UnitedHealth does throw its weight around. Many doctors complain about United's denied treatments, unpaid claims, unfair pay-for-performance practices and hardball contract negotiations. Ask Robert Seligson, president of the North Carolina Medical Society, who mildly characterized UnitedHealth's behaviour as "demonstrating the unrestrained greed and arrogance of an organization that has systematically undermined the very health-care system that provides the basis for its wealth." Seligson's state has joined 17 others in a class action lawsuit against UnitedHealth.
On the other hand, many claim the efforts of UnitedHealth and their ilk have helped rein in rising healthcare costs. This is likely so, but at what cost?
In purely economic terms, Dr. McGuire's track record and company performance justify his compensation by the standards of Wall Street. The standards of Wall Street are often whacked to begin with, which is why this justification holds so little water to non-millionaires. It's too bad such overwhelming profits can't be made without angering the medical establishment.
Healthcare is a much more complicated issue than oil. It engenders high emotions from many stakeholders, most of whom probably don't own UnitedHealth stock. Media love to attack the exceptions -- rarely do the everyday stories of care delivered by in-network docs paid for by health plans make the headlines.
Until someone implements a better healthcare system, managed care organizations are a necessary evil (or good). Regardless of how the healthcare system evolves, the HMOs of the future will profit and take arrows for it.
Posted by Shawn Whalen on September 10, 2007 at 12:55 PM
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