Wednesday, January 10, 2007

On the Performance on the Ground of One Supposedly "Brilliant" CEO's Company

One of our blogging colleagues, as we summarized in the Health Wonk Review, discussed differences in perceptions about pharmaceutical companies among their executives and the public at large. There also seem to be some differences in perceptions about for-profit managed care organizations as well.

Take UnitedHealth Group, (please.) We had posted about the gushing support its former CEO, Dr William McGuire, got from the board of directors who was supposed to be supervising him. In particular, we quoted the following from a Wall Street Journal article, "'We're so lucky to have Bill,' says Mary Mundinger, a UnitedHealth director who sits on the company's compensation committee. 'He's brilliant.' She says his income gives him extra credibility in health-policy debates because it shows his success. 'He needs to be compensated appropriately so that his business model has believability in the market,' says Ms. Mundinger, who is dean of the nursing school at Columbia University."

Later, the Pioneer Press reported about how Ms Mundinger's role on the UnitedHealth board might have conflicted with her role as Professor and Dean of Nursing at Columbia University. (See post here.) And later still, or course, the "brilliant" CEO Dr McGuire was forced to resign because of a scandal involving the back-dating of the over one billion dollars worth of stock options he had received from the company. (See post here.)

Now, it turns out, as per a report from AP (via the Fort Worth Star-Telegram), that the management of UnitedHealth while Dr McGuire was in command was not perceived as so "brilliant" by state regulators. There have been particular issues in Nebraska, as we have posted before.

UnitedHealthCare Group violated 18 Nebraska insurance laws hundreds of times during a review period, state insurance regulators say.

In a Nebraska Insurance Department petition, the department said UnitedHealthCare had more than 800 violations, mostly for its handling of claims, from July 1, 2003, through June 30, 2004.

UnitedHealthCare spokesman Gary Thompson said the company was taking the complaints seriously and has seen a decline in them.

'We have cooperated fully with regulatory agencies' examinations and reviews and consistently strive for effective solutions to improve service and monitor our own performance,' Thompson said.

Insurance Department attorney Ann Frohman said Monday that a surge of complaints prompted a department review starting in March 2003.

State examiners met with UnitedHealthCare officials, who said they would fix the problems, which persisted, the department said.

In 2005, UnitedHealthCare agreed to settle claims complaints by paying fines of $62,500 and $10,000.

Complaints continued last year, the department said, about claims for chiropractic treatments, mental health, newborn baby care, gastric bypasses and other medical procedures.

Among the company's failures, as cited by the department, were decision delays, wrong decisions about coverage and bad information given to consumers.

The department also said UnitedHealthCare didn't turn over accurate or timely information to the state, didn't have an adequate network of emergency services or mental health and substance abuse treatment in rural areas and didn't provide current lists of its care providers.
While some health care CEOs may be viewed as "brilliant" by their admirers on their companies' boards, the performance of their companies on the ground may often be far short of "brilliant."

Health care organizations would benefit from leadership that is not so insulated from the realities of the world.

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