Friday, August 13, 2010

Being a Health Insurance Executive Means Never Being Able to Say You Are Sorry

WellPoint, the largest US for-profit health care insurance company, has provided a steady stream of examples of poor management and bad behavior for the edification of Health Care Renewal readers.  Most recently, a company whose core functions include reliably and confidentially managing electronic data on policy-holders allowed what should have been private data from nearly half a million people to appear on-line (see post here.  For other examples, look here.)

This week, the Los Angeles Times recounted what happened to a highly placed WellPoint executive who tried to improve the company's behavior. 
Leslie Margolin was the public face of Anthem this year when it sought to raise individual insurance rates as much as 39%. The move triggered a backlash in Washington and Sacramento, where lawmakers accused Margolin and her corporate bosses at insurance giant WellPoint Inc. of trying to gouge unknowing policyholders.

Margolin, 55, generated headlines statewide when she was called to testify before angry lawmakers in the state capital. With television cameras rolling, the hearing's chairman stared her down and asked bluntly: 'Have you no shame?'

Now, speaking publicly for the first time since her departure, Margolin says she had been chagrined over the rate hikes for the last year and had worked internally to get Indianapolis-based WellPoint to rescind them or scale them back, and to apologize.

'I thought the rates were too high,' she said. 'I thought the impact on our membership was too significant.'

Margolin did not object to the rates in her Sacramento testimony this February. But in the months that followed, she repeatedly voiced her objections to WellPoint and in appearances outside the company, remarks that went largely unnoticed by the public.

In a March talk at Pepperdine University's business school, for instance, she told a gathering of students and business leaders that she wasn't responsible for rate increases she believed were ill-timed and ill-advised.

'We have impacted individual consumers in ways that were so significant for those individuals,' she said. 'And for that, I personally feel very, very sorry.'

As she made the Pepperdine appearance and others, Margolin said, she privately pressed WellPoint to abandon the company's get-tough approach to longtime adversaries — doctors and hospitals — and instead collaborate as part of a new 'healthcare transformation strategy' to cut costs and improve patient safety and the quality of care.

So what happened to Ms Margolin? Did she get a big raise and an award for doing the right thing? Is the moon made of green cheese?

In fact, here is what happens to a health insurance executive who says she is sorry for excessively high insurance rates:
Last month, WellPoint replaced her. At the time, Margolin said her departure was a mutual decision. Interviews with company insiders, insurance industry leaders and others familiar with the situation now make clear that she was pushed out.

'Her undoing was that she rocked the boat and wanted to do things a different way,' said one person familiar with the events who declined to be identified for fear of retribution. 'She wasn't a good corporate soldier.'

Margolin herself spoke cautiously about her resignation, but said: 'There is no question I needed to leave.'

In fact, her exit was quite inglorious:
Margolin vividly recalls her last day. Even though her Anthem team was exceeding its financial goals and membership numbers, she said, she was ushered from the doors of Anthem's Woodland Hills headquarters. She didn't have a chance to send a farewell message to her 400 employees.
So it seems that being a top health insurance corporate executive means never admitting a mistake, and never, ever saying you are sorry.

In contrast, in the 2009 WellPoint Annual Report, CEO Angela Braly boasted:
As you can see throughout this report, we’re focused on making health benefits more affordable, improving access to care, and simplifying interactions with the delivery system. We believe that we have to favorably impact the value equation in health care while improving the experience of members, doctors, and employers.

So presumably at WellPoint, "making health benefits more affordable" means raising premiums 39%.  As we mentioned earlier this year, for this and other bits of legerdemain, Angela Braly's 2009 compensation increased 51 percent to $13.1 million. This seems more like pay for propaganda than pay for performance.

In a post in the Dismounting Our Tiger blog, Edwin Lee addressed the origins of the BP oil spill by noting how most big corporations have come to promote leaders distinguished mainly for their careerism, tribal attitude, and disinclination to question received wisdom.  He wrote that the result was promoting "mediocre, short term thinkers with similar work experiences, outlooks, temperaments and personal incentives. Disaster response, creative thinking and fundamental changes are outside their limited range of interests or competencies."  Thus we can expect that at some point, WellPoint, and many similarly lead health care organizations, will create their own disasters.  We can only hope that our health care system survives them.

Meanwhile, kudos to Ms Margolin for trying to put the interests of policy-holders and the public ahead of following the company line.  If only more such people were able to lead health care organizations rather than being unceremoniously fired, we might have a fighting chance to have health care that really is high quality, affordable, and accessible.   

PS - For those old enough to have been forced to watch Love Story, the original quote was "love means never having to say you're sorry."


Anonymous said...

What we are seeing is in the drive to expand markets and increase profits, insurance companies are going into the data services business, as pointed out in the August 9, 2010 WSJ article, Doctors Get Dose of Technology From Insurers.

The opening of the article highlights the drive for financial gain:

“The lure: the estimated 80% of U.S. physicians and 90% of hospitals whose records are still on paper and the $27 billion in federal stimulus money available …”

Simply put, the opportunities for financial gain are tremendous, while delivering a quality product can be open to debate. The hook is doctors are already dealing with the insurance companies and often have specific software to handle claims.

“Wellpoint Inc., meanwhile, plans to help rural hospitals finance health-IT infrastructure …

Wellpoint says it has no plans to tie its billing system into whatever health records the hospital buy.”

And there we have the rub. Insurance companies will have access to both billing and patient records. While the claim will be to provide better cost and pricing the reality is the information can be used, as it has in California, to retroactively deny claims.

While many would point and say this is not possible we need to look at the August 12, 2010 WSJ article Ex-Brokers May Keep Bonuses. The article outlines how two brokers were allowed to keep signing bonuses even after it was found that they had committed fraud.

With the large number of financial executives populating the executive suits of all areas of medicine it is not hard to imagine this mentality pervading the board rooms and manager meetings. Win at all cost, and the only crime is getting caught.

And what is the cost? Substantial.

Fears over £65bn 'NHS mortgage'
12 August 10 20:22 ET

By Nick Triggle
Health reporter, BBC News

The NHS in England faces a total bill of £65bn for new hospitals built under the private finance initiative (PFI), figures obtained by the BBC indicate.

The so-called "NHS mortgage" means that for some trusts annual repayments take up more than 10% of their turnover.

Economists said the fees, which rise each year, would make it harder to achieve savings while doctors said they would mean less money for patient care.”

All the while:

“While the NHS budget is being protected, the health service has still been told to find up to £20bn of savings by 2014 to help it cope with pressures from the ageing population, the rising price of drugs and lifestyle changes such as obesity.”

Who benefits from this, mostly the financial companies. Claims are made that maintance and other cost included will provide money for value. The problem becomes that the NHS is relying on the actions of companies in the future, while the payments are guaranteed.

Once again the goal is to feed the monster. Patient care and doctor satisfaction are not even considered in the drive for financial gain.

Steve Lucas

Jhon smith said...

With the large number of financial executives populating the executive suits of all areas of medicine it is not hard to imagine this mentality pervading the board rooms and manager meetings. Win at all cost, and the only crime is getting caught.

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