Uncategorized

POLICY: Do No Evil, Part II.

Here’s my editorial in today’s issue of FH.

This week saw more controversy regarding some of the bad boys of healthcare past
and strong hints that some of the healthcare market stars of the present may
have adopted their bad habits. Criminal investigations into United HealthGroup
and ACS are now following The Wall Street Journal story about their
stock option pricing and Bill McGuire’s huge fortune. Now Caremark has been
subpoenaed, too. Those of you with very long memories may remember Caremark in a
previous life getting into legal trouble as a home infusion operation in the
1980s and being a financial disaster as a physician group roll-up in the
1990s.

Meanwhile, Tenet accepts a death penalty on one hospital and is still
struggling to get out from the malfeasance and its appalling, if not outright
criminal behavior, in Redding, CA, and probably elsewhere. Not that this is the
first time that appalling criminal behavior has been seen from that company,
although it was called NME back when it was kidnapping children into its
psychiatric hospitals.

We won’t do more than mention the name HealthSouth. While they’ve been off
the news lately, it’s worth remembering that the other big hospital chain, HCA,
has paid two of the biggest fines ever for defrauding Medicare, and that the
Senate majority leader’s brother, who happened to be the chairman, had an SEC
investigation mysteriously end in 2002.

So it’s worth asking the question again. Is it just a few bad apples? Or is
the pressure for stock growth from Wall Street incompatible with running a
responsible healthcare company?

POL

Livongo’s Post Ad Banner 728*90

Categories: Uncategorized

Tagged as: ,

11
Leave a Reply

11 Comment threads
0 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
5 Comment authors
The Medical Blog NetworkMatt S.Barry CarolMarcPeter Recent comment authors
newest oldest most voted
The Medical Blog Network
Guest

In support of Kaiser

In a recent LA Times letter to the editor, a reader stated this concerning Kaisers attempt to open its own transplant facility.
I trusted Kaiser with Ruben’s [her husband] healthcare; I never once thought they [Kaiser] would put cost before patients’ liv

Matt S.
Guest
Matt S.

More transparency. Again. This is a business of, above all things, expectations.

Marc
Guest

At least we agree on something Barry!

Barry Carol
Guest
Barry Carol

If the goal is to provide healthcare to everyone while at least capping the cost at the current spending level of 16% of GDP, I also believe that taxpayer financing is the best approach. With the cost of family coverage in the more expensive metropolitan areas currently the equivalent of $5-$7 per hour (2,000 hour work year), it is too high a percentage of total compensation for any jobs that pay less than $25 or so for an employer mandate to be viable. Just how the necessary taxes are structured can be debated, but I suspect that common ground would… Read more »

Marc
Guest

Ok, then let’s compare return on assets. And just what assets do the health insurers have besides the lavish headquarters, so that the employees can sit around and decide how best to deny coverage to the people they insure. Healthcare is not a commodity like cars and computers. You can’t go to China, Korea, or anywhere else to compare prices for health care. You’re stuck in your own community As long as the US mandates universal healthcare, but doesn’t require everyone to contribute to the system, healthcare costs will continue to skyrocket out of control. Healthcare is no different than… Read more »

Barry Carol
Guest
Barry Carol

Marc, as I have pointed out in the past, profit margin on sales is not the correct way to compare the profitability of companies in different industries because of significant differences in capital intensity (ratio of sales to assets). Oil exploration, development and production is a far more capital intensive business than health insurance. Exxon’s free cash flow (after all of their reinvestment in exploration) is astronomical, and my profitability reference was to a complete economic cycle, not one year. In any case, both Exxon and United Health have done very well for their shareholders over time. For the record,… Read more »

Marc
Guest

I think the record shows that the insurance industry is a highly competitive business, and returns on capital over a complete economic cycle are not out of line with the average for corporations generally. Last year, Unitedhealth Group, had a profit margin of over 11% with an operating profit of $4 Billion. Contrast that to Exxon which had a profit margin of less than 9%. Admittedly operating profit was significantly higher because their sales are considerably higher. At least Exxon reinvests much of its profits into exploring for more oil. What exactly do the health insurance companies do with their… Read more »

Barry Carol
Guest
Barry Carol

I guess it’s time for someone to speak up on behalf of the private sector. Is the private sector perfect? Of course, not. However, I think the record shows that the insurance industry is a highly competitive business, and returns on capital over a complete economic cycle are not out of line with the average for corporations generally. Furthermore, if a given insurance company or other private sector provider does not satisfy enough customers enough of the time, it will eventually go out of business. I see that Medicare and Medicaid, whose reimbursement rates are even lower than those of… Read more »

Marc
Guest

My question is, why does this come as such a shock to anyone? As long as we support a health care system, that relies on health insurance companies, who through mergers and acquisitions, have transformed themselves into hugh oligopolies capable of forcing doctors and hospitals to provide care for ever decreasing reimbursement rates, while the health insurers report record profits, and lower payout ratios, what do you expect? And let’s not foget about the US government, which continues to reduce reimbursements for Medicare and Medicaid patients, for the sake of lower tax rates for the wealthy, while at the same… Read more »

Peter
Guest
Peter

Thanks for the posting Matt. Healthcare and profits just don’t mix.

Pat Salber
Guest

Way to go Matt. We need some “Woodward and Bernstein-like” coverage of misconduct in health care.