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HEALTH PLANS: WellCare killing healthcare? With help?

There’s been enough bad behavior in Medicare private health plans to go around, but some of the worst behavior has come from private FFS plans, and some of the worst behavior of all has come from WellCare, a Medicaid and Medicare plan in Florida. Last Wednesday the FBI raided Wellcare, with allegations of fraud and presumably a qui tam suit in the works. And since then the stock is down some 70%.

Just another story of another private organization pushed by Wall Street to over plunder Medicare? After all I’ve been writing about why Wall Street Hates Healthcare Services But Doesn’t Know It for years. (Apparently George Soros, who, despite his liberal foreign policy leanings, isn’t above making the odd buck or two, made out like a bandit from Wellcare).

Well almost, but then there’s one little wrinkle.

Because there are also others apart from the single-payer advocates who don’t like health plans. In fact one prominent consumer advocate from her lofty ivory tower has proclaimed health insurers as one of those who’ve been “killing” healthcare.

Who killed healthcare?

Regina E. HerzlingerPosted 09/07/2007 (Medscape)

We turn over $2.2 trillion of our money each year to those who manage our healthcare, without holding them accountable for efficiency or quality. Not surprisingly, these folks — hospitals, insurers, governments — they use the money to benefit themselves. Jack Morgan, the insured, middle-class protagonist in Who Killed Health Care? was killed by this system.

Insurers, hospitals, and governments have gotten fat on our bloated healthcare costs, which kill the competitiveness of US firms.

<SNIP>

That’s my opinion. I’m Professor Regina Herzlinger of the Harvard Business School.

But funnily enough, there must have been something different between WellCare and those other “insurers” that were “getting fat on our bloated healthcare costs”. Different enough that Regina Herzlinger allowed herself to be appointed to the WellCare board in 2003.

Dr. Herzlinger said, “WellCare is a case study of a successful
public-private partnership, and a model for delivering quality
affordable healthcare. Over the years to come, companies like WellCare
that reach out to members with information, wellness planning and
screenings will be agents of change in the delivery of managed care
under government programs.”

So let’s guess what’s happened since then. Was she able to predict the future? The WSJ HealthBlog reports that (in what are of course claimed to be “regularly scheduled sales”):

Since July, CEO Todd Farha has sold $8.8 million worth of stock,
general counsel Thaddeus Bereday has sold $4.2 million and CFO Paul
Behrens has sold $2.1 million, according to figures from Thomson
Financial cited by the WSJ. Regina Herzlinger, who serves on the
company’s board of directors, sold $2.3 million worth of shares in
August.

Good to know that while the typical HBS Professors’ record of failure to understand incentives in
health care continues unabated, at the least the same cannot be said
about their understanding of incentives in personal finance.

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Ambulance NurseStanky Nubbinsregian e herzlingerLauramatt Recent comment authors
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Ambulance Nurse
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For me it’s hard to believe that money required for the area of health services can be stolen by anyone. I can’t even imagine how people can do so.

Stanky Nubbins
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Stanky Nubbins

The irony of the entire Wellcare situation is that it was originally identified, conceptually sold and brokered as part of a broader national Medicaid HMO roll-up play. The goal: drive efficiencies into government healthcare programs through consolidation and by eliminating administrative and technological redundancies and waste. Not only only did they hire a perennial industry loser without a successful track record to run the place they cashed out prior to making any real impact in the HMO marketplace. To top it all off…they screwed the family member that made it all possible for them!!!

regian e herzlinger
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regian e herzlinger

Ian Morrison ‘s Institute for the Future book, Healthcare In The New Millenium, was thought ,by some, to have substantial similarities with my book, Market-Driven Health Care. Ian Morrison graciously acknowledged that although he had read my book ,there were no similarities. Fair enough–let the reader judge. But ,Matthew Holt , who was some sort health care researcher at the Institute for The Future, has learned neither Ian’s work habits nor his graciousness. Holt, a health care blogger, also offers his services for “quick and dirty “ consulting jobs . In his ill-informed blog on my newest book, Who Killed… Read more »

Laura
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Laura

The reason is that Wall Street can’t understand the “business” of healthcare is because health care doesn’t operate the way most businesses do. A cell-phone company, for instance, makes several different models of cellphone. The basic does what a phone should do—dials and receives calls—and not much else. It’s often free with a new service contract. The next model up has a few bells and whistles—literally—and can maybe take pictures. It isn’t free, but it doesn’t cost much. The high-end model surfs the Web, works with personal and workplace email, allows for custom ringtones and also works as a walkie-talkie.… Read more »

matt
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matt

According to Forbes, Humana might be next:
“Now Thomas Carroll, the health services analyst at Stifel Nicolaus, said rumors were circulating that Humana (nyse: HUM – news – people ) may be the subject of a similar investigation.”
http://www.forbes.com/2007/10/26/amerigroup-health-schip-markets-equity-cx_ra_1026markets32.html?partner=yahootix