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.
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.
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
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.