It’s Going To Be A Bumpy Ride

In the face of membership declining by an estimated 800,000 for 2008, the Dow Jones Newswires reported Tuesday that United Healthcare is cutting operating costs, capital spending and headcount to focus on a more regional structure.  The headcount cuts are expected to be as high as 4,000. These cuts are due to be largely focused on IT and clinical operations. But wait – isn’t that where UHC’s core competencies lie, in IT and clinical operations? It certainly doesn’t lie with customer service and innovative provider partnerships.

For physicians, this could be good news, but only if it leads to more efficient processes as well. Less resources to manage high cost administrative tasks like referrals and preauthorizations could mean that United will soon modify those practices, thus alleviating some administrative burden (and cost) from providers. However, if its management history is anything to go by, that’s not likely to happen soon. This is further supported by decisions being made today – cut staff and you lose talent, at precisely a time when UHC needs to compete on service and market presence. It would appear that Wall St comes before all else, and this kind of blinkered thinking may very well be how UHC got to this point in the first place.

While the article goes on to report that the CEO, Stephen Hemsley,  says ‘increased benefit buydowns and continued trends of customers migrating to lower-priced plans’ is to blame for the lack of members, he says nothing about its own role in creating an environment where declining membership HAS to be the natural outcome – pricing products beyond the reach of many means fewer people can afford them. Price hikes can only go so high before people begin to forego the product.  Conversely, with fewer members, there are less premium dollars to go ’round, which in turn is bound to affect its Medical Cost Ratios. Unfortunately, this will simply look like medical costs trending ever higher, which isn’t necessarily the case, further bolstering increases to premiums. Except it would appear that the market has finally reached its limit on price. Amen.

Therefore, despite Wellpoint CEO Angela Braly’s assertions that they ‘will not sacrifice profitability for membership’ it looks like United is on the brink of having to do exactly that. I, for one, am looking forward to seeing premium prices come down. 

But the bigger question remains, will United be smart enough to stop dancing to the tune of Wall St and really hunker down and do the work it should have been doing all along, namely, managing the numbers by being an innovative, efficient company rather than just being a profiteer at the expense of employers and providers.  Slashing talent won’t make them a better company, it will only help them meet the next round of numbers. And so the cycle continues . . .

Once the lift from United’s slash-and-burn deflates, you can be sure it will turn to physician reimbursement next unless it figures out in the meantime that the way to ensure sustained profitability – albeit lower than its record-breaking history – is to partner with its stakeholders and get the unnecessary (administrative) costs out of the equation first.

The first glimmer of hope that UHC may be coming to its senses and looking at managing the company rather than the numbers is the fact that its new strategy is focused on ‘balancing the company more in favor of a regional business model’. After years of heavy-handed tactics with newly acquired regional companies to comply with UHC’s one-size-fits-all national uber-structure, this is a big departure from business-as-usual.

Regardless of how it all turns out, hold on to your hats. It’s going to be a bumpy ride.

Medical society unable to rank top local health insurers, saying ‘they all came in last’

Harris County Medical Society released its first “Payor Survey,” in which 487 local health professionals rated the six largest insurance companies in the region on care, payment and customer service. Except, they couldn’t actually rank them because they all came in at “the cellar level”.  The insurance companies rated are Aetna, Blue Cross Blue Shield of Texas, Cigna, Humana, UniCare and United Healthcare.

About 500 members of the Harris County Medical Society responded to a survey on the top six health insurers in the Houston area. Some results:

70 percent said insurance companies had denied claims for medically necessary procedures.

66 percent said they had trouble getting insurance company preauthorization for scans and other imaging.

83 percent said the red tape and delayed payments involving insurance companies require them to have at least one employee per doctor to deal with filing and billing issues.

Read the full story here.

I applaud Harris County for its efforts, and for helping to force a dialogue where there previously has been none. In response to their efforts, most Payors have responded one way or another. Cigna cites its improvement in the denial category as evidenced in AthenaHealth’s Payor View rankings (see Physicians Practice article here) and points to its use of physician focus groups as a way of showing engagement with the issues.

United could take a leaf out of Cigna’s book. The WSJ reported Wednesday that ‘Bad Service Cost UnitedHealth 315,000 Customers’. The CEO, Mr. Hemsley, admits that UHC is the ‘industry’s worst’ at resolving billing issues with providers.  While it is refreshing to hear admissions of this nature, where is the game plan for remediation?

Perhaps as more provider-perspective rankings are made available, these issues may finally be adequately confronted. The quarterly Verden report – available late January 2008 – ranks insurers on data generated from the Verden Alert subscription service, which tracks policy and procedure changes issued by 160 companies nationally.

You’ll hear about it here first!

Ranking Systems Shift Gears

Empire Blue Cross Blue Shield, today agreed to adopt a doctor ranking program that takes into account factors other than cost. Empire is the third insurer to agree to new physician ranking guidelines established by state Attorney General Andrew Cuomo. It’s parent WellPoint Inc. said it will apply the new guidelines to its existing ranking programs in other parts of the country.

As part of these agreements, insurers need to hire an oversight monitor, known as a ratings examiner, to evaluate compliance with the system, and who will meet with Mr. Cuomo every six months to review compiled information.

In October, Cigna HealthCare of New York said it would adapt its ranking system to the new guidelines and yesterday, Aetna, the state’s third-largest insurer, said it would also change its rankings to fit within the new regulations.

This is good news and a large step in the right direction for reasonable and meaningful ranking programs in the future.

Update 11/20/2007

NEW YORK, Nov 20 (Reuters) – The New York attorney general said on Tuesday that UnitedHealth Group Inc has become the latest health insurer to adopt his model for a physician ranking program.