UnitedHealth Group: A case example of the problem with for-profit health care

A few weeks before Thanksgiving, my husband, a hospice social worker, was told that his hours were being cut back from full to part-time. The explanation given to him, a six-year employee with solid performance reviews, was that the hospice’s census had declined and could no longer support a full-time bereavement counselor. The fact that my husband had taken on an extra caseload of individual hospice patients and families (on top of his bereavement duties) didn’t seem to register with his new bosses.

It was only after reading this recent article that I understood the real reason behind the reduction in pay foisted on my husband and another social worker at the same hospice. They worked for a subsidiary of the for-profit health care company, UnitedHealth Group, whose CEO has the highest CEO-to-worker pay ratio of any Fortune 50 company in the United States. According to the Minneapolis Business Journal, Stephen Hemsley made 1731 times what the typical UnitedHealth worker made last year, or $1731 for every dollar they made. Hemsley was paid nearly $102 million last year, while the median annual pay among the company’s 80,000 employees was $58,700, according to a survey done by PayScale.com.

That salient fact may also explain why UnitedHealth Group went after my husband, essentially forcing him to look for another job. As a seasoned social worker, he was earning well more than the median income most UnitedHealth nurses and social workers make. And he was not the only “over-paid” UHG employee to feel the heat. A colleague of his at the same hospice who was also earning more than the median income was made to feel so uncomfortable that she read the tea leaves and found another job before the axe fell on her as well.

Now, there’s no question that in the current economic environment, hospices, along with nursing home facilities and home health care services, face a challenging future. Even though hospice and palliative care for dying people is much less expensive than the end-of-life care routinely given to terminally ill patients in hospitals, the federal Centers for Medicare and Medicaid Services (CMS) are implementing drastic cuts in hospice reimbursement, which will amount to about $12 billion in total cuts to the hospice industry over the next few years, according to the National Association for Home Care and Hospice. So both non-profit and for-profit hospices have reason to worry about their bottom lines.

But why take those cuts out of the hides of the nurses and social workers on the front lines of hospice care every day? Why not do something about the exorbitant pay for top executives at for-profit health companies? I don’t care how successful UnitedHealth Group is on Wall Street; there is no reason why its CEO should be earning $102 million a year when its front-line workers are being put out of work. And indeed, one article I read in the Hospice Management Advisor, (a subscription-only journal), cautioned hospices not to lay off or reduce the hours of its caregivers because that hurts the morale of the entire organization and prompts other employees to seek employment elsewhere (which is exactly what’s happening at my husband’s former hospice).

To me, this case illustrates the fundamental problem with for-profit health care. In hospice (as in all of health care), the needs of patients and their families should be the first priority. But in for-profit companies, the first priority is creating wealth for top executives (like Stephen Hemsley) and its shareholders, and when that results in lay-offs and pay reductions for front-line workers, continuity of care is disrupted and patients and their families suffer. My husband was lucky enough to find another full-time job fairly quickly, but the patients and families at his former hospice lost a compassionate caregiver days before the holidays. That’s no way to run a hospice.

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6 Responses to UnitedHealth Group: A case example of the problem with for-profit health care

  1. Randall says:

    Alison you are a hero to me. Like your spouse, I am a clinical social worker. Medicare has cut our program, for persistently mentally ill, by draconian measures just in the past year. But Alison, aren’t most doctors/health care professionals “for profit” anyway? The amount executives make are obscene; but execs at non-profits make pretty obscene amounts themselves. What is the answer to this? Or is there one?

    • Alison Bass says:

      You’re right — under our current fee for service system, doctors have an incentive to do unnecessary procedures so they can make more money. That’s why we need to change our health care system and pay doctors according to other metrics — such as the quality of care received — or just pay them salaries, as other developed nations do.

      As for salaries in the for-profit vs nonprofit sector, I think you’ll find that executives of for-profit companies make far more on average than those in the nonprofit sector. Most developed nations (like France and England) do not allow for-profit medicine — why should we?

  2. In my humble opinion, the ability of top managers to put their self-interest first when running their organizations now appears to be THE fundamental reason behind the dysfunction of our health care system, and indeed, of our economy.

    The humungous compensation of UnitedHealth CEOs is actually an old story. See the summary here on Health Care Renewal:
    http://hcrenewal.blogspot.com/2011/10/exporting-us-health-ecosystem-and-its.html
    See more on United’s sorry track record here:
    http://hcrenewal.blogspot.com/search/label/UnitedHealth

    Hemsley got over $100 million in 2009. The previous CEO was allowed to retire after it was discovered that he was collecting the proceeds from back-dated stock options. At one point he was worth more than $1 billion. Although he had to pay back some money, he was left with hundreds of millions.

    We have discussed the outrageous compensation given to the top leaders of many types of health care organizations:
    http://hcrenewal.blogspot.com/search/label/executive%20compensation

    Today we posted about a non-profit hospital system executive who got more than $10 million, to lead an organization that is supposed to provide charity, and solicits donations from the public.

    If the 99 percenters in health care do not get together to solve this problem, things will only get worse.

    PS – Some physicians do make a lot of money, occasionally beyond $1 million a year, from doing procedures. What they are paid for these procedures also has been rigged by an amazing example of regulatory capture, look here:
    http://hcrenewal.blogspot.com/search/label/RUC
    Our attempts to publicize this problem and generate interest in a solution so far have not had much effect.

  3. Pingback: Daily Rounds: Facing Breast Cancer Together; For-Profit Hospice Cuts; Maine … | Cancer Kick

  4. Vik says:

    I worked as a call center employee for United Healthcare for 8.5 years and finally had to call it quits last year because the pressure was too great. During this time the company went from 10 seconds between calls to 7 seconds. The employees were constantly besieged by emails on how to do things better, and up learning on new procedures was done at the speed of light without time to digest information. Our raises were being based on several factors including the customer survey at the end of the call. If that customer hated their medical plan and vented, we were counted responsible for that and it affected our scores and subsequently our raises of bids for scheduled vacation time off.
    The next installment was to retrain everyone and call them “Health Advisers” which essentially meant more work and responsibility for the same pay. I could go on. But the essence of all of this is that employees are becoming “more productive” but not being paid more. Customers are being railroaded off the calls as fast as can be done. And front line employees are in a sweatshop situation.

  5. tina says:

    I am sorry I do not agree with any of this. Health insurance was started by the govt. If the govt had not put their nose where it does not belong we would have no private insurance. But the govt many years ago capped the salaries that all business could pay someone. So in order to compete for employees as a business you had to be inventive. So XYZ employer said hey come work for me and I will pay your doctor visits. This was back when the doc had the black bag coming to your home. Then employer ABC said wait a minute, I will pay for yours and your family. Thus health insurance was born and then followed vacation and sick time and all the other things. Anytime govt gets involved things end up a complete and utter mess. Any law created costs insurance companies millions. HIPPA cost 1 insurer 14 million to become compliant. healthcare reform has cost this same insurer up to now 22 million. You think that grows on a tree in the CEO’s backyard? Oh wait the CEO should take a paycut thats right. I forgot we do not live in America where you make your own success and if you are successful OMG we have to punish you. I make lots of money. Lots. Because I educated myself and worked my A$$ off to do so. I am not rich but am above the $110k when related to tax and now I am going to be punished because I opted to be successful. my money goes to pay for people that sit on their A$$ popping out more babies. Now, elderly is one thing. My parents worked hard and their money should not be taken away. But the generation beneath me is nothing but lazy people that want to milk me like i am some cow and people like you are allowing it. you want to punish corporations and the rich which is truly sad cuz i will tell you the rich are going to say screw this and move more and more jobs overseas as well as themselves and then we will have no one left to tax in order to keep this country going cuz it will be only fully of entitlement recipients and when there is no one to tax there is no money people. you cannot get blood from a turnip. so keep on putting the fire to the feet of all organizations you don’t agree with. see how much longer this country will survive while you are doing it. i find people that say what you all say are just jealous or the successful and rich cuz you know what…………..you would if you could. if you were the CEO of a multimillion dollar health co u cannot tell me you would be taking a paycut in order to help society. Bull. that is just like an honest politician. does not exist and never will. we are all greedy and want money dont care how noble we pretend to be. in the end we all would if we could and those of u that complain about the that’s not fair and just jealous cuz you are not making that bigwigs money.

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