Commentary on medical news by a practicing physician.
Wednesday, April 19, 2006
Nice Work, If You Can Get It: Where the insurance premiums go. I'm sure that's a small fraction of United Healthcare's yearly revenues, but good golly that's a lot of money.
It isn't a large proportion of UnitedHealth's profits, but it does seem to suggest that the priority is more on enriching McGuire than on fulfilling the company's stated mission of providing affordable health care. For moree, see the Health Care Renewal take on this: http://hcrenewal.blogspot.com/2006/04/us-health-insurance-more-market.html/
I think the idea was not so much "enriching" Dr. McGuire as keeping him at United. I also think that United's Board grossly overestimated how many stock options that would take.
Keep in mind that Dr. McGuire's $2 million salary and $7 million bonus and incentive pay is not terribly out of line for a company of this size, especially when one considers the success of the company during Dr. McGuire's tenure. That success increased the value of the stock, which "enriched" all the stockholders, not just Dr. McGuire.
So I keep coming back to the options. Did United "backdate" the option grants? If so, that could have cost United something significant. Normally stock options cost a company relatively little. So if United is found to have backdated the options then they will face much more serious problems with their stockholders as well as the public and, perhaps, the law. Amazingly enough, the practice of backdating options may not have been illegal in the past. Nevertheless the Minnesota A.G. has filed suit to determine what has been going on - and alleging that the stockholders were in fact damaged by the company's option grants to McGuire.
It isn't a large proportion of UnitedHealth's profits, but it does seem to suggest that the priority is more on enriching McGuire than on fulfilling the company's stated mission of providing affordable health care. For moree, see the Health Care Renewal take on this:
ReplyDeletehttp://hcrenewal.blogspot.com/2006/04/us-health-insurance-more-market.html/
I think the idea was not so much "enriching" Dr. McGuire as keeping him at United. I also think that United's Board grossly overestimated how many stock options that would take.
ReplyDeleteKeep in mind that Dr. McGuire's $2 million salary and $7 million bonus and incentive pay is not terribly out of line for a company of this size, especially when one considers the success of the company during Dr. McGuire's tenure. That success increased the value of the stock, which "enriched" all the stockholders, not just Dr. McGuire.
So I keep coming back to the options. Did United "backdate" the option grants? If so, that could have cost United something significant. Normally stock options cost a company relatively little. So if United is found to have backdated the options then they will face much more serious problems with their stockholders as well as the public and, perhaps, the law. Amazingly enough, the practice of backdating options may not have been illegal in the past. Nevertheless the Minnesota A.G. has filed suit to determine what has been going on - and alleging that the stockholders were in fact damaged by the company's option grants to McGuire.
John Fembup