healthy4u: Blue Cross

"A Kind of Blackmail": A Not-for-Profit Health Insurance Company CEO's Salary So Large It "Had Broken the Law"

Here is another case in the annals of over-paid executives of not-for-profit health care organizations, this time <a href="http://www.burlingtonfreepress.com/article/20100603/NEWS02/100602054/Blue-Cross-and-Blue-Shield-of-Vermont-ordered-to-pay-3M">from the Burlington (VT) Free-Press</a>, <blockquote>Blue Cross and Blue Shield of Vermont overpaid its former chief executive officer by $3 million over an eight-year period and has been ordered to pay the money back to its subscribers by 2012 in the form of reduced premiums, a top state regulator said Wednesday. The action by the state Banking, Insurance, Securities and Health Care Administration Department follows last year’s disclosure that William Milnes, the nonprofit firm’s former CEO, received a $7.2 million payout when he stepped down in 2008.</blockquote> Furthermore, note that <blockquote>[Commissioner of the Banking, Insurance, Securities and Health Care Administration Department Paulette] Thabault said her department had concluded Blue Cross had broken the law by paying Milnes more money than necessary to perform his functions as head of the nonprofit health-benefits provider.</blockquote> The Department's review found obvious flaws in how Blue Cross Blue Shield set its former CEO's pay: <blockquote>The department’s review found that Milnes’ salary package while at Blue Cross was excessive, and in some years, he was paid more in bonuses than he received in base pay. In 2005, for example, Milnes was paid $425,000 in salary and $489,800 in bonuses. 'Other health insurance or managed care organizations of a similar size to the Vermont company compensate their chief executive officers at a level of about 45 percent to 50 percent less than the compensation levels set by the company for Mr. Milnes,' the department order said in part. The department said Blue Cross used a 'peer group' study to justify the pay it gave Milnes, but regulators concluded the study was flawed because it put Milnes’ position on the same level of chief executive officers of much larger Blue Cross sister companies. 'The peer group ... used in 2007 included 14 companies, all but one of which were substantially larger in terms of annual gross premiums,' the department’s order said. 'Nine of the 14 companies had gross premiums in excess of $1 billion.' Blue Cross gross premiums for 2007 were $590 million.</blockquote> This story is striking because it seems that the overpayment of a not-for-profit health care organization's executive this time seemed to rise to the level of crime. However, current Blue Cross leaders seemed unconcerned. <blockquote>'The company accepts the findings of the department, and it just wants to move on at this point,' [Blue Cross and Blue Shield spokesman Kevin] Goddard said.</blockquote>Somehow, whenever a health care organization's conduct is publicly revealed to be shameful, the response is not sorrow or apology, but let's just "move on." Moving on, of course, minimizes the accountability of those initially responsible for the bad behavior. Furthermore, do not expect corporate leadership to acknowledge anything wrong with how the pay for the top hired corporate executive was determined. <blockquote>Goddard said the company thought the peer group numbers it was using were sound. 'Our board used a comprehensive analysis to come up with a compensation package for Bill,' he said. 'We relied on what we thought was professional information.'</blockquote> One begins to feel a little sorry for the poor spokesman who is obligated to mouth these sorts of sentiments. Whether the analysis was rational, or the "professional information" was relevant or correct seems not to have bee anyone's concern. In addition, although Blue Cross and Blue Shield is now obligated to reimburse its policy-holders for former CEO Milnes' excessive pay, do not expect the money to come out of his pocket: <blockquote>None of the $3 million the company has to pay back will come from Milnes. Blue Cross asked Milnes, through his attorney, if he would give back some of the money but was rejected, according to documents in the case made public Wednesday. 'He has made it quite clear that Mr. Milnes is not willing to make a voluntary repayment of any portion of the Supplemental Executive Retirement Program distribution,' Christopher Gannon, a Blue Cross vice president, wrote in a letter to Thabault’s department Jan. 21.</blockquote> One would think that the current company management would be so upset about its new $3 million obligation, that it would aggressively try to recover the money from the person who benefited from it. However, it seems that all the current Blue Cross and Blue Shield management was willing to do was politely requesting that Mr Milnes return it. Suing a former CEO, of course, is just something that is not done. Perhaps it would be too disturbing to  the cozy atmosphere now prevailing among top executives and the boards of trustees who are supposed to be supervising them. This seems to make clear that no one at Blue Cross and Blue Shield ever really was responsible for what Mr Milnes was paid. As an <a href="http://www.rutlandherald.com/article/20100604/OPINION01/6040310/1038/OPINION01">editorial</a> in the Rutland Herald put it: <blockquote>On its face, it was an outrage. Blue Cross is a nonprofit corporation that insures about 150,000 Vermonters. That a nonprofit with a mission of providing health care coverage should be a source of extravagant personal profit was an affront to all Vermonters, including those struggling to pay escalating premiums, those struggling to find adequate care, or those with no coverage at all. The usual excuse from companies is that big money is necessary to attract big talent. It's a marketplace. But this excuse is really a kind of blackmail that allows corporate executives to collude in the inflation of their own worth.</blockquote> So the notion of the "imperial CEO" who can virtually set his or her own pay, unencumbered by any real accountability to a board of trustees who would dare not ruffle the imperial feathers has now been imported even into relatively small health care organizations in New England states once famed for their common-sense and frugality. So here we go again.... We have <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">discussed</a> numerous examples of compensation of health care organizations' leadership that seems orders of magnitude above that which would be rationally justified. These latest examples of the wealth being accumulated by leaders of supposedly mission-centered not-for-profit organizations are a product of the current management culture that has been infused into nearly every health care organization in the US. That culture holds that managers are different from you and me. They are entitled to a special share of other people's money. Because of their innate and self-evident brilliance, they are entitled to become rich. This entitlement exists even when the economy, or the financial performance of the specific organization prevents other people from making any economic progress. This entitlement exists even if those other people actually do the work, and ultimately provide the money that sustains the organization. Although the executives of not-for-profit health care organizations generally make far less than executives of for-profit health care corporations, collectively, hired managers of even not-for-profit health care organizations have become richer and richer at a time when most Americans, including many health professionals, and most primary care physicians, have seen their incomes stagnate or fall. They are less and less restrained by passive, if not crony boards, and more and more unaccountable. In a kind of multi-centric coup d'etat of the hired managers, they have become our new de facto aristocracy. Or as we wrote in our previous post, executive compensation in health care seems best described <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">as Prof Mintzberg described</a> compensation for finance CEOs, "All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit." As it did in finance, compensation madness is likely to keep the health care bubble inflating until it bursts, with the expected adverse consequences. Meanwhile, I say again, if health care reformers really care about improving access and controlling costs, they will have to have the courage to confront the powerful and self-interested leaders who benefit so well from their previously mission-driven organizations. It is time to reverse the coup d'etat of the hired managers.

"A Kind of Blackmail": A Not-for-Profit Health Insurance Company CEO's Salary So Large It "Had Broken the Law"

Here is another case in the annals of over-paid executives of not-for-profit health care organizations, this time from the Burlington (VT) Free-Press,Blue Cross and Blue Shield of Vermont overpaid its…

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08 Jun 2010

Paying CEOs of Health Care Not-For-Profit Organizations: "Greed is Good?"

Million dollar plus executives of not-for-profit health care insurance companies seem to be becoming a dime a dozen.  Late in April, Buffalo Business First <a href="http://buffalo.bizjournals.com/buffalo/stories/2010/05/03/story11.html?b=1272859200^3269971">reported</a> the pay of executives of some western New York health insurance companies: <blockquote>The top local executives at the region’s three major nonprofit health plans received nearly $23 million in salaries and bonuses last year. More than 70 people received total compensation of $160,000 or more. That’s the level at which insurers are required to report in annual reports to the state Department of Insurance. When you include executives who work for those three health plans but are located outside Western New York, the total compensation for top-paid execs totaled $46.4 million last year. Among the local executives in the Western New York region, 23 individuals took home more than $300,000 last year. Among the CEO-level executives: • Alphonso O’Neil-White, president and CEO at HealthNow NY Inc./BlueCross BlueShield of WNY earned $1.65 million. • Dr. Michael Cropp, president and CEO at Independent Health, earned $1.3 million. • Univera Healthcare President Art Wingerter, who joined the company part-way through the year, earned $248,348, while David Klein, president/CEO of Univera’s Rochester-based parent Excellus Health Plan, received a total of $2 million. Wingerter says compensation levels are fair and are determined with help from outside consultants based on nationwide industry surveys. They are also adjusted annually based on the organization’s performance: Top officers at Excellus saw salaries decline last year by 20 percent based on the company’s 2008 performance. 'Our compensation levels fall into the midpoint by design,' he says. 'It’s a $5 billion company. If you compared it to any leader of a $5 billion (for-profit) company, I do not believe it would be considered excessive.'</blockquote> Consider that argument while reading <a href="http://www.app.com/article/20100517/NEWS03/5170330/Blue-Cross-boss-took-home-8.7-million-salary-as-premiums-rose">this story </a>from neighboring New Jersey reported by the Ashbury Park Press: <blockquote>William J. Marino, president and chief executive officer of Horizon Blue Cross Blue Shield of New Jersey, received $8.7 million in compensation in 2009, a 59 percent increase from 2008, according to the company's annual financial statement. The salary and bonus were part of a windfall for Horizon's nine highest-paid executives, who received on average 61 percent more than in 2008, the statement, filed with the New Jersey Department of Banking and Insurance, showed. Part of the increase came from compensation that was deferred from previous years, the company said. But the pay sparked anger from consumers and medical professionals who have battled Horizon over rising premiums and declining reimbursements. Newark-based Horizon is the state's biggest health insurance company, writing policies and administering self-funded programs for more than 3 million people. It has 72 percent of the individual market and 52 percent of the small employer market, according to the state. The company is a nonprofit.... Meantime, Horizon's top nine executives took home a total of $24.3 million in salaries and bonuses last year, up from $15.1 million in 2008.</blockquote> <a href="http://www.app.com/article/20100518/BUSINESS/5180339/Horizon-swings-from-loss-to-profit">Another article </a>in the same paper stated that in 2009, Horizon <blockquote>reported net income of $75.1 million last year, compared with a loss of $45 million in 2008. It reported revenue of $8.3 billion, up from $7.9 billion the previous year. The company collected 3.5 percent more in premiums. And it lowered administrative expenses by 3.5 percent, according to the annual report.</blockquote> Let us reconsider the rationale for the pay of the Excellus (NY) CEO. Its basis was the pay given to CEOs of for-profit corporations. Yet the nature of for-profit and not-for-profit corporations are fundamentally different. The former exist to make money. The latter exist to fulfill their missions. For example, this statement is <a href="https://www.excellusbcbs.com/wps/portal/xl/our/compinfo/corpoverview">on</a> the Excellus web-site: <blockquote>As New York state's largest nonprofit health plan, the company remains committed to three core principles: * We exist to assure, in the communities we serve, that as many people as possible have affordable, dignified access to needed, effective health care services, including long-term care. * We recognize the need, and our responsibility, to reach out to all segments of the communities we serve, particularly the poor and aged and others who are underserved, to enhance quality of life, including health status. * We are committed to being a nonprofit health insurer. </blockquote> The devotion that a not-for-profit organization is supposed to have to its mission suggests that working for such an organization, particularly in a leadership capacity should be calling, rather than just a way to make money. Equating leadership of such an organization to leadership of a for-profit corporation of comparable financial size provokes cognitive dissonance. So the notion that the leader of Excellus, an organization supposedly devoted to serving the "poor and aged," is entitled to make as much money as the leader of a for-profit corporation with similar revenues likewise provokes cognitive dissonance. However, let us assume, just assume, that the $2 million pay of the CEO of Excellus Health Plan was fair for a $5 billion not-for-profit company. Horizon is an $8.3 billion company, roughly 60% larger, but its CEO got $8.7 million, 330% more. Furthermore, the Horizon CEO saw his pay go up 59% while company revenue rose 3.5%. What possible argument could there be to justify these even more extreme levels of compensation? Here was the Ashbury Park Press' <a href="http://www.app.com/article/20100518/OPINION01/5190320">editorial reaction</a>: <blockquote>If truth be told, when it comes to the American health insurance system, the Hippocratic Oath — 'First, do no harm' — is too often trumped by Gordon Gecko's 'Wall Street' axiom: 'Greed is good.' There's no better example than the shameful $8.7 million in compensation paid last year to William J. Marino, president and chief executive officer of Horizon Blue Cross Blue Shield of New Jersey.... How tone-deaf could Horizon be to bestow this kind of compensation on its executives? The only decent thing for Marino and his cohorts to do is to return the bonuses. The disconnect between these well-heeled executives and the customers their non-profit company — that's right, nonprofit — are supposedly serving is staggering. </blockquote> We have <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">discussed</a> numerous examples of compensation of health care organizations' leadership that seems orders of magnitude above that which would be rationally justified.  These latest examples of the wealth being accumulated by leaders of supposedly mission-centered not-for-profit organizations are a product of the current management culture that has been infused into nearly every health care organization in the US. That culture holds that managers are different from you and me. They are entitled to a special share of other people's money. Because of their innate and self-evident brilliance, they are entitled to become rich. This entitlement exists even when the economy, or the financial performance of the specific organization prevents other people from making any economic progress. This entitlement exists even if those other people actually do the work, and ultimately provide the money that sustains the organization. Although the executives of not-for-profit health care organizations generally make far less than executives of for-profit health care corporations, collectively, hired managers of even not-for-profit health care organizations have become richer and richer at a time when most Americans, including many health professionals, and most primary care physicians, have seen their incomes stagnate or fall. They are less and less restrained by passive, if not crony boards, and more and more unaccountable. In a kind of multi-centric coup d'etat of the hired managers, they have become our new de facto aristocracy. Or as we wrote in our previous post, executive compensation in health care seems best described <a href="http://hcrenewal.blogspot.com/2009/12/compensation-madness-insiders-hijacking.html">as Prof Mintzberg described </a>compensation for finance CEOs, "All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit." As it did in finance, compensation madness is likely to keep the health care bubble inflating until it bursts, with the expected adverse consequences. Meanwhile, I say again, if health care reformers really care about improving access and controlling costs, they will have to have the courage to confront the powerful and self-interested leaders who benefit so well from their previously mission-driven organizations. It is time to reverse the coup d'etat of the hired managers.

Paying CEOs of Health Care Not-For-Profit Organizations: "Greed is Good?"

Million dollar plus executives of not-for-profit health care insurance companies seem to be becoming a dime a dozen. Late in April, Buffalo Business First reported the pay of executives of some weste…

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19 May 2010

Effort to Make Health Insurance Reimbursement Fairer Lead by Director of Insurance Company Accused of Unfair Practices

We previously <a href="http://hcrenewal.blogspot.com/2009/01/unitedhealth-and-ingenix-settles.html">discussed</a> a legal settlement of charges that UnitedHealth's Ingenix subsidiary manipulated its database of payments to physicians so as to reduce its and other insurers' payments to "out-of-network" physicians.  One aspect of the settlement was a new initiative to better determine such payments.  Now that effort has been caught up in the web of conflicts of interests that has ensnared health care.  As <a href="http://www.syracuse.com/news/index.ssf/2010/03/su_professor_hired_to_rid_heal.html">reported</a> by the Syracuse (NY) Post-Standard, <blockquote>[New York state Attorney General Andrew] Cuomo obtained $100 million in settlements from 13 insurers, including Excellus, that used the defective reimbursement data supplied by Ingenix, a subsidiary of United Health, the nation’s second biggest insurer. Cuomo’s investigation showed insurers such as Excellus used that data to shortchange New York consumers by as much as 28 percent.</blockquote> Also, the settlement included <blockquote>money ... to create FAIR Health Inc., a New York City-based nonprofit that is supposed to come up with a new, fair reimbursement system that will be used by insurers nationwide. FAIR Health has contracted with SU [Syracuse University] to help create that database.</blockquote> The effort was lead by SU Professor Deborah Freund, "a distinguished professor of public administration and economics. She also is an adjunct professor of orthopedics and pediatrics at Upstate Medical University." However, <blockquote>Freund also happens to be listed on the health insurance company’s payroll. Excellus paid Freund $61,378 last year for serving on its board of directors, according to a financial report Excellus filed with the state last week. After The Post-Standard spent several days investigating her ties to the insurance company, Freund quit the Excellus board Friday afternoon.</blockquote> The Post-Standard noted, <blockquote>But some consumer advocates said it was odd that a paid director of Excellus, one of the companies targeted in Cuomo’s investigation, was playing such an important role. [Art] Levin, of the Center for Medical Consumers, said it was ironic that one of the people helping to fix a payment system riddled with industry conflicts of interest may have had a conflict of her own. 'This makes no sense whatsoever given that Excellus is part of the settlement,' Levin said. Chuck Bell, programs director of Consumers Union, publisher of Consumer Reports and an outspoken supporter of the payment reform project, was unaware of Freund’s ties to Excellus. 'I think it’s a concern because consumers do want this to be an entity that is independent of the insurance industry,' Bell said.</blockquote> Among Freund's defenders was <blockquote>Dr. Nancy Nielsen, immediate past president of the American Medical Association and a board member of FAIR Health, [who] said the AMA looked closely at Freund’s qualifications and her Excellus affiliation. She said the doctors’ group concluded her expertise is important to the project and was comfortable that there were enough safeguards in place to avoid any conflicts. Nielsen said FAIR Health would have independent experts not tied to the insurance industry review any recommendations from Freund’s research team.</blockquote> But to add another level of irony, and perhaps conflict of interest, the Minneapolis - St Paul Business Journal just <a href="http://twincities.bizjournals.com/twincities/stories/2010/03/01/daily1.html?surround=lfn">announced</a> <blockquote>The American Medical Association will use an electronic health records system from Ingenix, the company said Monday. The Eden Prairie health care information technology said its Web-based CareTracker software will run on an AMA platform currently in beta testing with the Michigan State Medical Society and will launch nationwide later this year. The platform is touted as a way to improve patient care, clinical efficiency and make administration simpler. CareTracker is the first such system that the AMA will provide to physicians online. 'Ingenix and the AMA will help doctors adopt health IT systems that reduce time spent on administrative tasks and enable them to devote more of their time to patient care,' said Bill Miller, Ingenix executive vice president of health care delivery systems, in a news release. 'Ingenix CareTracker integrates patient medical records and e-prescribing tools into the physician’s workflow. By selecting CareTracker for its platform, the AMA is helping physicians make smarter, more practical decisions about technologies to support their practice.'</blockquote> Although we often discuss conflicts of interests involving physicians or health care academics who moonlight for drug and device companies, and the effects of these relationships on clinical research and medical education, it seems like the pervasive web of conflicts of interest in health care has entangled just about every kind of health care organization, health care decision-maker, and health care opinion leader. Thus, we need to be extremely skeptical of just about everyone and every organization claiming to provide health care related goods and services, or whose goal is to improve any aspect of health care. The danger is that such skepticism will lead to cynicism and distrust. At the least, comprehensive, detailed disclosure of all even indirectly relevant financial and other relationships by all health care decision-makers and opinion leaders at any level, whether they be individuals or organizations, would make it somewhat easier to assess their decisions and opinions.

Effort to Make Health Insurance Reimbursement Fairer Lead by Director of Insurance Company Accused of Unfair Practices

We previously discussed a legal settlement of charges that UnitedHealth's Ingenix subsidiary manipulated its database of payments to physicians so as to reduce its and other insurers' payments to "out…

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22 Mar 2010

A $4.3 Million Dollar CEO for a Not-For-Profit Health Care Insurance Corporation

The US stock markets are at lows unseen for more than 10 years, unemployment is rising, around the world national deficits are increasing, and times are tough for ostensibly not-for-profit Blue Cross and Blue Shield of Massachusetts, the state's largest health care insurer/ managed care organization. <a href="http://www.boston.com/business/healthcare/articles/2009/02/28/blue_cross_ceos_pay_rose_26/">Per the Boston Globe</a>: <blockquote> Blue Cross-Blue Shield's business was affected by the stock market decline, the recession, and the increasing cost of medical care. Membership at the state's largest health plan declined about 40,000 to just over 3 million. 'The decline in membership had an impact on results,' said chief financial officer Allen Maltz. 'In addition, many of our customers changed their benefits plans to products that have much lower margins.' Blue Cross-Blue Shield insures employees of national companies that have locations outside Massachusetts, Maltz said, and those customers accounted for some of the drop-off in membership. Maltz said Blue Cross-Blue Shield aims for a profit margin of between 1.5 and 2 percent. Last year's margin was almost zero. The firm had operating income from its medical claims business of just $1.6 million. A new state assessment on reserves lowered income by $21 million, Maltz said. Revenue was flat at $6.7 billion, and medical claims were also unchanged at $6 billion. Like most health insurers, Blue Cross-Blue Shield also relies on investment income, which fell 28 percent to $111 million. Maltz said the firm managed to avoid losses in the market by investing primarily in bonds and avoiding derivative securities that have declined precipitously in value. </blockquote> Well, things are tough all over. But they are apparently not so tough for Blue Cross Blue Shield's CEO: <blockquote> The salary and bonus paid to Cleve L. Killingsworth, chairman and chief executive of Blue Cross and Blue Shield of Massachusetts, increased 26 percent last year, to $3.5 million, even though the health insurer's membership declined and its net income fell 49 percent. Based on previous years' retirement benefits - which Blue Cross-Blue Shield did not report for 2008 - Killingsworth's total pay package was likely about $4.3 million, making him by far the highest paid healthcare executive in Massachusetts. </blockquote> And what was the justification for Killingworth's stellar pay? <blockquote> Salaries at Blue Cross-Blue Shield were inflated by a complex executive bonus plan in which senior officials get bonuses based on a rolling average of the previous three years. 'These executives and the company performed and exceeded our expectations,' said Jay McQuaide, a Blue Cross-Blue Shield spokesman. 'They earned these incentives.' The key metrics in the incentive plan are membership and net profit, he said. </blockquote> The company's board of directors did not do badly either. Unlike most boards of not-for-profit corporations, this one was paid: <blockquote> The insurer's board members also received a 33 percent increase in base pay, from $30,000 a year to $40,000. Most earn far more because of payments for attending meetings and serving on committees. </blockquote> Finally, <a href="http://www.bostonherald.com/business/general/view.bg?articleid=1155201&srvc=home&position=1">according to the Boston Herald</a>, other executives did quite nicely too: <blockquote> Bay State health insurance bosses continued to rake in multimillion-dollar compensation packages last year as the state and its taxpayers struggled to pay ever-increasing health-care costs. Data filed yesterday with the state’s Division of Insurance shows that Blue Cross Blue Shield of Massachusetts, the state’s largest HMO, doled out million-dollar pay packages to five executives, while Harvard Pilgrim Health Care paid its two highest-ranking executives a total of $2.7 million. Blue Cross’ top earner is Peter Meade, who retired last spring as executive vice president of corporate affairs. Meade took home $4 million, a sum that includes retirement benefits accrued during his 12 years at the HMO. </blockquote> It's just amazing that with all their talk about "pay for performance," top executives of health care organizations seem to make huge sums year in and year out, regardless of their organization's performance. (As an aside, how could someone say that the company's pay for performance "main metrics" were membership and net profit, when both fell, yet the CEO's pay rose?) There was a brilliant discussion of the culture that lead to this sad state of affairs <a href="http://www.timesonline.co.uk/tol/comment/columnists/minette_marrin/article5822151.ece">in the Times (UK) by Minette Marrin</a>. It was about British bankers, but it just as well could have been about American health care executives: <blockquote> The filthy rich, as Peter Mandelson affectionately calls them, are different. It is not just that they’re rich but that there’s something about being extremely rich that blurs ordinary perspective in all but the most exceptional people. Power may corrupt, but extreme wealth blinds and deafens. I first came across the filthy rich just after I was married and went to live in Hong Kong in the 1970s. Leaving poverty-stricken Britain, my husband and I joined a gold rush of bankers and brokers to what was then still a crown colony. What we saw was wealth and conspicuous consumption beyond the wildest dreams of avarice. Though we weren’t extremely highly paid, we spent a lot of time with people who were. Some were entrepreneurs and others were employees of banks and trading houses that, as today, offered them ways of making megabucks. Soon it became obvious that being very rich is like catching an insidious virus. Some people are able to resist it, but with most people the super-riches virus burrows into your nervous system for life. It blurs your perspective, weakens your grasp on reality and changes your identity into someone who is entitled to be very rich. </blockquote> Ms Marrin's description of "plutocratic blindness" seems to apply to a CEO of a so-called not-for-profit organization who could claim more than $4 million in a year in which the global economy collapsed, and his own organization did rather badly by any financial measure. This passage by Ms Marrin seems applicable to the Blue Cross Blue Shield Board who approved this disproportionate pay package: <blockquote> But I do know things are done quite differently on the parallel planet inhabited by the filthy rich. Remuneration boards unselfconsciously award each other astonishing packages, wrapped up in euphemism. </blockquote> The lack of selfconsciousness in this case may have been driven by the board's familiarity with how things used to be done in the American financial sector. A quarter of the board's members are leaders in that sector (see post <a href="http://hcrenewal.blogspot.com/2009/01/to-whom-did-scorpions-in-bottle-owe.html">here</a>). Let me close with Ms Marrin's suggested solution: <blockquote> The filthy rich culture that has developed in the past 20 years is sick. It needs strong medicine, fresh air, open windows. Above all, what’s needed is a cold dose of fear – fear of failing, of being sacked and of losing the lovely money. Here is an excellent antidote to greed. </blockquote>

A $4.3 Million Dollar CEO for a Not-For-Profit Health Care Insurance Corporation

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02 Mar 2009

A New CEO for Independence Blue Cross

Independence Blue Cross (IBC) of Pennsylvania just announced the appointment of a new CEO after the untimely death of its former leader, G. Fred DiBona Jr. His <a href="http://www.philly.com/mld/philly/news/10622025.htm">Philadelphia Inquirer obituary </a>summarized his career before he started at Blue Cross: <blockquote>In 1976, at the age of 25, he was appointed to the Philadelphia Zoning Board of Adjustment, quickly rising to become its chairman. Two years later, Mr. DiBona was named head of the Philadelphia Port Corp. He led the agency for four years and was appointed president and chief executive officer of the Greater Philadelphia Chamber of Commerce in 1983. During his three years there, membership rose to 5,000 from 1,800. From the chamber, he moved in 1986 to Pennsylvania Blue Shield....</blockquote>The new CEO is Joseph Frick. His brief bio in the <a href="http://biz.yahoo.com/prnews/050126/phw041_1.html">IBC press release </a>includes: <blockquote>Frick, 52, had been Senior Vice President - Human Resources and Administration since 1997. In this capacity, he was responsible for corporate planning and business development, as well as IBC's Human Resources and Administrative services functions. He joined IBC in 1993 as Vice President, Human Resources, after spending almost six years in several HR positions at Philadelphia Newspapers Inc. (PNI). Before coming to PNI, Frick spent 13 years at Westinghouse Electric Corporation in various training and development, quality control and planning positions. </blockquote>Thus IBC, a huge health insurer and managed care organization with 3.5 million subscribers and $10 billion in revenue, will have had two successive CEOs with no demonstrable experience "on the ground" in health care. I received a comment on this issue from a correspondent with considerable relevant insurance and managed care experience:<blockquote>What you're seeing is typical of most businesses. This seems to me to be the result of some myopic views taught in B-schools; "you don't have to know 'THE' business, just how to run 'A' business." Similarly, some folks think just because they can "do anything," they can run a business. I'm trying to convince them that "it ain't necessarily so." </blockquote>It makes you wonder how much better off we all would be if such large health organizations had leaders who actually had experience in health care. We can only hope that Mr. Frick at least gets some input from people with real "on the ground" experience. <blockquote></blockquote>

A New CEO for Independence Blue Cross

Independence Blue Cross (IBC) of Pennsylvania just announced the appointment of a new CEO after the untimely death of its former leader, G. Fred DiBona Jr. His Philadelphia Inquirer obituary summarize…

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01 Feb 2005

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