Expert Perspective by Grahall’s OmniMedia Editorial Board

Much has already been written and said (often in loud voices and with expletives not deleted – who can forget the “You lie” outburst in the U.S. Senate) about health care reform legislation, but one thing that has gotten very little attention is how insurance companies can most effectively adapt their business and people strategies to meet the new Health Care paradigm. 
Continue reading “Sick Over Health Care Reform: What’s the Prescription for Insurance Companies?” »

Expert Perspective by Grahall’s OmniMedia Editorial Board

In his March 16, 2010 article for the Huffington Post (Insurance Executives: A Big Part of Our Health Care Problem) William Lazonick says:  “Among the most powerful and vociferous opponents of health care reform are the executives of publicly listed health insurance companies and their lobbyists… Corporate profits are necessary to fund the investments that generate higher quality, lower cost goods and services. But that is not how the largest corporate health insurers have been using their profits over the past decade. Rather, virtually all of their profits have been spent on buying back their own stock for the sole purpose of jacking up their stock prices.”

Let’s take a small step back and remember that the primary goal of publically traded companies is to increase stock price.   Shareholders purchase stock for this reason (and maybe for dividends), and the Boards of Directors at these companies are in place to ensure that shareholders’ interests (that being increases in stock price) are considered first and foremost.  Of course some shareholders are also executives and very likely ALL executives are also shareholders (think Venn diagram with a little circle representing executives in the center of a bigger circle representing all shareholders). 

Are stock buybacks bad or were they the wrong thing to do? As Matt Koppenheffer said in his September 21, 2009 article for the Motley Fool (Your Company Did a Terrible Thing):  “There are really only a handful of options for using the cash produced by a business: organically expanding the business, making acquisitions, paying down debt and improving the balance sheet, paying a dividend, and repurchasing stock…. [companies should] choose the option that provides the best return.”

And by this he means the best return to shareholders (please refer to the Venn diagram described above). 

Perhaps buybacks were the option that, at the time, provided the best return. And based on the increase in stock prices for the Health Insurance companies that Lazonick mentions, it looks like these buybacks helped to fuel some pretty strong stock price increases.
• For Aetna, from about $7 in January 2000 to its high of about $54 in November 2007
• For Wellpoint, from about $21 in November 2001 to near $90 in December 2007
• For UnitedHealth Group, from about $7.60 in January 2000 to about $50 in January 2008.
   
But again does this make it wrong? Well, as Lazonick so clearly points out, it appears that “…these health insurers increase[d] their profits by raising premia, excluding people with pre-existing conditions, and capping lifetime benefits… to do more stock buybacks.”

For Americans who were not fortunate enough to be part of the shareholder Venn diagram for these companies but rather “just” customers, the results of these decisions were not so positive and may call into question the applicability of this business model: publically traded companies providing essential health care services.  

Perhaps Health Care Reform should demand that every health care insurer establish the following as their mission statement: “A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so.” (Mahatma Ghandi)

Contact Grahall’s OmniMedia Editorial Board at edie.kingston@grahall.com

Expert Perspective by Grahall’s OmniMedia Editorial Board

As the heath care debate continues so does the press coverage.  Reed Abelson says in his February 26th 2009 article in The New York Times (“The Cost of Doing Nothing on Health Care”) “…health policy analysts and economists of nearly every ideological persuasion agree [that without health care reform] …The unrelenting rise in medical costs is likely to wreak havoc within the system and beyond it, and pretty much everyone will be affected, directly or indirectly.”

The cost of health care is high and going higher without reform.
Continue reading “Health care spending – use it, don’t abuse it” »

Expert Perspective by Grahall’s Robert Cirkiel

In a recent United Health Foundation study, “The Healthiest and Unhealthiest States”, Vermont — which is the home of the beautiful Grahall Properties  and birthplace of Grahall partner Michael Graham — finished first.  Forbes published the study finding.  We are extremely proud of this achievement.  For the record, full disclosure, and transparency we have no relationship with either Forbes or the Foundation that would affect these findings.

The study considers the 22 factors they consider to be most important, but let me discuss my personal eight which are somewhat different.  I discovered them a few years ago in Italy.  At the time, I was chaperoning my son’s eighth grade class trip. My job was to be the “surrogate parent” – I did the “parenting” so that the teacher would be free to do the teaching.  In one week’s time, I lost ten pounds along with all of my little aches and pains and rediscovered my energy.  For the record I am a “50 something” who expected the constant touring and pasta consumption to have the opposite effect.

So, to what do I attribute this? Was it happiness, engagement, meaningfulness, achievement, exercise, sunshine, rest, and food quality?  Notice I did not say stress-less.  In fact, keeping an eighth grade Latin class out of the Arno is anything but.   But it was good stress, as in what I was doing was difficult but important and getting the students home in one piece and with fine memories was all the achievement and satisfaction I needed. 

Seems like such a simple formula, right?  I submit that it is a contributing factor to why Italians spend 9% of GDP on health care and we spend over 16%.  We can pass all the laws we want and vilify insurance companies, doctors and the government all we want but until we get healthier our spending will never come under control. 

Employers need to take a close look at my list because they can impact every item on it.  For many, the workplace is their primary source of engagement, meaningfulness and achievement.  The workplace must engender these things.  And, while an employer cannot turn unhappy people into happy people or fix everything that is wrong in an employee’s life, it does control what happens during the work day.  And, employers certainly can have a large influence on wellness by using the company medical plan to drive it and all employers should do so.

As far as our country’s efforts to get our health equation under control via Federal legislation, note that Massachusetts, the State with the laws most closely resembling the bills before Congress, finished third in the study.  This suggests that legislation can help.  But at the end of the day, the Vermont model with its outdoorsy lifestyle and ample supply of medical services works even better.

Grahall can help your organization get control of your medical costs, improve outcomes, and increase productivity.  Contact us and let us show you how.  

For more information about renting Grahall Properties for conferences, training sessions or simply for rest and relaxation in an environment that inspires reflection and creative thinking contact Robert Cirkiel at robert.cirkiel@grahall.com.