It just seems like common sense that when you ask someone to reduce their spending, you shouldn't be seen throwing around your own money as if it grows on trees. This, unfortunately, doesn't seem to be a lesson that health insurers have learned.
All the major health payers are lamenting the costs of healthcare, taking steps to cut their expenses by, for example, cutting major hospitals like the Mayo Clinic out of their network and begging doctors to reduce emergency room admissions. Meanwhile, they're doling out multi-million dollar bonuses and golden parachutes to their executives.
Here's a recent example. Blue Cross Blue Shield of Massachusetts signed an alternative quality contract with Beth Israel Deaconess Physician Organization where Blue Cross provides a budget for them to provide care for their HMO patients. If the doctors are under budget, they share the surplus with Blue Cross, but only if they can show improvement in patients' conditions or the patients received more preventive tests. Meanwhile, Blue Cross provided former CEO Cleve Killingsworth with almost $11 million in severance and bonuses and also paid its 18 directors between $11,000 and $84,000 each, with 14 of them receiving between $60,000 and $76,000. Keep in mind that Blue Cross operates as a non-profit, which doesn't generally allow compensation for sitting on a board of directors.
Cigna and WellPoint also have felt the weight of public, and increasingly, political pressure to lower their compensation packages. Cigna's CEO David Cordani received $9.77 million in pay last year, not including options and stock awards. Angela Braly, president and CEO of WellPoint, received a 3 percent boost in compensation last year for a total pay package worth $13.4 million--despite the insurer's sharp decline in profits.
Health payers can't have it both ways. If they want to engender any sort of public support and loyalty in an increasingly consumer-driven healthcare market, health payers must redeem themselves. Most people consider health insurance companies only to be money-hungry, greedy bastards (pardon my French), so it will take a huge media relations campaign to change such a strong and entrenched perception of an industry. Giving execs tons of money isn't going to help shape a consumer-friendly image.
It's been proven that even taking such a drastic step as eliminating all salaries to the upper echelon of payer execs wouldn't change the financial crisis facing healthcare and it wouldn't change the costs of insurance. But this issue isn't about facts; it's about image. Insurers can't ask doctors to keep their costs down or expect public support for decreasing costs while seemingly not caring about their own in-house costs and compensations, particularly during an economic recession. Such oxymoronic behavior causes insurers to lose credibility.
Fortunately, there have been some bright spots during these contradictory times. Blue Cross Blue Shield of Massachusetts has suspended pay to its board of directors. CEO Andrew Dreyfus said that if the community expects the board shouldn't be paid, "then I'm willing to accept that." Granted, his hand was practically forced by the state attorney general's office, but I'm trying to look on the positive side of things here.
If only other insurers would take similar steps to decrease their executive payouts, maybe they could have a larger seat at the table to discuss what really matters--providing quality healthcare at lower costs. - Dina