Congress called WellPoint’s President to testify before their august body last week. She testified to her company’s record-breaking profits in 2009. According to the LA Times, WellPoint posted an eightfold increase in profit for the fourth quarter and projected solid earnings for this year despite a recent softening in enrollments and revenue from premiums.
And this was during the Great Recession, too.
It makes sense that Congress would be interested in business model that generates a 8 fold increase in profit while customers and revenues decline.
But, Congress was not interested in her success. They were interested in her company's audacity to create value for their shareholders. That’s right. A company based in the US generated record profits during The Great Recession. And Congress wanted her to testify now how they were able to do that, but...how they do that. How dare her company achieve these record profits!!
This is where our healthcare system has problems.WellPoint is in the business of making money. WellPoint is a for-profit company. And hat’s off to them for having a record year for revenues and profits while much of the country was having a record year for revenues and losses.
WellPoint’s business is caring for their shareholders. It is not caring for American’s health, in general, nor even in providing for healthcare either for its members or our country. Their success is measured by how well they can minimize the expense required to deliver any service for the healthcare of their members, aka customers. Their service could be any service. It just happens to be what some call health insurance or healthcare provider.
Interestingly, WellPoint’s record year in profits was achieved by a record year in customer cancellations. That’s right. During the recession WellPoint member numbers declined. As their jobs were eliminated, and along with it their group membership, WellPoint members, aka customers, were no longer either members or customers. And those whose WellPoint membership came as individual policy-holders and whose jobs were eliminated found themselve unable to afford membership with WellPoint.
As they served fewer members, they made more money.
As they served fewer customers, not only did they make more money, but they and their industry colleagues acquired a greater share of our pocketbooks, ie, our economy.
That’s an odd business model. You see more paying customers walk away and you make more money. You see more sources of recurring monthly revenues disappear... And you make more money. You lose paying customers but gain a bigger share of everyone else’s pocketbook and collectively our economy.
I see why she should testify. We all could benefit from those skills.
That’s our healthcare system in a nutshell. The gatekeepers, the money handlers, are the insurance companies. They determine not only the costs of our healthcare system but also what care is delivered. And we relinquish our control and our money and our health and our economy to them. And they make more money as they deliver fewer and fewer solutions for more and more Americans. And as they do this, they consumer a great portion of our wallets and our economy.
What can we learn from the business model of WellPoint, etal, in the health insurance industry?
How do you serve fewer customers and make more money?
How do you make more money when you have fewer sources of monthly recurring revenues?
How do you find more ways to discourage more existing customers...and make more money?
How do you grab a growing share of our pocketbooks and our national economy while adding less and less value for your customers and our economy?
But these health insurance companies are not in the healthcare business. Their business is to maximize shareholder value. And the way they do that is to minimize the value they deliver to fewer and fewer customers.
Can you imagine another industry where adding shareholder value depends on finding more and more ways to send more and more customers away? The Big Three tried that approach. Failed miserably. The home mortgage industry tried to lure customers who shouldn’t be customers. That failed.
But the health insurance industry not only turns away customers who should and could be customers (they can afford it), who need their solutions (pre-existing conditions, eventually most of us) but they find ways to turn away customers who have paid for the services promised and never asked for them to be delivered. And in doing so, they make more money and take a greater share of our pockets and our economy.
An industry that generates such negative word-of-mouth is usually not long for this world. Where do you see customer evangelists for the health insurance industry. Stealth bloggers, expensive lobbyists and members of Congress do not count. And yet, this industry continues to absorb more and more of our economy, our potential creativity with job-lock keeping people in unproductive positions because they cannot afford be without their health insurance, our time as we are forced to constantly manage our health insurance expenses....
And this my dear readers is our healthcare system. For-profit companies masquerading as healthcare providers when their shareholders demand they deliver less and less. Congress complaining that for-profit companies are too profitable. And we, who should be their masters as we’re the source of their income and influence stand idly by and quibble over economic ideologies.
Meanwhile, 45,000 Americans die each year because health insurance is too expensive and that makes their healthcare too expensive to afford.