Re: As Patients, Doctors Feel Pinch, Insurer's CEO Makes a Billion
From: art fougner, md (evsono@pipeline.com)
Wed May 10 05:46:05 2006
And where is the outrage from the politicians? This makes the
EXXON-Mobil CEO's package of $400 million look like chump change. And
this man makes his living by denying care. With the continuing trend of
MCO mergers and acquisitions, the US is headed for single-payor after
all.
Art
At Wed, 10 May 2006, GIN11153@aol.com wrote:
>
>_http://online.wsj.com/article/SB114532417401928300.html_
>(http://online.wsj.com/article/SB114532417401928300.html)
>Wall Street Journal
>April 18, 2006
>Rewarding Career
>As Patients, Doctors Feel Pinch, Insurer's CEO Makes a Billion
>UnitedHealth Directors Strive To Please 'Brilliant' Chief;
>New Questions on Options
>Selling Trout for 40¢ a Pound
>By GEORGE ANDERS
>MINNETONKA, Minn. -- When William McGuire switched careers in 1986, he was
>so restless that a pay cut of more than 30% didn't faze him. Health
>one. So he
>jettisoned a six-figure income as a pulmonologist in favor of an HMO
>management job that paid about $70,000 a year.
>f
>
>He draws $8 million a year in salary plus bonus, enjoying perks such as
>personal use of the company jet. He also has amassed one of the largest
>stock-options fortunes of all time.
>o
>UnitedHealth's proxy statement released this month. Even celebrated CEOs
>s
>top.
>Dr. McGuire's story shows how an elite group of companies is getting rich
>ng
>ll
>.
>The middlemen credit themselves with keeping the health system humming and
>es
>
>and even drug makers are feeling a financial squeeze. Some 46 million
>Americans lack health insurance.
>UnitedHealth's main business is offering health plans to employers and
>ls out
>.
>ge
>
>s
>rivals in recent years. As health-care inflation eased, insurers still
>etween
>en
>n
>2005 totaled $3.3 billion, nearly four times the figure in 2001.
>UnitedHealth directors in the late 1990s allowed Dr. McGuire the rare
>d dates
>
>ral
>scrutinized _in a page-one article_
>t-box) in The Wall Street Journal last
>month and are being examined by the Securities and Exchange Commission.
>The Journal's analysis of 12 options grants to Dr. McGuire from 1994 to
>ir
>he
>rant
>f
>disclosure of the practice were inadequate, securities lawyers say. A
>board is
>reviewing options-granting procedures.
>The arrival of the $1 billion CEO would be a head-turner in any industry.
>w
>han
>Weiner, a health-policy expert at Johns Hopkins University. Dr. McGuire and
>
>g
>
>Ever since missing a stock-market windfall in the late 1980s, Dr. McGuire
>has pursued stock-options wealth tirelessly, as an iron-willed leader
>t and
>ssary
>to keep Dr. McGuire happy.
>
>s
>his income gives him extra credibility in health-policy debates because it
>shows his success. "He needs to be compensated appropriately so that his
> dean of
>the nursing school at Columbia University.
>Robert Ryan, another UnitedHealth director, notes that the company's
>r in
>1991. "A lot of the board's job here is to keep him motivated," says Mr. R an, a
>retired chief financial officer of Medtronic Inc.
>Bill McGuire was born in Troy, N.Y., but moved to Texas as a boy when his
>s,
>nd
>dead-certain of his expertise in areas ranging from sports to math.
>He grew to be 6-foot-6, and as a high-school senior he was the starting
>id all
>r
>as coach. "I'd never played our opponents before. Bill had. He remembered
>all the other players' strengths and weaknesses."
>t
>the urging of family doctor Ned Dudney. Varsity athletes who go into
>s more of
>an intellectual problem-solver and pointed him toward internal medicine.
>
>Dudney recalls.
>At medical school, Dr. McGuire became famous for his side income as a
>ts at 40
>cents a pound. The night before one exam, he slipped away to the Gulf of
>Mexico and spent hours catching fish.
>"It flabbergasted us," recalls classmate Robert Hendler. "The rest of us
>were struggling to learn the material. Bill had it down cold. He could go
>fishing and still get one of the best scores on the test."
>In the early 1980s, Dr. McGuire settled into private practice as a
>hospital
>,
>est
>
>heart. That audacious step kept the patient alive until a surgeon arrived.
>Looking for a new challenge, Dr. McGuire joined Peak Health Plan Inc. in
>1984 as its assistant medical director. He helped found a smaller health p an,
> of
>o
>expand our provider network, and I couldn't get doctors to come to our
>recruiting meetings. Bill could."
>Within two years, both Peak and CostGuard were sold to UnitedHealth, a
>t $95
>million. Dr. McGuire was irked that the company he had recently joined was
>stake
>
>Peak's three founders collected. "Bill didn't let me forget about it for
>years," Mr. Hyde says.
>The managed-care industry in the late 1980s was experiencing booming but
>
>HMOs
>to hold down runaway costs. Members streamed in so fast that many health
>plans' computer systems buckled.
>Dr. McGuire moved to UnitedHealth's headquarters in Minnesota, where he
>d the
>ed
>too thin. After he helped sell or close a half-dozen regional plans that
>any.
>e
>big stock options to give him some incentives," recalls Robert Ditmore, a
>uire
>had options on 229,277 shares, or 0.7% of the company.
>This was the beginning of a period when U.S. corporations began making
>ives
>and shareholders. Traditionally, hired CEOs enjoyed big salaries but their
>
>Rockefellers or DuPonts.
>But as stock options took off, highflying bosses such as Dr. McGuire
>istries.
>As stock prices rose, these bosses became tycoons, too.
>In the early 1990s, the HMO boom continued and Dr. McGuire found more ways
>for his company to pull ahead of the pack. He spent heavily on information
>ship
>even as rivals got snarled in data blowups. And he showed a knack for
>tworks.
>The stock jumped 10-fold during Dr. McGuire's first five years at the
> recalls
>Walter Mondale, the former presidential candidate, who was a member of the
>to
>keep him and help him with incentives."
>During his first seven years as CEO, Dr. McGuire's base salary more than
>few
>o
>
>backlash against restrictive health plans.
>His sacrifice impressed directors. As the expiration of his contract
>out a new
>contract.
>Dr. McGuire at the end of 1998 had unrealized gains of $22 million on his
>But
>Leonard Abramson, the founder of U.S. Healthcare Inc., netted about $900
>as at
>r
>stakes in their companies, which looked like passports to great wealth.
>s
>agreed. When his contract was renewed, effective Oct. 13, 1999, he got
>
>le
>in our
>mind," says director William Spears.
>The dot-coms' onslaught proved laughably brief, but UnitedHealth kept
>e
>ers
>are
>system generally.
>The better UnitedHealth fared, the more valuable Dr. McGuire's options
>e of
>imes
>as valuable as the company projected when it was issued.
>In Minnesota, such riches have infuriated some people. Joel Albers, a
>donning
>a tuxedo, holding up an enlarged picture of Dr. McGuire on a stick and
>lk on.
>to
>s
>77,000 uninsured children.
>UnitedHealth executive John Penshorn says outsiders' efforts to tell Dr.
>
>nal
>e
>some of the nation's poorest neighborhoods. Dr. McGuire also has set up a
>and the
>arts.
>
>In January, he announced he was giving $10 million to help thousands of
> nearly
>$10 million to the University of Florida for a biodiversity center that
>includes one of the world's largest butterfly research institutes. An avid
>hyes
>mcguirei.
>As long as UnitedHealth stock keeps climbing, big shareholders say they
>omeone
>like that is worth," says Tom Marsico, head of Marsico Capital in Denver,
>
>managers or athletes, he's probably doing more to improve the world."
>Even so, UnitedHealth directors huddled several times last year to discuss
>whether they have showered Dr. McGuire with too many options. His 1999
>.6
>million shares each year, adjusted for splits.
>
>in
>August 2005 eliminated the options guarantee. Dr. McGuire received options
>last year on 1.7 million shares, down 35% from the previous year.
>s
>l
>planning last year -- even though Dr. McGuire is long past the point of
>needing help with everyday living costs.
>"If we did reduce these things, Bill would take it as a signal that
>t would be
>
>how directors feel about him."
>During their August 2005 overhaul of Dr. McGuire's contract, directors did
>
>Dr.
>McGuire in 1997, 1999 and 2000 carried dates on which UnitedHealth's stock
>hit its low for the year. Mr. Spears said in March that he wasn't aware of
>anything inappropriate about the options grants.
>In an SEC filing April 7, UnitedHealth said a committee of independent
>nd
>was
>Dr. McGuire's idea.
>Write to George Anders at _george.anders@wsj.com_
>(mailto:george.anders@wsj.com) .
--
art fougner, md
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