When Profit equals Improved Service (shouldn’t it be the other way ’round?)


The Wall Street Journal reports “UnitedHealth reported a 3.5% rise in quarterly net income, as the health-insurance giant benefited from strong growth in its prescription-solutions unit”.

From what we have seen through our tracking of policies, ‘prescription-solutions’ means drug pre-authorizations, tiering and other administrative hurdles that have been added to the cost of running practices. Physicians carry the administrative cost, UHC profits. Nice, right?

If you read the article, you’ll note that there is much talk about United’s improved service, yet the member numbers don’t hold up. Maybe you’ll be as confused as I am when you read Mr. Helmsley’s comment “Our service levels have recovered strongly”, followed by ‘UnitedHealth continues to expect a 2%, or about 550,000-member, decline in commercial enrollment in the first quarter’ and ‘the outlook for the decline in risk-based commercial members is now closer to 400,000 than to 350,000, Mr. Hemsley said.

Furthermore, the article goes on to state ‘In the fourth quarter, UnitedHealth saw a 75,000-member decline sequentially in commercial risk-based membership and a 480,000-member decline year over year. Total commercial enrollment was flat sequentially at nearly 25.53 million and down 175,000 year over year, as fee-based commercial membership increased’.

Let’s see: decline in enrollement + increased profits = improved service. Yep, that makes perfect sense alright.  

I don’t see a quantification of HOW service levels have improved, other than discussion of PROFIT as an indicator. But as anyone who has studied statistics will know, correlation does not equal causation.

Looks to me like UHC are equating improved dollars to improved service, regardless of declining enrollment. How can that be? Wouldn’t it be the other way ’round, that improved service would mean an increase in enrollment? Perhaps service is the least of what is feeding the bottom line numbers. In addtion to the stated ‘prescription-solutions’, SEC filings suggest that acquisitions, policy change initiatives and lack of claims payments are all helping to boost the bottom line. That has nothing to do with improvements.

So what I want to know is, when is a journalist going ask “What have you actually done to improve SERVICE?”

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