"A Kind of Blackmail": A Not-for-Profit Health Insurance Company CEO's Salary So Large It "Had Broken the Law"

Here is another case in the annals of over-paid executives of not-for-profit health care organizations, this time from the Burlington (VT) Free-Press,

Blue Cross and Blue Shield of Vermont overpaid its former chief executive officer by $3 million over an eight-year period and has been ordered to pay the money back to its subscribers by 2012 in the form of reduced premiums, a top state regulator said Wednesday.

The action by the state Banking, Insurance, Securities and Health Care Administration Department follows last year’s disclosure that William Milnes, the nonprofit firm’s former CEO, received a $7.2 million payout when he stepped down in 2008.

Furthermore, note that

[Commissioner of the Banking, Insurance, Securities and Health Care Administration Department Paulette] Thabault said her department had concluded Blue Cross had broken the law by paying Milnes more money than necessary to perform his functions as head of the nonprofit health-benefits provider.

The Department's review found obvious flaws in how Blue Cross Blue Shield set its former CEO's pay:

The department’s review found that Milnes’ salary package while at Blue Cross was excessive, and in some years, he was paid more in bonuses than he received in base pay. In 2005, for example, Milnes was paid $425,000 in salary and $489,800 in bonuses.

'Other health insurance or managed care organizations of a similar size to the Vermont company compensate their chief executive officers at a level of about 45 percent to 50 percent less than the compensation levels set by the company for Mr. Milnes,' the department order said in part.

The department said Blue Cross used a 'peer group' study to justify the pay it gave Milnes, but regulators concluded the study was flawed because it put Milnes’ position on the same level of chief executive officers of much larger Blue Cross sister companies.

'The peer group ... used in 2007 included 14 companies, all but one of which were substantially larger in terms of annual gross premiums,' the department’s order said. 'Nine of the 14 companies had gross premiums in excess of $1 billion.' Blue Cross gross premiums for 2007 were $590 million.

This story is striking because it seems that the overpayment of a not-for-profit health care organization's executive this time seemed to rise to the level of crime. However, current Blue Cross leaders seemed unconcerned.

'The company accepts the findings of the department, and it just wants to move on at this point,' [Blue Cross and Blue Shield spokesman Kevin] Goddard said.

Somehow, whenever a health care organization's conduct is publicly revealed to be shameful, the response is not sorrow or apology, but let's just "move on." Moving on, of course, minimizes the accountability of those initially responsible for the bad behavior.

Furthermore, do not expect corporate leadership to acknowledge anything wrong with how the pay for the top hired corporate executive was determined.

Goddard said the company thought the peer group numbers it was using were sound.

'Our board used a comprehensive analysis to come up with a compensation package for Bill,' he said. 'We relied on what we thought was professional information.'

One begins to feel a little sorry for the poor spokesman who is obligated to mouth these sorts of sentiments. Whether the analysis was rational, or the "professional information" was relevant or correct seems not to have bee anyone's concern.

In addition, although Blue Cross and Blue Shield is now obligated to reimburse its policy-holders for former CEO Milnes' excessive pay, do not expect the money to come out of his pocket:

None of the $3 million the company has to pay back will come from Milnes. Blue Cross asked Milnes, through his attorney, if he would give back some of the money but was rejected, according to documents in the case made public Wednesday.

'He has made it quite clear that Mr. Milnes is not willing to make a voluntary repayment of any portion of the Supplemental Executive Retirement Program distribution,' Christopher Gannon, a Blue Cross vice president, wrote in a letter to Thabault’s department Jan. 21.

One would think that the current company management would be so upset about its new $3 million obligation, that it would aggressively try to recover the money from the person who benefited from it. However, it seems that all the current Blue Cross and Blue Shield management was willing to do was politely requesting that Mr Milnes return it. Suing a former CEO, of course, is just something that is not done. Perhaps it would be too disturbing to  the cozy atmosphere now prevailing among top executives and the boards of trustees who are supposed to be supervising them. This seems to make clear that no one at Blue Cross and Blue Shield ever really was responsible for what Mr Milnes was paid.

As an editorial in the Rutland Herald put it:

On its face, it was an outrage. Blue Cross is a nonprofit corporation that insures about 150,000 Vermonters. That a nonprofit with a mission of providing health care coverage should be a source of extravagant personal profit was an affront to all Vermonters, including those struggling to pay escalating premiums, those struggling to find adequate care, or those with no coverage at all.

The usual excuse from companies is that big money is necessary to attract big talent. It's a marketplace. But this excuse is really a kind of blackmail that allows corporate executives to collude in the inflation of their own worth.

So the notion of the "imperial CEO" who can virtually set his or her own pay, unencumbered by any real accountability to a board of trustees who would dare not ruffle the imperial feathers has now been imported even into relatively small health care organizations in New England states once famed for their common-sense and frugality.

So here we go again.... We have discussed numerous examples of compensation of health care organizations' leadership that seems orders of magnitude above that which would be rationally justified. These latest examples of the wealth being accumulated by leaders of supposedly mission-centered not-for-profit organizations are a product of the current management culture that has been infused into nearly every health care organization in the US. That culture holds that managers are different from you and me. They are entitled to a special share of other people's money. Because of their innate and self-evident brilliance, they are entitled to become rich. This entitlement exists even when the economy, or the financial performance of the specific organization prevents other people from making any economic progress. This entitlement exists even if those other people actually do the work, and ultimately provide the money that sustains the organization.

Although the executives of not-for-profit health care organizations generally make far less than executives of for-profit health care corporations, collectively, hired managers of even not-for-profit health care organizations have become richer and richer at a time when most Americans, including many health professionals, and most primary care physicians, have seen their incomes stagnate or fall. They are less and less restrained by passive, if not crony boards, and more and more unaccountable. In a kind of multi-centric coup d'etat of the hired managers, they have become our new de facto aristocracy.

Or as we wrote in our previous post, executive compensation in health care seems best described as Prof Mintzberg described compensation for finance CEOs, "All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit." As it did in finance, compensation madness is likely to keep the health care bubble inflating until it bursts, with the expected adverse consequences. Meanwhile, I say again, if health care reformers really care about improving access and controlling costs, they will have to have the courage to confront the powerful and self-interested leaders who benefit so well from their previously mission-driven organizations. It is time to reverse the coup d'etat of the hired managers.

"A Kind of Blackmail": A Not-for-Profit Health Insurance Company CEO's Salary So Large It "Had Broken the Law"

Here is another case in the annals of over-paid executives of not-for-profit health care organizations, this time from the Burlington (VT) Free-Press,

Blue Cross and Blue Shield of Vermont overpaid its former chief executive officer by $3 million over an eight-year period and has been ordered to pay the money back to its subscribers by 2012 in the form of reduced premiums, a top state regulator said Wednesday.

The action by the state Banking, Insurance, Securities and Health Care Administration Department follows last year’s disclosure that William Milnes, the nonprofit firm’s former CEO, received a $7.2 million payout when he stepped down in 2008.

Furthermore, note that

[Commissioner of the Banking, Insurance, Securities and Health Care Administration Department Paulette] Thabault said her department had concluded Blue Cross had broken the law by paying Milnes more money than necessary to perform his functions as head of the nonprofit health-benefits provider.

The Department's review found obvious flaws in how Blue Cross Blue Shield set its former CEO's pay:

The department’s review found that Milnes’ salary package while at Blue Cross was excessive, and in some years, he was paid more in bonuses than he received in base pay. In 2005, for example, Milnes was paid $425,000 in salary and $489,800 in bonuses.

'Other health insurance or managed care organizations of a similar size to the Vermont company compensate their chief executive officers at a level of about 45 percent to 50 percent less than the compensation levels set by the company for Mr. Milnes,' the department order said in part.

The department said Blue Cross used a 'peer group' study to justify the pay it gave Milnes, but regulators concluded the study was flawed because it put Milnes’ position on the same level of chief executive officers of much larger Blue Cross sister companies.

'The peer group ... used in 2007 included 14 companies, all but one of which were substantially larger in terms of annual gross premiums,' the department’s order said. 'Nine of the 14 companies had gross premiums in excess of $1 billion.' Blue Cross gross premiums for 2007 were $590 million.

This story is striking because it seems that the overpayment of a not-for-profit health care organization's executive this time seemed to rise to the level of crime. However, current Blue Cross leaders seemed unconcerned.

'The company accepts the findings of the department, and it just wants to move on at this point,' [Blue Cross and Blue Shield spokesman Kevin] Goddard said.

Somehow, whenever a health care organization's conduct is publicly revealed to be shameful, the response is not sorrow or apology, but let's just "move on." Moving on, of course, minimizes the accountability of those initially responsible for the bad behavior.

Furthermore, do not expect corporate leadership to acknowledge anything wrong with how the pay for the top hired corporate executive was determined.

Goddard said the company thought the peer group numbers it was using were sound.

'Our board used a comprehensive analysis to come up with a compensation package for Bill,' he said. 'We relied on what we thought was professional information.'

One begins to feel a little sorry for the poor spokesman who is obligated to mouth these sorts of sentiments. Whether the analysis was rational, or the "professional information" was relevant or correct seems not to have bee anyone's concern.

In addition, although Blue Cross and Blue Shield is now obligated to reimburse its policy-holders for former CEO Milnes' excessive pay, do not expect the money to come out of his pocket:

None of the $3 million the company has to pay back will come from Milnes. Blue Cross asked Milnes, through his attorney, if he would give back some of the money but was rejected, according to documents in the case made public Wednesday.

'He has made it quite clear that Mr. Milnes is not willing to make a voluntary repayment of any portion of the Supplemental Executive Retirement Program distribution,' Christopher Gannon, a Blue Cross vice president, wrote in a letter to Thabault’s department Jan. 21.

One would think that the current company management would be so upset about its new $3 million obligation, that it would aggressively try to recover the money from the person who benefited from it. However, it seems that all the current Blue Cross and Blue Shield management was willing to do was politely requesting that Mr Milnes return it. Suing a former CEO, of course, is just something that is not done. Perhaps it would be too disturbing to  the cozy atmosphere now prevailing among top executives and the boards of trustees who are supposed to be supervising them. This seems to make clear that no one at Blue Cross and Blue Shield ever really was responsible for what Mr Milnes was paid.

As an editorial in the Rutland Herald put it:

On its face, it was an outrage. Blue Cross is a nonprofit corporation that insures about 150,000 Vermonters. That a nonprofit with a mission of providing health care coverage should be a source of extravagant personal profit was an affront to all Vermonters, including those struggling to pay escalating premiums, those struggling to find adequate care, or those with no coverage at all.

The usual excuse from companies is that big money is necessary to attract big talent. It's a marketplace. But this excuse is really a kind of blackmail that allows corporate executives to collude in the inflation of their own worth.

So the notion of the "imperial CEO" who can virtually set his or her own pay, unencumbered by any real accountability to a board of trustees who would dare not ruffle the imperial feathers has now been imported even into relatively small health care organizations in New England states once famed for their common-sense and frugality.

So here we go again.... We have discussed numerous examples of compensation of health care organizations' leadership that seems orders of magnitude above that which would be rationally justified. These latest examples of the wealth being accumulated by leaders of supposedly mission-centered not-for-profit organizations are a product of the current management culture that has been infused into nearly every health care organization in the US. That culture holds that managers are different from you and me. They are entitled to a special share of other people's money. Because of their innate and self-evident brilliance, they are entitled to become rich. This entitlement exists even when the economy, or the financial performance of the specific organization prevents other people from making any economic progress. This entitlement exists even if those other people actually do the work, and ultimately provide the money that sustains the organization.

Although the executives of not-for-profit health care organizations generally make far less than executives of for-profit health care corporations, collectively, hired managers of even not-for-profit health care organizations have become richer and richer at a time when most Americans, including many health professionals, and most primary care physicians, have seen their incomes stagnate or fall. They are less and less restrained by passive, if not crony boards, and more and more unaccountable. In a kind of multi-centric coup d'etat of the hired managers, they have become our new de facto aristocracy.

Or as we wrote in our previous post, executive compensation in health care seems best described as Prof Mintzberg described compensation for finance CEOs, "All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit." As it did in finance, compensation madness is likely to keep the health care bubble inflating until it bursts, with the expected adverse consequences. Meanwhile, I say again, if health care reformers really care about improving access and controlling costs, they will have to have the courage to confront the powerful and self-interested leaders who benefit so well from their previously mission-driven organizations. It is time to reverse the coup d'etat of the hired managers.

Paying CEOs of Health Care Not-For-Profit Organizations: "Greed is Good?"

Million dollar plus executives of not-for-profit health care insurance companies seem to be becoming a dime a dozen.  Late in April, Buffalo Business First reported the pay of executives of some western New York health insurance companies:

The top local executives at the region’s three major nonprofit health plans received nearly $23 million in salaries and bonuses last year.

More than 70 people received total compensation of $160,000 or more. That’s the level at which insurers are required to report in annual reports to the state Department of Insurance.

When you include executives who work for those three health plans but are located outside Western New York, the total compensation for top-paid execs totaled $46.4 million last year.

Among the local executives in the Western New York region, 23 individuals took home more than $300,000 last year.

Among the CEO-level executives:

• Alphonso O’Neil-White, president and CEO at HealthNow NY Inc./BlueCross BlueShield of WNY earned $1.65 million.

• Dr. Michael Cropp, president and CEO at Independent Health, earned $1.3 million.

• Univera Healthcare President Art Wingerter, who joined the company part-way through the year, earned $248,348, while David Klein, president/CEO of Univera’s Rochester-based parent Excellus Health Plan, received a total of $2 million.

Wingerter says compensation levels are fair and are determined with help from outside consultants based on nationwide industry surveys. They are also adjusted annually based on the organization’s performance: Top officers at Excellus saw salaries decline last year by 20 percent based on the company’s 2008 performance.

'Our compensation levels fall into the midpoint by design,' he says. 'It’s a $5 billion company. If you compared it to any leader of a $5 billion (for-profit) company, I do not believe it would be considered excessive.'

Consider that argument while reading this story from neighboring New Jersey reported by the Ashbury Park Press:

William J. Marino, president and chief executive officer of Horizon Blue Cross Blue Shield of New Jersey, received $8.7 million in compensation in 2009, a 59 percent increase from 2008, according to the company's annual financial statement.

The salary and bonus were part of a windfall for Horizon's nine highest-paid executives, who received on average 61 percent more than in 2008, the statement, filed with the New Jersey Department of Banking and Insurance, showed.

Part of the increase came from compensation that was deferred from previous years, the company said. But the pay sparked anger from consumers and medical professionals who have battled Horizon over rising premiums and declining reimbursements.

Newark-based Horizon is the state's biggest health insurance company, writing policies and administering self-funded programs for more than 3 million people. It has 72 percent of the individual market and 52 percent of the small employer market, according to the state.

The company is a nonprofit....

Meantime, Horizon's top nine executives took home a total of $24.3 million in salaries and bonuses last year, up from $15.1 million in 2008.

Another article in the same paper stated that in 2009, Horizon

reported net income of $75.1 million last year, compared with a loss of $45 million in 2008. It reported revenue of $8.3 billion, up from $7.9 billion the previous year.

The company collected 3.5 percent more in premiums. And it lowered administrative expenses by 3.5 percent, according to the annual report.

Let us reconsider the rationale for the pay of the Excellus (NY) CEO. Its basis was the pay given to CEOs of for-profit corporations. Yet the nature of for-profit and not-for-profit corporations are fundamentally different. The former exist to make money. The latter exist to fulfill their missions.

For example, this statement is on the Excellus web-site:

As New York state's largest nonprofit health plan, the company remains committed to three core principles:

* We exist to assure, in the communities we serve, that as many people as possible have affordable, dignified access to needed, effective health care services, including long-term care.
* We recognize the need, and our responsibility, to reach out to all segments of the communities we serve, particularly the poor and aged and others who are underserved, to enhance quality of life, including health status.
* We are committed to being a nonprofit health insurer.

The devotion that a not-for-profit organization is supposed to have to its mission suggests that working for such an organization, particularly in a leadership capacity should be calling, rather than just a way to make money. Equating leadership of such an organization to leadership of a for-profit corporation of comparable financial size provokes cognitive dissonance. So the notion that the leader of Excellus, an organization supposedly devoted to serving the "poor and aged," is entitled to make as much money as the leader of a for-profit corporation with similar revenues likewise provokes cognitive dissonance.

However, let us assume, just assume, that the $2 million pay of the CEO of Excellus Health Plan was fair for a $5 billion not-for-profit company. Horizon is an $8.3 billion company, roughly 60% larger, but its CEO got $8.7 million, 330% more. Furthermore, the Horizon CEO saw his pay go up 59% while company revenue rose 3.5%. What possible argument could there be to justify these even more extreme levels of compensation?

Here was the Ashbury Park Press' editorial reaction:

If truth be told, when it comes to the American health insurance system, the Hippocratic Oath — 'First, do no harm' — is too often trumped by Gordon Gecko's 'Wall Street' axiom: 'Greed is good.'

There's no better example than the shameful $8.7 million in compensation paid last year to William J. Marino, president and chief executive officer of Horizon Blue Cross Blue Shield of New Jersey....

How tone-deaf could Horizon be to bestow this kind of compensation on its executives? The only decent thing for Marino and his cohorts to do is to return the bonuses.

The disconnect between these well-heeled executives and the customers their non-profit company — that's right, nonprofit — are supposedly serving is staggering.

We have discussed numerous examples of compensation of health care organizations' leadership that seems orders of magnitude above that which would be rationally justified.  These latest examples of the wealth being accumulated by leaders of supposedly mission-centered not-for-profit organizations are a product of the current management culture that has been infused into nearly every health care organization in the US. That culture holds that managers are different from you and me. They are entitled to a special share of other people's money. Because of their innate and self-evident brilliance, they are entitled to become rich. This entitlement exists even when the economy, or the financial performance of the specific organization prevents other people from making any economic progress. This entitlement exists even if those other people actually do the work, and ultimately provide the money that sustains the organization.


Although the executives of not-for-profit health care organizations generally make far less than executives of for-profit health care corporations, collectively, hired managers of even not-for-profit health care organizations have become richer and richer at a time when most Americans, including many health professionals, and most primary care physicians, have seen their incomes stagnate or fall. They are less and less restrained by passive, if not crony boards, and more and more unaccountable. In a kind of multi-centric coup d'etat of the hired managers, they have become our new de facto aristocracy.

Or as we wrote in our previous post, executive compensation in health care seems best described as Prof Mintzberg described compensation for finance CEOs, "All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit." As it did in finance, compensation madness is likely to keep the health care bubble inflating until it bursts, with the expected adverse consequences. Meanwhile, I say again, if health care reformers really care about improving access and controlling costs, they will have to have the courage to confront the powerful and self-interested leaders who benefit so well from their previously mission-driven organizations. It is time to reverse the coup d'etat of the hired managers.

Paying CEOs of Health Care Not-For-Profit Organizations: "Greed is Good?"

Million dollar plus executives of not-for-profit health care insurance companies seem to be becoming a dime a dozen.  Late in April, Buffalo Business First reported the pay of executives of some western New York health insurance companies:

The top local executives at the region’s three major nonprofit health plans received nearly $23 million in salaries and bonuses last year.

More than 70 people received total compensation of $160,000 or more. That’s the level at which insurers are required to report in annual reports to the state Department of Insurance.

When you include executives who work for those three health plans but are located outside Western New York, the total compensation for top-paid execs totaled $46.4 million last year.

Among the local executives in the Western New York region, 23 individuals took home more than $300,000 last year.

Among the CEO-level executives:

• Alphonso O’Neil-White, president and CEO at HealthNow NY Inc./BlueCross BlueShield of WNY earned $1.65 million.

• Dr. Michael Cropp, president and CEO at Independent Health, earned $1.3 million.

• Univera Healthcare President Art Wingerter, who joined the company part-way through the year, earned $248,348, while David Klein, president/CEO of Univera’s Rochester-based parent Excellus Health Plan, received a total of $2 million.

Wingerter says compensation levels are fair and are determined with help from outside consultants based on nationwide industry surveys. They are also adjusted annually based on the organization’s performance: Top officers at Excellus saw salaries decline last year by 20 percent based on the company’s 2008 performance.

'Our compensation levels fall into the midpoint by design,' he says. 'It’s a $5 billion company. If you compared it to any leader of a $5 billion (for-profit) company, I do not believe it would be considered excessive.'

Consider that argument while reading this story from neighboring New Jersey reported by the Ashbury Park Press:

William J. Marino, president and chief executive officer of Horizon Blue Cross Blue Shield of New Jersey, received $8.7 million in compensation in 2009, a 59 percent increase from 2008, according to the company's annual financial statement.

The salary and bonus were part of a windfall for Horizon's nine highest-paid executives, who received on average 61 percent more than in 2008, the statement, filed with the New Jersey Department of Banking and Insurance, showed.

Part of the increase came from compensation that was deferred from previous years, the company said. But the pay sparked anger from consumers and medical professionals who have battled Horizon over rising premiums and declining reimbursements.

Newark-based Horizon is the state's biggest health insurance company, writing policies and administering self-funded programs for more than 3 million people. It has 72 percent of the individual market and 52 percent of the small employer market, according to the state.

The company is a nonprofit....

Meantime, Horizon's top nine executives took home a total of $24.3 million in salaries and bonuses last year, up from $15.1 million in 2008.

Another article in the same paper stated that in 2009, Horizon

reported net income of $75.1 million last year, compared with a loss of $45 million in 2008. It reported revenue of $8.3 billion, up from $7.9 billion the previous year.

The company collected 3.5 percent more in premiums. And it lowered administrative expenses by 3.5 percent, according to the annual report.

Let us reconsider the rationale for the pay of the Excellus (NY) CEO. Its basis was the pay given to CEOs of for-profit corporations. Yet the nature of for-profit and not-for-profit corporations are fundamentally different. The former exist to make money. The latter exist to fulfill their missions.

For example, this statement is on the Excellus web-site:

As New York state's largest nonprofit health plan, the company remains committed to three core principles:

* We exist to assure, in the communities we serve, that as many people as possible have affordable, dignified access to needed, effective health care services, including long-term care.
* We recognize the need, and our responsibility, to reach out to all segments of the communities we serve, particularly the poor and aged and others who are underserved, to enhance quality of life, including health status.
* We are committed to being a nonprofit health insurer.

The devotion that a not-for-profit organization is supposed to have to its mission suggests that working for such an organization, particularly in a leadership capacity should be calling, rather than just a way to make money. Equating leadership of such an organization to leadership of a for-profit corporation of comparable financial size provokes cognitive dissonance. So the notion that the leader of Excellus, an organization supposedly devoted to serving the "poor and aged," is entitled to make as much money as the leader of a for-profit corporation with similar revenues likewise provokes cognitive dissonance.

However, let us assume, just assume, that the $2 million pay of the CEO of Excellus Health Plan was fair for a $5 billion not-for-profit company. Horizon is an $8.3 billion company, roughly 60% larger, but its CEO got $8.7 million, 330% more. Furthermore, the Horizon CEO saw his pay go up 59% while company revenue rose 3.5%. What possible argument could there be to justify these even more extreme levels of compensation?

Here was the Ashbury Park Press' editorial reaction:

If truth be told, when it comes to the American health insurance system, the Hippocratic Oath — 'First, do no harm' — is too often trumped by Gordon Gecko's 'Wall Street' axiom: 'Greed is good.'

There's no better example than the shameful $8.7 million in compensation paid last year to William J. Marino, president and chief executive officer of Horizon Blue Cross Blue Shield of New Jersey....

How tone-deaf could Horizon be to bestow this kind of compensation on its executives? The only decent thing for Marino and his cohorts to do is to return the bonuses.

The disconnect between these well-heeled executives and the customers their non-profit company — that's right, nonprofit — are supposedly serving is staggering.

We have discussed numerous examples of compensation of health care organizations' leadership that seems orders of magnitude above that which would be rationally justified.  These latest examples of the wealth being accumulated by leaders of supposedly mission-centered not-for-profit organizations are a product of the current management culture that has been infused into nearly every health care organization in the US. That culture holds that managers are different from you and me. They are entitled to a special share of other people's money. Because of their innate and self-evident brilliance, they are entitled to become rich. This entitlement exists even when the economy, or the financial performance of the specific organization prevents other people from making any economic progress. This entitlement exists even if those other people actually do the work, and ultimately provide the money that sustains the organization.


Although the executives of not-for-profit health care organizations generally make far less than executives of for-profit health care corporations, collectively, hired managers of even not-for-profit health care organizations have become richer and richer at a time when most Americans, including many health professionals, and most primary care physicians, have seen their incomes stagnate or fall. They are less and less restrained by passive, if not crony boards, and more and more unaccountable. In a kind of multi-centric coup d'etat of the hired managers, they have become our new de facto aristocracy.

Or as we wrote in our previous post, executive compensation in health care seems best described as Prof Mintzberg described compensation for finance CEOs, "All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit." As it did in finance, compensation madness is likely to keep the health care bubble inflating until it bursts, with the expected adverse consequences. Meanwhile, I say again, if health care reformers really care about improving access and controlling costs, they will have to have the courage to confront the powerful and self-interested leaders who benefit so well from their previously mission-driven organizations. It is time to reverse the coup d'etat of the hired managers.

Effort to Make Health Insurance Reimbursement Fairer Lead by Director of Insurance Company Accused of Unfair Practices

We previously discussed a legal settlement of charges that UnitedHealth's Ingenix subsidiary manipulated its database of payments to physicians so as to reduce its and other insurers' payments to "out-of-network" physicians. 

One aspect of the settlement was a new initiative to better determine such payments.  Now that effort has been caught up in the web of conflicts of interests that has ensnared health care.  As reported by the Syracuse (NY) Post-Standard,

[New York state Attorney General Andrew] Cuomo obtained $100 million in settlements from 13 insurers, including Excellus, that used the defective reimbursement data supplied by Ingenix, a subsidiary of United Health, the nation’s second biggest insurer. Cuomo’s investigation showed insurers such as Excellus used that data to shortchange New York consumers by as much as 28 percent.

Also, the settlement included

money ... to create FAIR Health Inc., a New York City-based nonprofit that is supposed to come up with a new, fair reimbursement system that will be used by insurers nationwide. FAIR Health has contracted with SU [Syracuse University] to help create that database.

The effort was lead by SU Professor Deborah Freund, "a distinguished professor of public administration and economics. She also is an adjunct professor of orthopedics and pediatrics at Upstate Medical University."

However,

Freund also happens to be listed on the health insurance company’s payroll.


Excellus paid Freund $61,378 last year for serving on its board of directors, according to a financial report Excellus filed with the state last week.

After The Post-Standard spent several days investigating her ties to the insurance company, Freund quit the Excellus board Friday afternoon.

The Post-Standard noted,

But some consumer advocates said it was odd that a paid director of Excellus, one of the companies targeted in Cuomo’s investigation, was playing such an important role.

[Art] Levin, of the Center for Medical Consumers, said it was ironic that one of the people helping to fix a payment system riddled with industry conflicts of interest may have had a conflict of her own.

'This makes no sense whatsoever given that Excellus is part of the settlement,' Levin said.

Chuck Bell, programs director of Consumers Union, publisher of Consumer Reports and an outspoken supporter of the payment reform project, was unaware of Freund’s ties to Excellus.

'I think it’s a concern because consumers do want this to be an entity that is independent of the insurance industry,' Bell said.

Among Freund's defenders was

Dr. Nancy Nielsen, immediate past president of the American Medical Association and a board member of FAIR Health, [who] said the AMA looked closely at Freund’s qualifications and her Excellus affiliation. She said the doctors’ group concluded her expertise is important to the project and was comfortable that there were enough safeguards in place to avoid any conflicts. Nielsen said FAIR Health would have independent experts not tied to the insurance industry review any recommendations from Freund’s research team.

But to add another level of irony, and perhaps conflict of interest, the Minneapolis - St Paul Business Journal just announced

The American Medical Association will use an electronic health records system from Ingenix, the company said Monday.

The Eden Prairie health care information technology said its Web-based CareTracker software will run on an AMA platform currently in beta testing with the Michigan State Medical Society and will launch nationwide later this year.

The platform is touted as a way to improve patient care, clinical efficiency and make administration simpler. CareTracker is the first such system that the AMA will provide to physicians online.

'Ingenix and the AMA will help doctors adopt health IT systems that reduce time spent on administrative tasks and enable them to devote more of their time to patient care,' said Bill Miller, Ingenix executive vice president of health care delivery systems, in a news release. 'Ingenix CareTracker integrates patient medical records and e-prescribing tools into the physician’s workflow. By selecting CareTracker for its platform, the AMA is helping physicians make smarter, more practical decisions about technologies to support their practice.'

Although we often discuss conflicts of interests involving physicians or health care academics who moonlight for drug and device companies, and the effects of these relationships on clinical research and medical education, it seems like the pervasive web of conflicts of interest in health care has entangled just about every kind of health care organization, health care decision-maker, and health care opinion leader.

Thus, we need to be extremely skeptical of just about everyone and every organization claiming to provide health care related goods and services, or whose goal is to improve any aspect of health care. The danger is that such skepticism will lead to cynicism and distrust.

At the least, comprehensive, detailed disclosure of all even indirectly relevant financial and other relationships by all health care decision-makers and opinion leaders at any level, whether they be individuals or organizations, would make it somewhat easier to assess their decisions and opinions.

Effort to Make Health Insurance Reimbursement Fairer Lead by Director of Insurance Company Accused of Unfair Practices

We previously discussed a legal settlement of charges that UnitedHealth's Ingenix subsidiary manipulated its database of payments to physicians so as to reduce its and other insurers' payments to "out-of-network" physicians. 

One aspect of the settlement was a new initiative to better determine such payments.  Now that effort has been caught up in the web of conflicts of interests that has ensnared health care.  As reported by the Syracuse (NY) Post-Standard,

[New York state Attorney General Andrew] Cuomo obtained $100 million in settlements from 13 insurers, including Excellus, that used the defective reimbursement data supplied by Ingenix, a subsidiary of United Health, the nation’s second biggest insurer. Cuomo’s investigation showed insurers such as Excellus used that data to shortchange New York consumers by as much as 28 percent.

Also, the settlement included

money ... to create FAIR Health Inc., a New York City-based nonprofit that is supposed to come up with a new, fair reimbursement system that will be used by insurers nationwide. FAIR Health has contracted with SU [Syracuse University] to help create that database.

The effort was lead by SU Professor Deborah Freund, "a distinguished professor of public administration and economics. She also is an adjunct professor of orthopedics and pediatrics at Upstate Medical University."

However,

Freund also happens to be listed on the health insurance company’s payroll.


Excellus paid Freund $61,378 last year for serving on its board of directors, according to a financial report Excellus filed with the state last week.

After The Post-Standard spent several days investigating her ties to the insurance company, Freund quit the Excellus board Friday afternoon.

The Post-Standard noted,

But some consumer advocates said it was odd that a paid director of Excellus, one of the companies targeted in Cuomo’s investigation, was playing such an important role.

[Art] Levin, of the Center for Medical Consumers, said it was ironic that one of the people helping to fix a payment system riddled with industry conflicts of interest may have had a conflict of her own.

'This makes no sense whatsoever given that Excellus is part of the settlement,' Levin said.

Chuck Bell, programs director of Consumers Union, publisher of Consumer Reports and an outspoken supporter of the payment reform project, was unaware of Freund’s ties to Excellus.

'I think it’s a concern because consumers do want this to be an entity that is independent of the insurance industry,' Bell said.

Among Freund's defenders was

Dr. Nancy Nielsen, immediate past president of the American Medical Association and a board member of FAIR Health, [who] said the AMA looked closely at Freund’s qualifications and her Excellus affiliation. She said the doctors’ group concluded her expertise is important to the project and was comfortable that there were enough safeguards in place to avoid any conflicts. Nielsen said FAIR Health would have independent experts not tied to the insurance industry review any recommendations from Freund’s research team.

But to add another level of irony, and perhaps conflict of interest, the Minneapolis - St Paul Business Journal just announced

The American Medical Association will use an electronic health records system from Ingenix, the company said Monday.

The Eden Prairie health care information technology said its Web-based CareTracker software will run on an AMA platform currently in beta testing with the Michigan State Medical Society and will launch nationwide later this year.

The platform is touted as a way to improve patient care, clinical efficiency and make administration simpler. CareTracker is the first such system that the AMA will provide to physicians online.

'Ingenix and the AMA will help doctors adopt health IT systems that reduce time spent on administrative tasks and enable them to devote more of their time to patient care,' said Bill Miller, Ingenix executive vice president of health care delivery systems, in a news release. 'Ingenix CareTracker integrates patient medical records and e-prescribing tools into the physician’s workflow. By selecting CareTracker for its platform, the AMA is helping physicians make smarter, more practical decisions about technologies to support their practice.'

Although we often discuss conflicts of interests involving physicians or health care academics who moonlight for drug and device companies, and the effects of these relationships on clinical research and medical education, it seems like the pervasive web of conflicts of interest in health care has entangled just about every kind of health care organization, health care decision-maker, and health care opinion leader.

Thus, we need to be extremely skeptical of just about everyone and every organization claiming to provide health care related goods and services, or whose goal is to improve any aspect of health care. The danger is that such skepticism will lead to cynicism and distrust.

At the least, comprehensive, detailed disclosure of all even indirectly relevant financial and other relationships by all health care decision-makers and opinion leaders at any level, whether they be individuals or organizations, would make it somewhat easier to assess their decisions and opinions.

A $4.3 Million Dollar CEO for a Not-For-Profit Health Care Insurance Corporation

The US stock markets are at lows unseen for more than 10 years, unemployment is rising, around the world national deficits are increasing, and times are tough for ostensibly not-for-profit Blue Cross and Blue Shield of Massachusetts, the state's largest health care insurer/ managed care organization. Per the Boston Globe:

Blue Cross-Blue Shield's business was affected by the stock market decline, the recession, and the increasing cost of medical care.

Membership at the state's largest health plan declined about 40,000 to just over 3 million.

'The decline in membership had an impact on results,' said chief financial officer Allen Maltz. 'In addition, many of our customers changed their benefits plans to products that have much lower margins.'

Blue Cross-Blue Shield insures employees of national companies that have locations outside Massachusetts, Maltz said, and those customers accounted for some of the drop-off in membership.

Maltz said Blue Cross-Blue Shield aims for a profit margin of between 1.5 and 2 percent. Last year's margin was almost zero. The firm had operating income from its medical claims business of just $1.6 million.

A new state assessment on reserves lowered income by $21 million, Maltz said. Revenue was flat at $6.7 billion, and medical claims were also unchanged at $6 billion.

Like most health insurers, Blue Cross-Blue Shield also relies on investment income, which fell 28 percent to $111 million. Maltz said the firm managed to avoid losses in the market by investing primarily in bonds and avoiding derivative securities that have declined precipitously in value.

Well, things are tough all over. But they are apparently not so tough for Blue Cross Blue Shield's CEO:

The salary and bonus paid to Cleve L. Killingsworth, chairman and chief executive of Blue Cross and Blue Shield of Massachusetts, increased 26 percent last year, to $3.5 million, even though the health insurer's membership declined and its net income fell 49 percent.

Based on previous years' retirement benefits - which Blue Cross-Blue Shield did not report for 2008 - Killingsworth's total pay package was likely about $4.3 million, making him by far the highest paid healthcare executive in Massachusetts.

And what was the justification for Killingworth's stellar pay?

Salaries at Blue Cross-Blue Shield were inflated by a complex executive bonus plan in which senior officials get bonuses based on a rolling average of the previous three years.

'These executives and the company performed and exceeded our expectations,' said Jay McQuaide, a Blue Cross-Blue Shield spokesman. 'They earned these incentives.' The key metrics in the incentive plan are membership and net profit, he said.

The company's board of directors did not do badly either. Unlike most boards of not-for-profit corporations, this one was paid:

The insurer's board members also received a 33 percent increase in base pay, from $30,000 a year to $40,000. Most earn far more because of payments for attending meetings and serving on committees.

Finally, according to the Boston Herald, other executives did quite nicely too:

Bay State health insurance bosses continued to rake in multimillion-dollar compensation packages last year as the state and its taxpayers struggled to pay ever-increasing health-care costs.

Data filed yesterday with the state’s Division of Insurance shows that Blue Cross Blue Shield of Massachusetts, the state’s largest HMO, doled out million-dollar pay packages to five executives, while Harvard Pilgrim Health Care paid its two highest-ranking executives a total of $2.7 million.

Blue Cross’ top earner is Peter Meade, who retired last spring as executive vice president of corporate affairs. Meade took home $4 million, a sum that includes retirement benefits accrued during his 12 years at the HMO.

It's just amazing that with all their talk about "pay for performance," top executives of health care organizations seem to make huge sums year in and year out, regardless of their organization's performance. (As an aside, how could someone say that the company's pay for performance "main metrics" were membership and net profit, when both fell, yet the CEO's pay rose?)

There was a brilliant discussion of the culture that lead to this sad state of affairs in the Times (UK) by Minette Marrin. It was about British bankers, but it just as well could have been about American health care executives:

The filthy rich, as Peter Mandelson affectionately calls them, are different. It is not just that they’re rich but that there’s something about being extremely rich that blurs ordinary perspective in all but the most exceptional people. Power may corrupt, but extreme wealth blinds and deafens.

I first came across the filthy rich just after I was married and went to live in Hong Kong in the 1970s. Leaving poverty-stricken Britain, my husband and I joined a gold rush of bankers and brokers to what was then still a crown colony. What we saw was wealth and conspicuous consumption beyond the wildest dreams of avarice.

Though we weren’t extremely highly paid, we spent a lot of time with people who were. Some were entrepreneurs and others were employees of banks and trading houses that, as today, offered them ways of making megabucks. Soon it became obvious that being very rich is like catching an insidious virus. Some people are able to resist it, but with most people the super-riches virus burrows into your nervous system for life. It blurs your perspective, weakens your grasp on reality and changes your identity into someone who is entitled to be very rich.

Ms Marrin's description of "plutocratic blindness" seems to apply to a CEO of a so-called not-for-profit organization who could claim more than $4 million in a year in which the global economy collapsed, and his own organization did rather badly by any financial measure.

This passage by Ms Marrin seems applicable to the Blue Cross Blue Shield Board who approved this disproportionate pay package:

But I do know things are done quite differently on the parallel planet inhabited by the filthy rich. Remuneration boards unselfconsciously award each other astonishing packages, wrapped up in euphemism.

The lack of selfconsciousness in this case may have been driven by the board's familiarity with how things used to be done in the American financial sector. A quarter of the board's members are leaders in that sector (see post here).

Let me close with Ms Marrin's suggested solution:

The filthy rich culture that has developed in the past 20 years is sick. It needs strong medicine, fresh air, open windows. Above all, what’s needed is a cold dose of fear – fear of failing, of being sacked and of losing the lovely money. Here is an excellent antidote to greed.

To Whom Did the "Scorpions in a Bottle" Owe Their Allegiance?

In 2000, an important meeting took place between two men.

The first was a member of the board of directors of Merck Inc, the global pharmaceutical company, and of the board of Charles River Laboratories, which helps "our global partners accelerate drug discovery and development by providing them with tailored research models and preclinical, clinical, support services." The second was a member of the board of IMH Health, which advertises that it provides "global information, analytics and consulting" to support "the life cycle of medicines," from "the earliest stages of research and development through product launch, product maturation and patent expiration," and on the board of BankBoston Corporation, a national and international bank holding company. What might they have talked about?

It does not seem unreasonable to guess that they talked about pharmaceutical development. But that was not their topic.

In fact, the two men were Dr Samuel O Thier, who was then also the CEO of Partners Healthcare, and Mr William C Van Faasen, then CEO of Blue Cross and Blue Shield (BCBS) of Massachusetts. Their subject, as we discussed recently, was a secret increase in the reimbursement BCBS would give to Partners, far beyond the reimbursement given to other Boston teaching hospitals. Why BCBS was so willing to pay so much money to one hospital system is unclear. This revelation of this secret agreement showed how an important precept of the supposedly "market-based" US health care broke down. We had previously discussed that in a deregulated system, organizations like hospitals and health insurers/ managed care organizations were supposed to have negotiated vigorously for their interests. The former would try to maximize their reimbursement. The latter would try to minimize their costs. In the secret agreement between Thier and van Faasen, this did not happen.

I cannot explain why this secret agreement was made. I can point out some factors that may have been influential, but have not often been discussed.

The first factor is that the people leading health care organizations often have divided loyalties, and hence their actions on behalf of particular organizations may not be completely explained by their roles with these organizations, and consequent responsibilities and duties. For example, as noted above, the CEO of Partners also was a director of a pharmaceutical corporation, and a contract research/ drug development corporation. His responsibilities to advance the mission of Partners may have conflicted with his fiduciary duties to the stock-holders of Merck and Charles River Laboratories. Similarly, the CEO of Blue Cross Blue Shield was also a director of a drug development corporation and an international finance corporation. His responsibilities to advance the mission of Blue Cross Blue Shield may have conflicted with his fiduciary duties to the stock-holders of IMH Health and BankBoston Corporation.

The second factor may be revealed by considering the current leadership of the two organizations, leadership which has maintained the secret agreement (at least until it was made public).

The current Board of Trustees of Partners Healthcare, which has 16 members, includes:
- Jack Connors, the chair of the board, who is also the Chairman Emeritus of marketing communications company Hill, Holliday, Connors, Cosmopoulos Inc, whose clients include pharmaceutical and pharmacy benefits manager CVS / Caremark, and is also a member of the board of directors of Covidien, a medical device company.
- Anne M Finacane, who is chief marketing officer for Bank of America, an international financial corporation
- Steven S Fischman, who is President and Chief Operating Officer of New England Development, and real estate development and investment company.
- Edward P Lawrence, a member of the board of directors of Invesco, a global investment management corporation, and of AMVESCAP PLC, another global investment management corporation.
- Jay O Light, an "advisor/trustee to several corporate and institutional pools of capital," a member of the board of directors of Blackstone Group Management, the general partner of the Blackstone Group, a global investment and advisory firm, and a member of the board of directors of ESurg.com, an online source of health care supplies and information.
- Terrence Murray, who is on the board of directors of CVS/Caremark, and is former chair of FleetBoston Financial Corporation and its predecessor FleetBoston, into which BankBoston merged, and which subsequently merged into Bank of America.
- Gary A Spiess, former vice-president of FleetBoston Financial.
- Dorothy A Terrell, a venture partner of First Light Capital, a venture capital firm.
- David A Thomas, a member of the board of directors of Cambridge Trust Company.

The current Board of Directors of Blue Cross Blue Shield of Massachusetts, which has 18 members, includes:
- Mara Aspinall, senior advisor to Genzyme Corporation, a biotechnology firm, member of the board of directors of Predictive Biosciences, also a biotechnology company, and member of the board of trustees of the Dana-Farber Cancer Institute, a component of Partners Healthcare.
- Brian Barefoot, a former executive vice president and director of investment banking for PaineWebber Inc, an investment firm that was merged into UBS.
- Samuel Cabot III, a member of the board of directors of Fiduciary Trust Company, an investment management firm.
- Richard C Garrison, senior vice president and "catalyst" of Vertex Pharmaceuticals, a biotechnology company.
- Paul Guzzi, member of the Partners Healthcare corporation.
- Marian L Heard, is a member of the board of directors of CVS/ Caremark.
- Philip W Johnston is president and CEO of Johnston Associates, a consulting firm whose clients include Partners Healthcare, numerous medical device companies, including Covidien, and numerous other health care corporations.
- Cleve L Killingsworth, a member of the board of overseers of TIAA/CREF, an investment company.
- Karen Kruck, a senior managing director and head of strategy for State Street Global Advisors, an investment management company.

So another factor seems to be that the leadership of organizations which are supposed to negotiate at arms' length may have more in common with each other than with their organizations' constituencies. Note that these two boards have a lot in common. Both have disproportionate numbers of members who work or retired from one sector of the economy, financial services, and are or were top leaders within that sector. (Half, 8/16 of Partners board members are from this sector. 22%, 4/18 of the Blue Cross Blue Shield board are from this sector.) Keep in mind that of the employed US population, less than 6% work in this sector. This sector is also that which has brought us the global financial crisis.

There are also a variety of interlocks and overlaps among the two boards. These include:
- A major client of a firm run by a member of the BCBS board (Johnston) is Covidien, whose own board includes a member of the Partners board (Connors).
- Another major client of Johnston's firm is Partners itself.
- A member of the Partners board (Murray) and a member of the BCBS board (Heard) both sit on the CVS/ Caremark board.
- A major client of the former firm of a member of the Partners board (Connors) is CVS/ Caremark, a firm on whom a member of the BCBS board and a member of the Partners board sit.
- a member of the BCBS board (Aspinall) also sits on the board of a the Dana-Farber, a component of Partners.
- a member of the BCBS board (Guzzi) is also on the Partners corporation.

Finally, a number of the members of both boards have leadership roles in other health care corporations whose goals could conflict with Partners of BCBS respectively. Two members of the Partners board and three members of the BCBS board sit on the board of such health care corporations.

In summary, the current "market-based" approach to the organization of our health care system is based on the assumption that health care organizations will compete vigorously with each other, and different kinds of health care organizations will negotiate vigorously and at arms' length for their own interests.

However, it appears that the leaders of large health care organizations may have more in common with each other than with other members of their organizations' constituencies. For example, the leaders of a hospital system and of a health insurance/ managed care corporation may be more like each other than like their own employees, patients, trainees, etc. This may make it less likely that they will negotiate vigorously and at arms' length.

It also appears that conflicts of interest affecting these leaders may be widespread, and that conflicts can be of a variety of types.

Finally, it appears that leaders of the finance sector may have a disproportionate overlap with the leadership of health care organizations. The current global economic collapse have lead many to characterize the culture of the financial sector as marked by arrogance, greed, and corruption. Having this culture disproportionately influence the leadership of health care organizations may be responsible for some aspects of the ongoing health care crisis.

This case, and many others reported on Health Care Renewal, suggests that we need leaders of health care organizations to be dedicated to the principles and mission of their organizations, and not to have divided loyalties and conflicts of interest.

Merger Mania Redux: Combination Would Lead to Windfalls for Blue Cross Executives

The Philadelphia Inquirer published a story about what seems to drive merger mania in health care. In Pennsylvania, the two largest health insurance companies in the state, both not-for-profit, Highmark and Independence Blue Cross, have been pushing to merge

Highmark Inc. and Independence Blue Cross would pay their top executives as much as $4.2 million more if they were allowed to merge.

Kenneth Melani, the chief executive of Highmark, who is expected to have the same job at the combined companies, would get a 31 percent raise, to $3.9 million from $2.97 million, including incentives, according to documents filed with the Pennsylvania Insurance Department.

Independence Blue Cross' CEO, Joseph Frick, who is slated for the role of chief operating office after the merger, would earn $2.94 million, the same as his current pay. In 2006, Frick's pay was $1.6 million.

The two biggest raises after Melani's $930,000 are planned for chief financial officer Nanette DeTurk and David M. O'Brien, executive vice president for government services, both from Pittsburgh-based Highmark.

DeTurk, who is in line to be CFO of the combined entity, could get a $635,098 increase in total pay, which includes possible annual and long-term incentives. O'Brien, head of Medicare operations, would get a $556,184 raise under the plan filed Thursday.

Lance Haver, director of Philadelphia's Office of Consumer Affairs, said yesterday that the raises were another 'indication that the Blues have lost their social mission and operate more like for-profit insurance companies.'

If the reason for the merger is 'to better serve the public, then they don't need to raise executive salaries like this,' he said.

The insurers have said that efficiencies from the merger, which would create the largest health insurer in state history and one of the largest in the nation, would spin off $1 billion in savings to benefit subscribers, the uninsured and other charities.

Part of the savings would come from the elimination of 745 to 1,200 jobs, the companies have projected.

An editorial in the same newspaper noted that while executives would enrich themselves, the benefits to others were not so obvious.

Short of the windfalls for the top execs, the proposed merger looks like a loser for other Pennsylvanians.

Employees: Up to 1,200 Blue Cross jobs are expected to be eliminated if the deal goes through. Mergers create job overlaps that lead to reductions and a big annual savings.

Of course, there's no overlap for the two chief executives, who instead will divvy up their duties and still get big paydays.

Customers: Independence Blue Cross and Highmark already have a stranglehold on their respective markets, which helps explain why they can jack up rates without much recourse by their clients.

The proposed merger won't lead to a reduction in premiums for customers, who have been socked with annual double-digit increases. The Blue Cross CEOs say the merger will have 'minimal' impact when it comes to reining in rate hikes.

Competitors: If the merger is approved, the prospect of any real competition among health-insurance providers in the state will disappear.

The merger would give the new firm a combined market share of roughly 65 percent - making it the largest private health insurer in Pennsylvania. The result will be a more dominant health-insurance provider, making it even harder for other existing insurers to expand while scaring any new competitors from entering the state.

The leaders of not-for-profit corporations are supposed to have a duty of obedience, the obligation to advance their organization's mission, and a duty of loyalty, the obligation to put the mission ahead of their self-interest when acting in their leadership capacity. Highmark proclaims its mission to be "to provide access to affordable, quality health care." Independence Blue Cross seems to have avoided committing itself to a mission, but by implication also should be about providing fairly priced, accessible health insurance. However, the main effect of this merger seemingly would be to enrich the two organizations' top executives, not to improve health care or make it more affordable or accessible. This example of merger mania reminds us that far too many health care leaders seem more interested in enriching and empowering themselves rather than improving health care.

We need health care leaders who actually care about health.

Making the governance of health care organizations, particularly not-for-profit organizations, more representative of key constituencies, more transparent, more accountable, and subject to clear ethical standards might encourage people who care about health to lead health care organizations, and discourage people who care mainly about their own wealth and power from doing so.