Yet the economic power of the Baby Boom generation and government-sponsored plans provides the industry with significant investment potential.
IN THIS PACKAGE
- Seeking bargains in the financial-services rubble
- Take steps quickly to head off foreclosure
- Time is short to devise new strategies for cash
- The savings game
- The Leckey file
- Getting started
- Spending smart
- Can they do that
- Taking stock
- Card issuers become wary, leaving consumers pinched
- The week ahead
- Andrew Leckey
Jan. 13: Bond backer may see its troubles grow exponentially
Jan. 6: Battle of the formats: Winners are elusive
- Companies and Corporations
- HealthSouth Corp
See more topics »
Consider UnitedHealth Group Inc. and HealthSouth Corp., two high-profile companies that rate consensus "buy" recommendations from Wall Street analysts.
UnitedHealth provides health-care services to 70 million Americans through 520,000 physicians and other care providers, while HealthSouth has 978 U.S. ambulatory surgery and rehabilitative facilities.
There have been problems.
The University of Missouri recently dropped UnitedHealth as its health-plan administrator, citing "unacceptable service levels" and "concerns about the quality and reliability of customer service."
The school's plan, which includes 40,000 faculty, staff, retirees and their dependents, will shift to Coventry Health Care Inc. in January. It may be a financial drop in the bucket for UnitedHealth, but it is a far larger jolt to its image.
UnitedHealth has agreed to pay as much as $20 million in a settlement with 36 states to resolve problems with its claims-paying systems. It accepted a three-year plan in which it must submit quarterly reports and reduce claims-payment errors.
There also was scandal in the UnitedHealth executive suite: Former Chief Executive William McGuire left late last year after an investigation into backdating of stock options at the company.
McGuire's second-in-command, Stephen Hemsley, assumed the top job. Though Hemsley also received backdated options, he was cleared of responsibility for instigating them.
That list of problems is trifling compared to those for HealthSouth's founder.
Former CEO Richard Scrushy in June began a seven-year term for bribing a former governor of Alabama. Scrushy has also made a settlement on Securities and Exchange Commission civil claims of $77.5 million, plus a $3.5 million penalty. He received credit for $71.5 million already paid in related cases.
Health-care firms have been political animals, which is clear from the amounts they give to presidential campaigns. But considering the controversy they generate, apart from any Michael Moore documentaries, these companies must emphasize efficient delivery systems and high ethical standards more than ever.
No matter what demographics or profit projections may forecast, any more negative news from major firms could send the industry into intensive care.
Andrew Leckey is a Tribune Media Services columnist.