UnitedHealth Group Inc. is heading into the holiday weekend with a major settlement in the books, and probably quite a few nervous employees. The second-largest health insurer in the US has announced it will cut 4000 jobs as it restructures its business towards a more regional model and becomes “simpler, leaner, and faster” according to CEO Stephen Hemsley.
The company announced a $900 million payout for settlement of an options backdating lawsuit that dates back two years. The scandal forced former CEO Bill McGuire to resign, and has hounded the company since 2006, but it looks like they are putting it behind them and moving forward. It’s good to see that they’re focused on making the company more efficient, although I’m sure that’s little consolation to the 4000 people whose jobs are on the line.
There have been lots of issues with health insurance companies and financial settlements lately, and several instances of lowered earnings projections in 2008. Hopefully the health insurance industry will learn from all these settlements and be on better behavior going into 2009. With all the calls for change in the health care industry, every player in the game needs to be focusing on efficiency, service, and honesty. Anything less is likely to be looked at sharply as lawmakers and industry insiders work to lower the cost of healthcare and increase access to care for all Americans. I’m glad to see that United Healthcare – one of our major Colorado health insurers – has laid the SEC problem to rest and seems to be headed in the right direction.