The departure last week of two key executives at UnitedHealth Group, the nations largest commercial insurer, has the industry buzzing about what it means for the companys future.
Richard Anderson, the executive vice president who headed up the Commercial Services Group, left UnitedHealth to become chief executive officer of Delta Air Lines, effective Sept. 1. Anderson, 52, was with the insurer for less than three years, after 17 years at Northwest Airlines, where he served as CEO. He was named to Deltas board of directors in March, and his move back to the airline industry was not unexpected, analysts said.
More of a surprise is the departure of Lois Quam, an executive vice president who had been with the Minnetonka, Minn.-based insurer since 1989. Quam was instrumental in winning UnitedHealths first AARP Medicare Supplement contract in 1997, and has run the companys Public and Senior Markets Group, including Medicare and Medicaid divisions.
Both Anderson and Quam gained more responsibilities after the abrupt resignation of CEO William McGuire last December amid a stock backdating scandal. The company and McGuire remain under investigation by the U.S. attorney in New York City, the Internal Revenue Service and the Securities and Exchange Commission. A shareholder lawsuit is also pending.
Anderson, Quam and Dave Wichmann, who is staying and runs the companys largest businesses (UnitedHealthcare and Uniprise), had the top operating jobs at the company, comprising what was essentially an Office of the President reporting to Chief Executive Officer Steve Hemsley, John Rex, a Bear Stearns analyst, said in a note to investors. With a near-continuous stream of issues to deal with for some time now, the disruption doesnt exactly help create a more stable perception.
Speculation about why Quam left abounds. Quam, 46, who will start her new post as managing director at Piper Jaffray & Co. this fall, worked on health reform in the first term of the Clinton administration, and is considered to still have a good relationship with Senator Clinton, Rex said. Should she ever want to return to public service in another Clinton administration, establishing some distance from UnitedHealth, the largest Medicare contractor in the country, would probably be helpful, Rex said.
Quams husband, Matt Entenza, a former state representative in Minnesota, ran for state attorney general in 2006 but withdrew amid a scandal over his hiring of an investigator to research the sitting attorney general, as well as possible conflicts of interest because of his wifes role at UnitedHealth. In July, he founded Minnesota 2020, a think tank focused on economic development and healthcare.
Quams departure could be related to missed Medicare Advantage enrollment numbers and overzealous marketing of those plans, others said. In June, UnitedHealth was among seven companies that agreed to suspend marketing of its private fee-for-service plans after a CMS investigation.
Replacing Anderson and Quam are William Munsell and Anthony Welters, respectively. Until the reorganization last December, Munsell was CEO of Specialized Care Services, the largest unit in the commercial group and Welters was CEO of AmeriChoice.
Welters had been focused on governmental affairs. Medicare Advantage is 12% of UnitedHealths business and Congress is considering slashing those reimbursements.
Even with these departures, UnitedHealth continues to have the deepest management team in the industry, Matthew Borsch, an analyst at Goldman Sachs, said in an investor note.