Angela Braly was sacked as the head of health insurance giant Wellpoint yesterday - but not necessarily for the right reasons.
Wall Street banks and billionaire investors complained about the company's profit margins and a slipping stock price. (Put that in perspective: Wellpoint had $13 billion in profits last year.)
It’s an appropriate changing of the guard with federal and state health reform at hand. Braly won the prize for being the most politically tone-deaf of national health insurance industry executives. She sat through poignant Congressional testimony from customers whose lives were being ruined by spiraling premium hikes, then testified that the public outrage at unaffordable insurance prices was "a triumph of sound bites over substance." It was her Marie Antoinette moment. But that was more than two years ago.
The lesson here isn’t a great one: See a huge spike in customer dissatisfaction and no one notices. See a small dip in earnings, and management gets overthrown. This despite the fact that Wellpoint remains profitable, is the second-largest health insurer in the country, and has to wait just a little more than a year before the health reform law delivers it a few million more customers courtesy of the health reform law’s mandate that everyone have health insurance.
More from Chad Terhune in today’s LA Times:
Royal Capital Management, a New York hedge fund that owns about 800,000 WellPoint shares, sent a letter to the board last week saying that Braly had "failed miserably" and called for her ouster.
Billionaire investor Leon Cooperman and his Omega Advisors hedge fund, another influential WellPoint shareholder, also urged the board to make a change in management in hopes the health insurer could resuscitate its slumping share price.
…. Consumer advocates expressed relief at Braly's departure. Many Anthem Blue Cross customers in California have complained about getting hit with double-digit rate hikes year after year.
"Let's hope the next CEO understands that indifference to patients' pain and suffering is no way to run a business," said Jamie Court, president of Consumer Watchdog, an advocacy group in Santa Monica.