Kang Departure a Loss for Cigna, Health Insurance Industry

October 31, 2011

I’d wanted to write a brief note about the departure of Jeffrey Kang, M.D., as chief medical officer of Cigna earlier this month but got a bit pressed.  Alan Muney, M.D., replaces.  Kang, who was with Cigna since 2002, has taken a job as senior vice president of health and wellness services and solutions for Walgreen Co. 

I always found Kang to be more thoughtful than dogmatic in his approach to the problems surrounding the U.S. healthcare system.  I interviewed him in the run-up to healthcare reform, when the insurance industry was circling the wagons in opposition of the public option.  Kang noted at the time that health plans would actually “be able to compete favorably with any public option” as long as there was a national provider fee schedule that leveled the playing field — an approach I agreed with then and agree with now. 

Former Cigna public relations executive turned industry whistleblower Wendell Potter calls Kang “a compassionate man,” noting that “he could always be counted on for a reasoned point of view.”  Prior to joining Cigna, Kang worked for the federal government, serving stints as chief clinical officer for the Health Care Financing Administration (now CMS) and as chief medical officer for the Office of Managed Care.

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When Choice in Healthcare Goes Bad, Part 1: Steve Jobs

October 31, 2011

From Paul Kedrosky’s review of Walter Isaacson’s new biography of Steve Jobs:

Among the book’s telling revelations is Jobs’s decision, after an October, 2003, diagnosis of a rare but treatable pancreatic cancer, to do nothing for nine months. Where he should have gone in for immediate surgery, Jobs engaged in magical thinking, ignoring the problem and self-medicating with bowel cleansings, juice and other mainstays of woo-woo medicine. When he finally went in for surgery in July, 2004, Jobs’s cancer had metastasized to his liver, forcing him to begin chemotherapy. He eventually had a liver transplant in 2009, but that growing cancer finally killed him this Oct. 5, at the age of 56.


SXC Fallout From Cigna-HealthSpring

October 26, 2011

In Brief: HealthSpring is the largest pharmacy benefit management client of SXC Health Solutions.  Cigna is acquiring HealthSpring.  Cigna has its own PBM.  Shares in SXC fell 23% on word of the deal.


Quote of the Day: David Cordani

October 26, 2011

David Cordani, chief executive of Cigna, on the scalability of physician engagement tools that will come along with the company’s acquisition of HealthSpring:

We don’t believe it will be a one-size fits all model….We do believe philosophically that at the core aligning the physicians’ incentive and engaging them in a more partnered model using information to help to drive improvement in clinical quality is the sustainable way to drive forward.


U.S. Healthcare Spending vs. Other Nations

October 25, 2011

The latest from The Commonwealth Fund, citing 2011 OECD data.


War, Healthcare and Lost Jobs

October 25, 2011

From Costs of War, a study prepared by The Watson Institute at Brown University:

Approximately 8.3 jobs are created by every $1 million in military spending….A million dollars of spending would create 15.5 jobs in public education, 14.3 jobs in healthcare, 12 jobs in home weatherization, or about the same number of jobs in various renewable energy technologies.   A million dollars spent on construction (residential and non-residential structures) creates 11.1 direct and indirect jobs….

The (at least) $1.3 trillion of Department of Defense war spending in the past decade averages out to $130 billion per year.  While these funds did indeed create jobs in the military and in related sectors….$130 billion per year could have created a net increase of jobs in other sectors:  for example, more than 300,000 jobs in construction, or 900,000 jobs in education or about 780,000 jobs in healthcare.


Go Medicare? Cigna to Acquire HealthSpring

October 24, 2011

Ever since David Cordani took over as chief executive of Cigna, the company has hammered home its strategy of “go deep, go global, go individual.”   So it comes as a surprise that the company is now going Medicare in a big way, announcing the acquisition of HealthSpring for $3.8 billion or $55 per share.  That’s a 37% premium over HealthSpring’s Friday close.  The deal will increase Cigna’s Medicare Advantage membership nearly four-fold to about 457,000 lives. 

The purchase price works out to about $11,000 per member for HealthSpring’s 336,000 Medicare Advantage lives, but it’s actually a bit less because the deal includes 835,000 Medicare Part D members and 1350 Medicaid members.  Cigna had just 121,000 Medicare Advantage members as of June 30, down considerably from a year earlier.  Cigna has no Medicaid members.

The deal also marks a return to large-scale consolidation among health plans — a trend many predicted would return following healthcare reform.  A complete assessment of the deal and Cigna’s renewed push into the government market will appear in this week’s Health Plan Market Trends.

Correction (Oct. 26): Number of Medicaid lives was originally reported incorrectly.


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