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UnitedHealth Vows Better Service

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By JOSHUA FREED, The Associated Press

Published: December 7, 2007

MINNEAPOLIS - UnitedHealth Group executives acknowledge that missteps have frustrated patients and doctors and cost it customers, although it predicts a turnaround next year as it strives to improve customer service and roll out new types of health plans.

Poor customer service, especially for health insurance for businesses, caused losses of 315,000 customers this year, the company told investors and analysts at a presentation in New York this week. UnitedHealth, one of the nation's biggest health insurers, said the missteps could cost it half a million members in the first quarter of 2008.

"We are not satisfied at all with 2007," chief executive Stephen Hemsley said at the company's annual investor conference in New York on Tuesday. Hemsley took over leadership of the Minnetonka-based company a year ago after former chief William McGuire was ousted in a stock-options scandal.

Improvements are on the way, including faster payments for doctors, said David S. Wichmann, who oversees UnitedHealth Group Inc.'s individual and employer markets.

UnitedHealth officials outlined several changes aimed at improving its service reputation:

•It will show doctors and patients on the day of a doctor's visit how a claim will be paid.

•Doctors will be paid more quickly.

•UnitedHealth employees will be given incentives for quality and patient advocacy first, and productivity second.

"We're becoming easier to do business with," Wichmann said.

UnitedHealth rankled doctors and customers by the way it handled its purchase of PacifiCare in 2005. Its brand was also hurt by a stock options backdating scandal that led McGuire to step down. On Tuesday, the Minnesota Court of Appeals ruled that state Attorney General Lori Swanson can force UnitedHealth to turn over options-related documents under a false advertising statute.

The three-judge appeals panel wrote that UnitedHealth's Securities and Exchange Commission filings are the legal equivalent of "advertising."

UnitedHealth had to restate several years of financial statements because it dated its stock options incorrectly, giving McGuire and some other employees an instant gain.

The investigation began a year and a half ago under Swanson's predecessor. "The investigation has been stymied by the company's lack of cooperation" but should be able to move forward now, Swanson said in a statement.

UnitedHealth attorneys have said Swanson should sue if she has allegations of wrongdoing, but that she should not be allowed to fish for material without saying what it's for. The Securities and Exchange Commission and the U.S. attorney's office in Manhattan have also announced investigations.

CEO Hemsley said the improvements are being made now but will take another year to become more obvious for customers. UnitedHealth said it expects to continue to lose health insurance customers during the first quarter of 2008, followed by gains throughout the rest of the year.

He said UnitedHealthcare is aiming to resolve billing issues within two days or less, which he said would lead the industry. He said UnitedHealth has cut claim defects by 60 percent over the past 22 months.

Information from the Star-Tribune of Minneapolis was used in this report.

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