The brutal assassination of Brian Thompson brought to light a perturbing truth about the U.S. healthcare structure. Holding the position of CEO at the nation’s largest health insurance firm makes your untimely demise not just a gruesome crime tale but also a financial story. The brutal end of UnitedHealthcare head, Brian Thompson, narrated in media outlets has been seemingly sensationalistic, morphing into a relentless manhunt across New York. Meanwhile, the story concurrently unfolds in the financial landscape, almost disturbingly usual.
Thompson fell victim to gunfire on a Wednesday morning in Manhattan, a potential deliberate strike described by New York law enforcement. As a shocking ripple effect began to unfold, UnitedHealth’s (UNH.NaE) stocks surprisingly found themselves on a 0.6% incline. On the day of the relentless assault, UnitedHealth Group Inc., the coping parent company of the insurer, saw a typically flat day in their share prices. The day commenced with stocks at $611.02, ending almost unchanged at $610.79.
Remarkably, during this rollercoaster day, UnitedHealth’s shares went up by roughly a point. However, as the news spread and the day aged, UnitedHealthcare faced an onslaught of negative media attention, highlighting what many interpreted as exploitative business practices. The shocking event sent tremors through other healthcare conglomerates, upticking fears for their executive teams. UnitedHealthcare’s response was swift and tangible – removing all executive images from its website.
With time, the tides turned. The scope and severity of the murder amplified, transforming it into a narrative of national relevance. Friday morning saw UnitedHealth’s shares dipping once more, fueling uncertainties about when the decline might finally plateau. Despite the turmoil, it’s hard to deny the powerhouse that UnitedHealthcare is, boasting an impressive $16.4 billion in profits for the year that just passed.
Alongside all insurance conglomerates, UnitedHealthcare is no stranger to denying claims. While data around the precise number of claims denied is held close to the vest, plenty of heartbreaking tales have emerged. ProPublica, in the previous year, published an intriguing exposé about the company’s near-ridiculous fight to withhold from paying a claim to a chronically sick man with multiple illnesses that should theoretically qualify for coverage.
The underpinning philosophy of the insurance industry revolves around the delicate balance between the premiums collected and the claims paid out. For instance, UnitedHealth reported a staggering $290 billion in premium collections in 2023, offset by expenses of $240 billion on actual medical costs for its patrons. This profit-making model capitalizing on human health failures is so established and systematic that even the brutal demise of the head of operations can only slightly sway stock prices.
UnitedHealthcare sits snugly in this somber reality, surrounded by many others in the industry. There’s a fascinating analysis by academics in 2016 that verified the occasionally witnessed rise in stock values post the abrupt death of a CEO. It seems markets, at times, reflect a lack of confidence in the deceased CEO by escalating the stock value in their absence.
This interchangeability of leadership may not be a universal phenomenon, though. One can visualize numerous enterprises where the perceived replaceability of the decision-maker wouldn’t hold valid.