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Coventry Health Care Inc of Bethesda MD is a Fortune 500 Health Insurance Company. In 2005, this managed healthcare company operated under various names in 14 states. Coventry Health Care, Inc. of West Virginia served West Virginia. For the first six months of 2005, revenues rose 24% and net income approached a positive 53%..
Coventry enjoyed much positive media coverage at that time. None so glowing, however, than an article that appeared in The Washington Post in 2005.
Coventry's Profitability Prescription
By Steven Pearlstein
Friday, October 7, 2005; Page D01
As corporate addresses go, there's no better in the Washington area than Bethesda's Rockledge Drive. Lockheed Martin. Marriott. Coventry Health Care.
Never heard of Coventry? You're not alone. This company has operated under the radar for many years, running HMOs and health insurance plans under a variety of names. The presence of its 220-person headquarters in Bethesda is an accidental legacy of a long-ago merger. Its top executives are some of the highest-paid in the region but are virtual unknowns, rarely taking visible roles in civic affairs or even industry conferences. And Coventry's idea of corporate media relations is to refuse to respond to reporters' inquiries.
Where Coventry is well known, however, is on Wall Street, where it has become a darling of analysts and institutional investors. Over the past five years, while an investment in the S&P 500 index would have lost 7 percent, investors in Coventry enjoyed a total return of 753.1 percent, making it one of the market's top performers among large companies.
Coventry's financial performance has been equally spectacular. Since 1996, when industry veteran Allen Wise was hired to turn the company around, annual revenue has grown from $1.2 billion to an estimated $6.6 billion this year, largely through acquisition, while profit has gone from essentially zero to an expected $500 million this year. Its administrative costs and medical "loss ratio" (the percentage of premiums spent on medical care) are among the lowest in the industry, giving Coventry some of the highest margins.
Coventry's MO has been to buy up underperforming health plans -- 20 since 1988 -- at discount prices in regions where it can win enough market share to raise premiums and demand good rates from doctors and hospitals. By integrating the plans' back-office functions -- such as claims processing, customer service and health management -- Coventry realizes economies of scale. At the same time, it leaves each plan to do its own sales and marketing under an established local brand name. And by focusing on providing insurance to small and medium-size firms in secondary markets where price competition is not too fierce and customers are not too demanding, Coventry has hit the sweet spot of industry profitability.
The way insurance companies keep premiums competitive while improving profits is by cherry-picking the healthiest customers, limiting service to the most cost-efficient providers, steering patients toward lower-priced drugs and withholding approval for expensive procedures unless absolutely necessary. Coventry has a reputation for mastering these skills.
Coventry's rankings on consumer surveys, not surprisingly, are less than spectacular, running from slightly above average in western Pennsylvania to slightly below in Kansas City. That is a good indication that Co ventry has learned to squeeze costs and limit coverage without going too far. ???
For a long time, I assumed Wise was setting up Coventry to be sold to one of the bigger national players like Aetna or UnitedHealth. But last year's purchase of First Health for $1.8 billion suggested that Coventry aims to be one of the big survivors in the coming industry shakeout. That challenge now falls to Dale Wolf, Wise's handpicked successor, who has options on 1.5 million shares of Coventry stock riding on the outcome.
Wolf's strategy, it appears, is to make First Health -- with its national provider network and disease-management capabilities -- a platform for expanding Coventry's Medicare and Medicaid business, which have provided most of its growth in the past two years. Coventry, along with pharmacy partner Rite Aid, was chosen as one of a handful of firms to provide the new stand-alone drug benefit nationwide when the program begins next year. And while that business may have smaller margins than Coventry is used to, it offers the opportunity of eventually selling those customers a more comprehensive (and profitable) managed-care plan that covers physician services and drugs not covered by the basic Medicare plan.
In the meantime, Coventry faces stiffer competition on its commercial business from the recently reinvigorated BlueCross BlueShield plans, and from Humana, which has jumped to the lead in a hot new area of health insurance -- consumer choice plans that combine health savings accounts with catastrophic insurance. If Wolf can't catch up with a competitive product, look for him to use Coventry's premium-priced stock to shop for a company that already has. ~The Washington Post, Steven Pearlstein, Business Columnist, October 7, 2005
There is a dark side of Coventry Health Care that reveals itself in the many health care denials of rightful benefits to their consumers. Like Tracy Pierce.
Tracy Pierce Sr-His Fight for Life..April 2004-January 2006
Tracy Dion Pierce died on January 18, 2006 at home after a courageous battle with Renal Cell Carcinoma (Kidney Cancer). Tracy was a 37 year old African American man from Mission, Kansas. Tracy was a Journeyman Carpenter with Local #61 Carpenter's District Council in Kansas City. Tracy was diagnosed with Renal Cell Carcinoma in 2004, the cancer eventually spread to his liver, lungs, lymph nodes, adrenal gland, renal cavity and his brain. This sounds like just another statistic...but it’s not! Tracy was not! Tracy Pierce was a Father of a 14-year old boy, a brother, a son, a friend and he was my husband of 16 years!
On April 10, 2004, one day before his 36th birthday, Tracy was sent to the emergency room for an MRI after an appointment with our family physician. Our worst fears began that day and the nightmare only got worse. The MRI showed a massive mass on his left kidney which needed to be surgical removed immediately. On April 15, 2004 Tracy had surgery, a radical left nephroectomy that was followed by complications which led to another surgery for a blockage in the intestines which kept him in the hospital until May 12, 2004.
We were told that Tracy would need to start treatment immediately as it had infected his Lymph nodes and would spread. The first Oncologist was the one assigned to Tracy's case by the surgeon during his hospital stay, he acted as if there were no avenues for us to go and just seemed as if he didn't care. I began looking at other options, by word of mouth I was told to take Tracy to KU Cancer Center at the KU Medical Center-my insurance said they were not in network. Since I work at a hospital I talked to one of our well respected Oncologist, he told me to bring Tracy to see him and he would see what he could do..we did..He referred us to Ella Fischel Cancer Center in Columbia, Missouri...
We made the appointment, insurance said it was in network so off we went on the 2 1/2 hour drive..The next morning at our appointment, we were told that our insurance denied it, I argued that I had called prior to coming all this way and it was approved..we ended up paying out of pocket to see this physician...He wanted to start treatment on Tracy right away..Insurance Denied....
The next day when we arrived home, I contacted the benefits department at my employer-St. Joseph Medical Center, within hours we were notified that the reason for the denial was that there was a doctor right here in Kansas City that could treat Tracy. Go figure it was at KU Medical Center. the hospital I originally tried to go to...So we went to see Dr. Peter Van Veldhuizen at the Cancer Center at KU Med.
We had health insurance through my employer St. Joseph Medical Center which is part of Carondelet Health and Ascension Health, so we felt certain that the road to recovery could be promising along with additional treatments and therapy aiding in prolonging his life.....so we thought......WE THOUGHT WRONG! Every treatment that Tracy’s physician submitted to the insurance company for approval was denied except for one which was 2 rounds of Interleukin infusions in September 2004, which were not successful due to the delay in treatments due to denials.
When you keep getting denied for everything, you will try anything for that miracle and pray that it works. We did try for Clinical Trials but they have strict guidelines you must meet in ordered to be accepted. By September of 2004 Tracy was disabled and on 2 high dose pain medications and the cancer had spread to his liver and lungs. Early in 2005 it had spread to his adrenal gland, lymph nodes and renal cavity, then by the fall of 2005 it spread to his brain.
Our last hope was a Bone Marrow Transplant..When the request was submitted for testing of Tracy and his 2 brothers, it was denied. Then 2 days later I received a call that they were approving the bone marrow work-up...We were ecstatic!!! The results came in 2 weeks later that Tracy's youngest brother was a perfect donor match..the doctor submitted the results.....it was denied!
Why would they allow my husband to get his hopes up, approve the testing when they knew they were going to DENY it????? At first we were under the impression that the insurance company "First Health Coventry" was the entity solely responsible for denying my husband treatment, but we found out that the final decisions rested with the medical plans Board of Trustee’s/Plan Administrators at my employer St. Joseph Medical Center.
I couldn't believe that my employer was behind this as we are a Catholic Hospital that promotes life. We met with the Board begging for approval, submitting a 27 page appeal letter from the Bone Marrow physician who emphatically pleaded with them to approve necessary treatments.....they DENIED it!!! They had the power to save my husbands life, they put us through false hopes by sending him and his brothers for the testing when they knew they would deny it......How heartless and ruthless is this?
They preach that we are a health care that cares for the sick, the dying and the poor-that we are a health care that leaves no one behind....LIES....We fought a long and hard battle for Tracy's right to receive the treatments that his physician ordered and his right to live! and Yes my employer did create the Tracy Pierce Fund after I went on television for the second time and put their name out there... we truly feel it was a PR move to save face and it wasn't enough for any kind of treatment, just to put toward debt we had built up due to denials.
I have boxes of paper work as I didn't throw anything away, I have every denial letter. He was denied from day 1 until his last days. Below is the list, which does not include the ones that were denied when pre-authorization calls were made.
~DEATH BY DENIAL - MURDER, juliepierce-sicko.blogspot.com/, March 5, 2009
There are many more stories to be read on the internet. Ponder the suffering Coventry denials caused the Pierce family. It’s real and it is intense. What many do not know is that while Coventry rejected medically necessary care, Dale Wolf, the CEO of Coventry Health Care, enjoyed a pay package of 37 million dollars.
That's not to say that Maryland directors have become stingy. At least a third of the CEOs in the (2005) analysis received pay raises of 43 percent or more, while the pay of average Americans climbed 3 percent to 4 percent.
Bonuses for the richest CEOs also got bigger on average, with 14 companies handing out $1 million or more and nine topping $2 million, the analysis found.
There are still examples of eyebrow-raising paydays, including the options valued at $35.7 million that Coventry Health Care gave incoming CEO Dale B. Wolf, making him Maryland's highest-paid chief executive. ~CEOs find that pay is now tied to results, The Baltimore Sun, January 27, 2009, By Paul Adams
Like all Coventry executives, Dale Wolf avoids press coverage. On a rare occasion, one might locate his image but little else. Unless, that is, you persist and hunt with perseverance. There is a rich harvest of information not only about Dale Wolf but, more importantly, Coventry Health Care.
CHICAGO, August 3, 2010 – GTCR, one of the nation's leading private equity firms, today announced it has entered into a partnership with Dale Wolf to form Jessamine Healthcare, Inc. The new company, headquartered in Rockville, Maryland, will focus on acquiring companies in the healthcare payor and outsourced payor services industries. GTCR.com 8/3/10
After Dale Wolf’s tenure with Coventry, he is quoted as saying, “The changing U.S. healthcare system should increasingly value business that can enhance access to care and improve patient outcomes in effective ways.” ~Citybixlist, Washington DC, August 2010
Dale Wolf was CEO of Coventry Health Care Inc of Bethesda MD when all that the Tracy Pierce family desired was access to medically necessary health care. Dale Wolf was CEO when Carelink Health Plan Inc of WV denied me medically necessary surgery.
