BUSINESSBlues execs to get bonus in conversionThe potential for premium increases and for physician pay cuts also fuels objections to Premera's plan to seek for-profit status in Washington state and Alaska.By Robert Kazel, AMNews staff. March 15, 2004. Medical societies and consumer groups are expressing dismay after learning that Washington-based Premera Blue Cross is proposing to award its top executives and board members lucrative stock options if the insurer obtains government approvals to convert to for-profit status. Premera's request to transform to a publicly traded plan has been pending with insurance regulators in Washington and Alaska since 2002. The company's plan for changes in executive compensation was released to the public in February in response to a Seattle newspaper's Freedom of Information Act request. If the conversion goes through, Premera CEO Brereton "Gubby" Barlow would get annual stock options estimated at $750,000, bringing his total compensation to about $2.2 million. Four executive vice presidents each would receive annual stock options valued at $375,000. Moreover, compensation for members of Premera's board would nearly triple after conversion because of stock options, from $44,500 to $119,500. "That's obviously a lot of money that's being wasted," said Bob Crittenden, MD, a Seattle family physician and former president of the Washington Academy of Family Physicians, which is opposing the conversion. "When you make somebody into a wealthy person overnight on one of these conversions, it makes you wonder." The disclosure of the planned boost in compensation "was strong evidence that the whole conversion proposal is ill-considered and doesn't make good economic sense for the state of Washington or its citizens who need access to health care," said Bob Perna, director of health care economics at the Washington State Medical Assn., which also opposes conversion. Premera has 1.2 million members in Washington. [...]Full text of AMNews content is available to AMA members and paid subscribers.
Copyright 2004 American Medical Association. All rights reserved.
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