(Bloomberg) -- The first sign that something was amiss at UnitedHealth Group Inc.’s investor day was when Brian Thompson didn’t show up to his early morning hair and makeup appointment.
At around 6:40 a.m. on Wednesday of last week, Thompson, 50, was shot outside the New York Hilton Midtown hotel in a killing that gripped the world.On Monday, police arrested a man in connection with the shooting who local officials found in Altoona, Pennsylvania, carrying a gun and a handwritten three-page manifesto decrying the health-care industry’s profit motives. While the police investigation unfolds, the $500 billion health-care company is simultaneously trying to cope with the personal tragedy of losing a top executive and a spiraling PR crisis that risks long-term reputational harm in a country where so many have turned against it.
Interviews with people familiar with the events show a company under siege.
UnitedHealth locked down its Minnesota, New York City and Washington, DC, offices to external visitors and urged workers with safety fears to stay home, according to messages seen by Bloomberg News. A new management structure was put in place to navigate the situation, one message said, without detailing who was running UnitedHealth’s largest division in the wake of Thompson’s death. A private funeral for friends and family was set for Monday, while the company is still working on logistics to safely hold a memorial service, according to people familiar with the matter.
Instead of eliciting sympathy from the public, the death of the insurance division’s chief executive officer has spawned a hate machine against the insurance industry that’s only getting louder as the days drag on with little insight into the killer’s motives. The man in custody, Luigi Mangione, 26, was noticed by a McDonald’s employee while he was eating at the restaurant, police said. The manifesto he was carrying speaks to both his “motivation and mindset,” New York Police Commissioner Jessica Tisch said Monday.It’s a crucial break in a case that dragged on for days in what police say was a targeted and premeditated killing. Bullet casings recovered at the scene bore the words “denied,” “depose,” and “delay,” loosely echoing the book title Delay, Deny, Defend, which describes tactics allegedly used by insurers to deny claims.
“Our hope is that today’s apprehension brings some relief to Brian’s family, friends, colleagues, and the many others affected by this unspeakable tragedy. We thank law enforcement and will continue to work with them on this investigation,” a UnitedHealth spokesperson said in a statement.
Inside the company, meetings and presentations were canceled after the shooting. A crisis communications firm was tapped to help. And tributes to Thompson poured in. “The news of Brian's passing has been overwhelming for all of us and we feel his loss profoundly,” said UnitedHealth Group CEO Andrew Witty said in an email to staff on Wednesday that was seen by Bloomberg News.But outside the Minnetonka, Minnesota-based insurer, a groundswell of anger against the for-profit insurance industry continues to intensify across the US. A singer posted a folk song about the shooting on social media. Saturday Night Live even joked about the reaction to the killing over the weekend.
Thompson’s death has become a symbol of revenge over denied medical bills and lack of access to necessary care, an issue that some UnitedHealth employees say they’re growing increasingly anxious about. While the company has sent a series of messages extolling Thompson and decrying his killing, some employees say they want to see a more direct response to the vitriol against the company.
A Company Under Siege
On the morning of the shooting, some executives noticed a frenzy of police cars on one of the hotel’s side streets as they arrived for the investor meeting. They were redirected by the New York Police Department into a different hotel entrance, according to people familiar with the events who asked to speak anonymously as law enforcement continues its investigation. The executives headed into the building and upstairs to the conference area where they sipped coffee, chatted and proceeded to get their hair and makeup done.
Executives began to speculate about what happened outside the hotel. A person had collapsed— maybe a heart attack, some suggested. Others thought there had been a shooting. They did not immediately think it was related to the absence of their colleague, known affectionately as “BT,” according to the people.
As the minutes ticked closer to the start of the investor meeting, unease grew. It was unusual for Thompson, a 20-year veteran of UnitedHealth who’d climbed the ranks to run its key insurance division, to not show up for an important day like this. Colleagues suspected he’d overslept or was sick in bed, and planned to send someone to his room at a nearby hotel to check on him. They prepped a backup speaker to give Thompson’s presentation if he didn’t arrive on time, the people said.
It took a few minutes for the 8 a.m. event to begin, after some 275 people showed up. It’s unclear why they didn’t start on time. But as Witty, the company’s CEO, began his opening remarks, a handful of executives were alerted of a security emergency. They stepped away from the event. They were told Thompson had been killed outside of the hotel that morning.
As the investor day presentations continued, the small group of company executives in the know were questioned by police. The executives immediately started trying to reach Thompson’s family. They wanted to tell his wife and kids before the media got a hold of the story.
Meanwhile, Witty was told of Thompson’s death on the sidelines of the conference. He was distraught, people familiar with the event said, but had to make quick decisions about the safety of his employees and what to do about the ongoing investor meeting.
As all of that was happening, the news got out. Mobile alerts about Thompson’s death started pinging attendees’ phones. There were gasps. People in the audience started looking around to see if others knew.
Around 9 a.m., Witty cut the investor day short. “Some of you may know we’re dealing with a very serious medical situation with one of our team members,” he said. “And as a result, I’m afraid we’re going to have to bring to a close the event today, which I apologize for.” Thompson had been dead for two hours.
While conference-goers dispersed in a haze of confusion and grief, UnitedHealth executives and some employees were pulled into a room together at the hotel, the people said. With no information about the shooter’s motive, some feared for their own personal safety. Later that day, the company pulled down bio pages of its top executives and board members, while other employees deleted their profile pages on Linkedin.
Tidal Wave
The vitriol following the shooting sparked a reckoning among some UnitedHealth employees. Much of the public animosity was aimed at the way insurance companies prevent Americans from getting the care their doctors prescribe. Some employees grappled with the idea that their paychecks were padded in part by the practice of denying care.
Witty, in a video to staff last week, attempted to address the rage but failed to change the narrative for some workers. “As you've seen, people are writing things we simply don't recognize, are aggressive, inappropriate and disrespectful,” he said, urging employees to ignore the media. “There’s no value in engaging.”One employee said they wanted to see accountability from Witty. The episode made them question whether they could keep working for UnitedHealth both mentally and morally, this person said.
It wasn’t enough to extol Thompson as a leader, colleague, friend and family man, according to some workers who declined to speak publicly for fear of retribution. The noise had become too loud to ignore and they wanted to see management address it head on.
This growing disconnect between Americans and their insurers is an increasing threat to the industry, said Wendell Potter, a former Cigna communications executive who has written books critical of health insurance.“They have to demonstrate quarter-to-quarter that they’re managing medical expenses because that’s what Wall Street expects,” Potter said. “They’re certainly not managing the expectations of the people that they serve.”
In the company’s limited external communications, UnitedHealth said in a statement Thursday: “Our priorities are, first and foremost, supporting Brian’s family; ensuring the safety of our employees; and working with law enforcement to bring the perpetrators to justice.”
The constrained response may be intentional.
“If they were my client, I would say go radio silent unless they have new news,” said crisis communications specialist Bruce Hennes, who is not working with UnitedHealth. “This is not the time to get into extended arguments and discussions with people on social media. There’s nothing to be gained.”
Investors are also reacting to the impact of the outrage on the company, which sent shares down 10% in the days following the shooting.
The killing “has cast a dark shadow” over the health-care insurance industry, Jared Holz, a health-care equity strategist at Mizuho Securities, wrote in a note to clients about UnitedHealth’s stock drop.
“We believe the majority of the pressure, if not all, is related to the idea that the crime was based on some level of dissatisfaction with the insurance industry, its tendency to deny coverage for patients (in some circumstances) and the emotional toil this can take on patients and families,” Holz said.
In some ways, UnitedHealth is in an impossible situation. “I don’t know what they can do other than hope that it does go away,” Potter said.
Insurance Behemoth
UnitedHealth, the country’s largest insurer, is known among those in the industry as a place with sharp elbows: It’s unafraid of high-profile legal battles or tough negotiations with medical providers. On Wall Street, the company gained a reputation for reliably hitting — and usually exceeding — financial targets, even if it meant slashing jobs to do so.
The culture at the top was shaped for years by veterans of the defunct accounting firm Arthur Andersen, where Chairman and former CEO Stephen Hemsley once worked. A previous CEO, William McGuire, unceremoniously left the company and settled with the Securities and Exchange Commission over backdating stock options that regulators alleged enriched him and other executives.
In recent years, a series of acquisitions have consolidated UnitedHealth’s position so much that when a cyberattack took out its Change Healthcare subsidiary, doctors offices and hospitals across the country were paralyzed. That market dominance has come under review by the Department of Justice, Bloomberg News has reported. Members of Congress have called for a breakup of the conglomerate.
Thompson was one of a handful of executives who sold UnitedHealth shares after the company learned it was under investigation by the DOJ, but before that information was shared with the public, Bloomberg reported. The company’s stock fell when the DOJ investigation was reported. Thompson sold $15.1 million worth of shares, according to Bloomberg calculations.
Growing through so many acquisitions rapidly turned UnitedHealth into a company with around 400,000 employees. Some former employees call it too big to manage effectively, with layers of management slowing down decision making and pressure on divisions to buy services from other parts of the company because UnitedHealth is in so many lines of business that feed off one another.
Before the investor day last week was cut short, Witty used some of his time on stage to acknowledge the widespread dissatisfaction with his industry.
“You only have to walk into a room with five people to hear four stories of frustration. ‘I couldn't find a doctor, I didn't know where to go. It's too difficult to understand,’” he said in a room full of financial analysts and investors.
For now, Witty’s trying to reassure his employees that the narrative hasn’t spiraled out of the company’s control. “We will work through this together. But it's going to be difficult,” he told workers in a video address last week. “Life won't be the same again.”
--With assistance from Antonia Mufarech, Gerry Smith, Madison Muller, John Lauerman and Myles Miller.
(Updates to include detail of the suspect’s apprehension.)
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