UnitedHealth has allegedly secretly paid nursing homes to reduce hospital transfers — the latest accusations in a series of woes facing the health insurance giant.
The alleged action, first reported by The Guardian newspaper on Wednesday, was part of a series of cost-cutting tactics that have saved the company millions, but at times, risked residents’ health, the publication showed, citing an investigation.
The story, which cites thousands of documents and firsthand accounts of more than 20 former employees of the healthcare company and nursing homes, says that the insurance giant sent its own medical teams to nursing homes to push the cost-cutting measures. As a result, patients who urgently needed medical care did not receive it, including one person who now lives with permanent brain damage after a delayed transfer.
The allegations add to the litany of negatives that have hurt UnitedHealth in the last several months, following a massive cyberattack at its Change Healthcare unit, reports of criminal and civil investigations into the company’s practices, including one for Medicare fraud and the abrupt departure of CEO Andrew Witty last week.
UnitedHealth said in response to the story, “The US Department of Justice investigated these allegations, interviewed witnesses, and obtained thousands of documents that demonstrated the significant factual inaccuracies in the allegations.”
The company also said that the DOJ “declined to pursue the matter”.
Wall Street responds
Shares have stumbled all year, losing more than 39 percent compared with a 0.6 percent decrease for the Dow. As of noon ET (16:00 GMT), the stock is down more than 3.6 percent.
“The news is only seemingly getting worse for UnitedHealth,” said Sahak Manuelian, managing director, global equity trading at Wedbush Securities.
HSBC downgraded the stock to “reduce” from “hold,” and cut the price target to a street-low of $270.
The brokerage said higher medical costs, pressure on drug pricing and its pharmacy benefit management unit, OptumRx, and a potential Medicaid funding cut can upset the company’s recovery journey.
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