Forum editorial: Blues CEO embraces challengeSome of the shouting and cursing about a critical examination of executive pay at Blue Cross Blue Shield of North Dakota is a tad over the top.
By: Forum Editorial Board, INFORUM
Some of the shouting and cursing about a critical examination of executive pay at Blue Cross Blue Shield of North Dakota is a tad over the top. The issue is complex and fraught with shades of gray. It’s easy to work oneself into an indignant froth because Blues’ execs are paid well. It’s difficult and time-consuming to examine in detail the company’s salary structure and its justification for paying big bucks to top people.
A report commissioned by the North Dakota Insurance Department concluded that portions of executive salaries were not justified. Bonuses for executives apparently were paid using an incentive formula that guaranteed payment in almost all circumstances. It appears the link between bonuses and job performance was malleable.
(BCBS leaders object to the term “bonus,” contending that it’s a loaded word that does not accurately or fairly define the incentive program. However, others, including the insurance commissioner’s staff, called the system a “bonus look-alike.” (Anyone with a modicum of common-sense perception knows that if it looks like a duck, walks like a duck and quacks like a duck, it’s a duck.)
New CEO Paul von Ebers, who was not on board when the bonus system, hotel investment and costly trips to exotic locations were instituted at BCBS, said he recognizes the need for changes in all those areas. He’s working with Insurance Commissioner Adam Hamm to make appropriate adjustments, specifically in the incentive (bonus) structure. Von Ebers said fancy trips and certain kinds of investments also are out.
That’s all fine. But the real problem has been a corporate culture that seems to have forgotten its mandate to be responsive to the needs of its members – the individuals and groups that purchase health insurance. The company’s current public relations disaster might be the worst, but it’s not the first. The past 20 years have seen recurring missteps: from lavish Hawaiian “retreats” to the piling up of what the Insurance Department found were excess reserves to the excesses of the former (fired) CEO.
Von Ebers’ task (for which he is well-qualified) is to change the direction of the ship, not merely rearrange deck chairs on the Titanic. He has to make substantive changes in management style, which, if done right, will scrape some of the tarnish off the company’s image. In conversation last week with The Forum Editorial Board, it’s clear he is up to the challenge – indeed, eager to take it on.
We wish von Ebers and his team success in that effort because a
well-managed and respected BCBS is essential to North Dakota’s health care economy, and to the well-being of policy holders.
Forum editorials represent the opinion of Forum management and the newspaper’s Editorial Board.