WellPoint is like many other investors these days: Its portfolio took a sizable hit from the financial crisis.
The Indianapolis-based health insurance giant saw its quarterly profit fall 5.4 percent, dragged down by investment losses.
The company Wednesday reported a profit of $820.7 million for the third quarter ending Sept. 30. That's down from a profit of $868 million a year earlier. WellPoint's quarterly revenue of about $15 billion also was down slightly from a year ago.
WellPoint said that those results included pre-tax investment losses of $562.6 million, or 71 cents a share. Of those losses, $229.5 million came from investments in mortgage lenders Fannie Mae and Freddie Mac and $88.5 million from bankrupt Lehman Brothers.
A long time ago, the argument was made that managed care organizations would be better able to manage care than would health care professionals. This seemed to come out of thinking prevalent towards the end of the 2oth century that professional managers and executives somehow could manage any kind of endeavor better than people who were trained in the context in which the endeavor operated. The 21st century seems to be on its way to correcting that notion.
The current example suggests that the businesspeople now in charge of health care insurance and managed care (and most other kinds of health care organizations) are not even good at managing how they invest their financial researces. Investment management is clearly much closer to what ought to be the core expertise of businesspeople than health care. If they cannot manage their investments well, is it any surprise that they have not managed health care well? (And we have had occasion, most recently here, to write about WellPoint's less than stellar management in areas that more directly impact patient care.)
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