Welcome back to Communication Breakdown, a weekly podcast from the Observatory on Corporate
Reputation.
Thanks for joining us.
I'm Steve Dowling in Silicon Valley.
And I'm Craig Carroll in New York City.
Each week Steve and I take a look at strategies companies are using to shape headlines and
sometimes save their skins.
It's a post game show for PR Pros.
This week United Health performs a CEO Transplant and the Wall Street Journal calls this post-op
complications.
The country's largest and most profitable health insurance company announcing Tuesday morning
that Chief Executive Andrew Witty had resigned for what the company described only as
personal reasons. An abrupt departure, but not an especially surprising one given recent
struggles.
Last month United Health missed both revenue and earnings expectations for the first time
in 17 years and revised its guidance downward.
Seems a spike in demand for care, especially Medicare services, meaning older patients,
caught the company flat-footed.
On Tuesday as they announced Witty's departure, they also suspended financial guidance altogether
for the year.
It's just the latest shock in a tumultuous 12 months for United Health employees and investors,
including news of government investigations, a massive cyber attack that disrupted health
care services, and of course the brazen, broad daylight murder of the company's top insurance
executive, Brian Thompson, in New York City last December.
Whitty himself has received death threats and at least one analyst speculated that fear
for his family safety might be one of the "personal reasons" the company cited in his departure.
But most observers point to business challenges, especially the April earnings miss.
United Health's new boss is a familiar face, Board Chair Steve Helmsley, who was CEO once
before from 2006 till 2017.
Following the paper announcement on Tuesday, Helmsley held a 20 minute call with analysts
and investors.
"To all stakeholders, including employees and shareholders, I'm deeply disappointed in
and apologize for the performance setbacks we have encountered from both external and internal
challenges.
Many of the issues standing in the way of achieving our goals as well as our opportunities are largely
within our control."
Apparently outside the company's control- a scoop by the Wall Street Journal, breaking
one day after Helmsley's return that the Justice Department has been investigating United
Health Care for possible criminal Medicare fraud.
The company called the journal's reporting "deeply responsible" and said it hasn't
been notified by the Department of Justice.
Steve, executive departures are a fact of life and sometimes they get messy.
How is United Health doing with this one?
Well, I think the announcement itself was solid.
It had all the elements of a good transition announcement and most importantly, it had
answers to all the questions that Wall Street knew to care about on the day of the transition.
They made clear who's in charge, Helmsley, who's in known quantity has a good track record.
So clarity, continuity, confidence, we can make these all words that begin with C like we're
buying a diamond.
On those three, they did well.
And again, that's what analysts and investors want to see.
That and the return to profitability next year.
There's two other areas though.
I would call them candor and context.
They're closely related.
But I think it was a mixed bag even on the day of the announcement before we got this news
of a possible criminal investigation.
People were looking at that first line of the press release, 'stepping down for personal reasons.'
And they noted that it's kind of vague.
It is vague, probably intentionally vague.
But that left reporters to write some reporters, not a lot, about what you didn't say.
And that chips away at what you did say.
So you kind of have to say what happened, not just what's next.
And the first news cycle is so critical for tone setting.
That's why companies play stories, they leak stories, they give out exclusives.
But you really can't do that with a CEO departure, especially not at an abrupt one like this.
If you leave people wondering, they might wait for another shoe to drop.
And who knows if this DOJ investigation, the reported investigation, is related or not.
But it's another shoe, maybe not from the same pair.
And it's going to complicate Helmsley's return.
Yeah.
I love that: clarity, continuity, confidence. Sort of the investor relations trifecta.
You're buying a diamond cut, clarity and control of that narrative.
And you're right for that audience, this was a clean handoff.
But on candor and context, I think you nailed it, right?
The message is polished, but still hollow in places.
Personal reasons is just PR shorthand for "please don't ask any more questions."
And that works until someone does ask more questions.
And that's exactly what happened.
You leave out context and reporters start to reverse engineering the story.
You build the vacuum and then blame the press when they try to fill it.
The bigger risk here isn't just the DOJ storyline.
It's that it starts to feel like there's always another shoe.
(It) doesn't even have to match the first one.
Just adds to the clutter noise Helmsley now has to cut through.
You can't say personal reasons and expect professional silence.
That phrase is just a blank check the media is going to cash.
One of the things that company did not address this week is we're talking about what they
said versus what they didn't say.
But this one is surely going to be on Helmsley's to-do list at some point.
And that's the reputational crisis that United Health is in.
And I don't think crisis is too strong a word.
And now this reported criminal investigation, if it's real, that's not going to help.
Let's just rewind for a second.
Of course, everybody remembers that Brian Thompson, who was in charge of United Health's insurance
division, he was murdered in the broad daylight, as you said, on the streets of New York
right before their analyst day in December.
And just as shocking as the assassination, that's what it was, is how the public reacted.
And the alleged shooter, Luigi Mangione, he instantly took on this kind of cult status,
which I think is really hard to sort of wrap your head around.
But it's reflective, I think, of this widespread frustration that Americans have with the
for-profit health insurance companies.
But let's look at how United Health dealt with that.
Andrew Wittyy, who was Thompson's boss, he sent a video message we talked about on the
podcast at the time.
He sent this message to employees, which was then leaked to an independent journalist.
And Whitty spoke in human terms about Thompson and the loss the company was feeling.
But he also weirdly talked about United Health's role in the healthcare system.
And he made some remarks that were seen as insensitive.
"Our role is a critical role.
And we make sure that care is safe, appropriate, and is delivered when people need it.
And we guard against the pressures that exist for unsafe care or for unnecessary care to
be delivered in a way which makes the whole system too complex and ultimately unsustainable."
So then a few days later, Witty writes an op-ed for the New York Times and it was not well
received.
People said he was deflecting responsibility for flaws in the healthcare system.
He said no one would design a system like the one we have.
But here's United Health spending millions of dollars every year lobbying on healthcare issues and
they might profit mightily from the system that he's deriving as a patchwork.
So Whitty says United Health is on a mission to deliver high quality care and lower costs.
The whole thing really fell flat.
So I think there was this moment after Thompson's death where they might have made some progress
on softening their image.
And I think that's one of the reasons why Witty wrote the op-ed to begin with because he
said they were struggling to understand the public's reaction.
But instead, at least from my point of view, there's really been a change in tone in their
public statements since December.
And they're... United Health is much more defensive, much more often.
If you look at their newsroom website, they've got all these statements their refuting,
individual stories in the Wall Street Journal or on social media.
It's almost combative.
They don't provide a lot of context.
They come off as angry.
I really don't see it as being very effective.
It's this siege mentality.
It's not a good look.
And if they had any opportunity to sort of find some goodwill in the wake of Thompson's
death, it seems like they have squandered it.
Yeah.
I think that moment really crystallized Whitty's reputational struggle.
He tried to dress something that was human, horrifying and symbolic.
And he didn't quite land it.
That video message, which could have been a turning point, ended up being remembered for
what he missed.
Yeah.
He spoke about loss, but then he pivoted into the system's language about appropriate care
and sustainability.
And it just didn't connect.
And I think in that moment, people didn't want to hear about policy pressure.
They wanted to see emotional leadership.
And when they didn't get it, that's when the reaction hardened, right?
The company came off as cold, detattached and even defensive.
And I think that was the reputational break point, not because Whitty did something outrageous,
but because he failed to meet the moment.
And in reputational terms, that's just as damaging.
Yeah.
It feels like a huge mess because they had this chance to find a new voice.
And I think it's sort of cynical calculation, but if there was any sympathy from the public
to be had, if there was any way to humanize the company that people really had a, I think,
poor impression of, they didn't do it.
And now, like it feels like a pendulum has swung way to the wrong side because they're
taking this very, like I said, it seems angry,
oppositional stance to the press.
And if you respond to every outrage and you crank up the indignation to 11 every time, people
are going to start dismissing those reactions.
You can't go out every time the Journal breaks a story and say they're reporting misinformation.
That's outrageous and false.
This one was deeply irresponsible.
It's not the way you win in the long run.
And I think more important, they're not creating any forward motion.
They aren't countering that narrative.
It is, I think, generally unchallenged.
And that's why I think they're in the spot they're in and they're going to have to deal
with it.
Yeah.
You know, what you're describing is like a classic siege spiral where the company stops
speaking to the public and start speaking against everyone else.
And the problem is, once you adopt that posture, everything sounds like deflection, even
if some of it's true.
So the reacting to outrage with outrage, but reputationally, that's a losing game.
You know, you might win the headline battle for a day, but you're losing the story of war
over time.
And more importantly, you're losing the room.
And you know, you're right, tone fatigue-
It's real.
Every response is deeply responsible, outrageous and false or grossly misleading, eventually
bleeds an into noise and you can't crank the outrage down 11 every time and expect people to
still hear you.
Yeah.
I think that there is, and maybe this is symptomatic of the problems they're going through internally.
Maybe it's more isolated.
Who knows how closely it was related to what he's leadership?
We may never know.
But they have a moment now with a new CEO who understands the company clearly, brings
a lot of credibility.
I thought it was good that on Tuesday, he issued this apology to employees and to shareholders.
The reputational issue is really with the customers.
They've got 50 million people there providing health insurance coverage to and millions and
millions and millions more who are looking at this very profitable company in a very unpopular
industry.
And there is, as I said, this narrative that's basically unchallenged that people are being
denied coverage left and right.
And I think somehow United Health has got to try a reset, take a more sympathetic approach,
ideally with more transparency because I think that is a big part of their problem.
Yeah.
And here's the bigger issue.
You know, they're not replacing the narrative.
There's no forward motion, no counterweight to the noise, just rebuttals and rebuttals
doesn't build reputation, signals do, strategy does, meeting stakeholder expectations does,
story does.
And that's, I think, what Helmsley's got to do fast.
You don't calm the chaos by yelling back.
You calm it by changing the tone and anchoring in transparency and action.
But the thing I'd say is, you know, I want to make clear, this isn't crisis to me, right?
To me, this is chaos, just another example of chaos.
Crisis as a beginning, a peak and a resolution, but chaos is a little bit more ambient.
It's sustained.
And I think that's what United Health is in right now.
They're not just dealing with a single breaking point.
They're caught in a swirl.
Leadership turnover, the DOJ scrutiny, cyber tax, public outrage, denial rate headlines, and
the emotional shockwave of a murder.
And that's not a comms event.
That's a communications environment.
And you just can't manage chaos with a crisis playbook.
You need a new mindset, a new tone, and a new system for making meaning of this.
Yeah, I think though you need some place to start.
And that denial rate issue has been one that is really, I think, been both nagging at
them.
And every time it comes up, it undermines their efforts to be more credible, more trustworthy
in general.
So this is what happened in the wake of Thompson's murder, about two months later.
end of January, there's this third party study that comes out that says United Health
denies 32% of claims, which would be twice the industry average.
And there was, there were a lot of problems with that report.
It only looked at certain kinds of care for certain groups.
I think maybe only in a couple of states.
And of course, United Health, they went ballistic, and it was reported by the mainstream press.
They called it 'grossly misleading' to extrapolate that narrow figure.
So United Health says that overall their denial rate is more like 2%.
But as flawed as that initial report was, they haven't been able to shake that 32% number.
And if not the number itself, just this idea that the problem is way more widespread than
what they're claiming.
It's a situation that confirms people's worst fears.
And the profitability just gets people even more furious when they hear about people being
denied care.
So it kind of reminds me of this episode last year that we've talked about when McDonald's
was having trouble shaking this story about an $18 big Mac or whatever the price was.
And it was like one store in Connecticut.
It went viral.
But ultimately, they couldn't because people felt that prices were rising, which they
were, but they were feeling in their pocketbooks, and they saw prices going up, and it just
sort of snowballed, and it became this conventional wisdom.
And I think, while much more consequential for a company like United Health, this situation
similar.
And what did McDonald's do?
They eventually broke their own rules
and they started publishing pricing data, which they had never done before.
The transparency was the key.
And I wonder if there is something similar for United Health and other health insurance
companies to do to give people more confidence in their numbers.
I don't know if 2% is any more accurate than any other number out there.
But United Health is having trouble breaking through with that number.
And they've got to try something to emphasize transparency if they want to be more credible
on that topic.
I think part of it is United Health is dealing with almost the reputational equivalent of a
fixed narrative.
The 32%, accurate or not, felt true to people
and it confirmed what they already suspected that profits came before patients.
And what's the number becomes a symbol?
The facts are just going to have a hard time catching up.
So United Health responded with that 2% number, but they didn't bring receipts.
And without real verifiable data, segment by segment, plan by plan, it just sounds like spin.
And in an emotionally loaded environment like this, the more confident you sound, the less
credible you seem.
I think they don't even sound confident in it.
I think that more success breaking through with that number, if they weren't just leading
with how angry they are at the Wall Street Journal or whatever the source is every time
something comes up.
I think this is what gets to what I was saying earlier is if you're just angry and you're
perceived as railing against. You're calling the Wall Street Journal biased.
That's a pretty strong statement.
You may feel that your executives may feel that, but it's a big difference between being
frustrated and going out and making an accusation like that.
You need to maintain your own credibility if you want that information to be taken seriously.
And you also need to be presenting it in a much more rational way.
Absolutely.
I like your comparison to the $18 Big Mac story.
I think that's a perfect example because once the public locks in on a number, you don't
fix it with outrage, you fix it with transparency.
Show your work.
Break down the real data or better yet, invite someone else to.
They're fighting data perception with press statements and that's not a fair fight and
it's not one they're winning.
And when the narrative feels true, people don't need it to be accurate.
They just need it to be believable.
In moments like this, transparency isn't a strategy.
It's the cost of staying in the conversation.
Well, and let's look at it as an opportunity because that's what I see here.
There is no agreed upon industry metric or way to get to the denial rate that is going
to be comparable to other companies, to your own history, whatever.
And here's United Health Care, United Health Group.
They are the biggest, the most profitable.
They're the leaders in this industry.
They have the opportunity to at least try to lay out a metric that other companies could
get behind or even if other companies won't do it, that can be consistent over time and
will add credibility to their assertion that they're only at 2% and not at 32%.
That's the opportunity hiding in all this, right?
There's no agreed upon industry standard for denial rates, right?
The data is fragmented, the definitions are all over the place and everybody's been able
to hide behind that fog.
But United Health is the biggest and they're the most profitable.
Whether they like it or not, they're the benchmark and
that means they're in a position to lead here to set a standard that the rest of the industry
can follow.
They could be the first to say, "here's how we define a denial.
Here's the rate across product lines.
Here's what's eligible.
Here's what's not.
And here's how we'll report it consistently."
And that's not damage control.
That's a agenda setting.
If you're the biggest, you don't just inherit the blame, you inherit the responsibility to
lead.
Right now, they could turn a reputational liability into an industry standard, but only if
they stop defending and start defining.
They don't need better rebuttals.
They need a baseline that the whole industry can see and use.
Yeah.
It brings me back again to this tone that they're taking on their newsroom and all
their interactions with the press.
Yeah.
I think if they can make an adjustment there, and also, this is a huge opportunity for the
returning CEO, and I'm sure it is not lost on him.
He's going to have an opportunity to talk about these issues a lot more than Witty did.
I actually, I was surprised and I will not be surprised if someone tells me that I've
missed something, but I didn't see a single public appearance by Witty in the first five,
six months of this year.
There were no industry conferences.
There were no analysts days. And maybe I'm missing something, but they kind of went quite.
And listen, maybe this was a security concern.
Again, you mentioned chaos and all the different... we didn't even talk about the scrutiny that
they've been under from Congress on cyber security.
So yes, there's been a siege mentality.
I would call it, you're calling it an environment that's chaotic.
I think both are true, but thier going to have to break out by talking.
They're going to have to break out by showing that they are willing to stand up to scrutiny
and telling their story themselves, which is something that Whitty started doing with
the fall start, I think, in December, and then I don't think they ever really got back
to it instead for whatever reason they have swung to this really defensive posture.
And if that was not their intention, they're really missing the mark, but they're looking
for a voice and they haven't found it. But they've got to start taking a different approach
to this and the arrival of a new CEO is as good a moment as any to do that.
Yeah, Helnsley is not just walking into a leadership role.
He's stepping into a reputational deficit.
The ledger isn't neutral.
It's in the red publicly, emotionally, symbolically, but here's the nuance, because he's returning
CEO.
He's not a stranger and that gives him credibility, but
it also gives him some package.
The question becomes, is he here to stabilize or is he here to reset?
And honestly, Steve, for me, this is where the narrative becomes mission critical.
If this is just a return of the past, he's missed the moment.
But if he can frame this as a return with renewed purpose, now we're talking about a second
act, not a sequel.
The public doesn't need nostalgia.
They need new meaning.
They need someone to start with humility, honesty, clear signals of change, even if the
face is familiar.
So he's not just returning to the company.
He's returning into a story that's lost its plot and his first job is he's got to rewrite
it.
Yeah, you said stability or reset.
I think it's both.
I think that is the way you get the stability is by resetting.
And I've got to make a clear break, not necessarily with the previous executive, but they
need to take a new approach to how they're communicating with the outside world.
And I mean, consumers first, through the press, investors, maybe, I think they did everything
that the investors could want in this announcement.
But addressing the business uncertainties, just as Helmsley said in that quote we played
earlier, if the issues standing in their way are within their control, then they just
start to demonstrate that they're in control of them
and making the changes that they need to and communicating about those changes proactively
in a way that doesn't feel defensive or angry at the press for questioning them or whatever.
Accept that scrutiny.
The press set the rules and we have to play by them.
Do that and use all the information, knowledge, reputation, the credibility that he brings
as he returns to the CEO role, apply those and show that they're on a new path.
Yeah, his job is not just returning to the company.
He's returning to a story that's lost its plot.
His first job is got to be to rewrite the story.
When trust is this low, even a familiar face has got to re-earn its legitimacy.
This isn't about memory, it's about momentum.
And the narrative reset that we're talking about here, it's not cosmetic.
It's existential because people don't want a new chapter;
They want to know it's not the same book.
Yeah.
What's the size with them on this DOJ factor?
The Wall Street Journal reports that there's a criminal investigation underway.
The company says they haven't been contacted about it.
They say it's irresponsible to go out and report that, which I don't think is necessarily
true and I certainly don't think it's something that you call out.
But again, I sympathize with them because it's a rough situation to be in where someone
is saying there's an investigation and you cannot comment on what might be under investigation
for the most important reason is that if there isn't investigation and even if there isn't,
you might make it worse for yourself.
But they are in a real spot here. as we've been saying for the past many minutes.
And I think that they should really look at ways that they can continue or reset their
communication without being constrained too much out of fear of what they might be getting
into with the DOJ or what the DOJ might be looking at.
You've got an army of lawyers, I'm sure, who are going to help them set some guardrails.
But I just think that going silent is really not an appealing proposition
Yeah, Steve, I think what we're saying here is it's like six months of sustained narrative
damage and most of it is self-inflicted.
This isn't one crisis.
It's a pattern, defensive tone and consistent messaging, over reliance on legalese and
under delivery on empathy.
You listed all those rebuttal statements, five or six, I think maybe more, accusing the
media bias, misinformation, being deeply irresponsible.
That might feel good in a legal war room, but reputationally, I think it just makes you
look combative and evasive.
It's like they're fighting every fire with gasoline and a press release.
When you layer that on a top of like a 50% stock drop, a leadership vacuum and increasing
regulatory scrutiny, it's not just a business problem, it's a trust problem.
And I think that's the job that Helmsely is inheriting.
It's not just stabilizing operations, but it's stabilizing meaning.
He's got to shift the tone from defensive to accountable and from opaque to transparent.
Because even at this point, even if the company technically is right on some of their denial
rate claims, the tone, the posture, and I think the inconsistency in past messaging, it's
all going to cost them something deeper than credibility.
It's going to cost them the benefit of the doubt
Yeah, I think just as we head towards the end of the show here are some final thoughts
I think if I were in their situation, I would be looking for places that I can move the
ball forward on our reputation. Find areas where you can be more transparent. Lose this
defensive tone, no matter what.
And try to leverage that leadership position into more agenda setting and see if you can
chart a path out of this credibility deficit starting with,
I wouldn't say it's the only thing, but starting with its denial rate issue because they could
find a way to define that rate or find an acceptable metric that people will, they may not love it,
but at least they could find something to build on there.
I think it could be a good step forward.
It might feel like a concession to the company, but I think that's, you know, if you're under
this much scrutiny and criticism, you have to find a place to give.
And the most important, I think, from my point of view is they've got to be thinking about
their audience with the customer at the front.
I think that right now they're talking to investors and they're talking to regulators
and they may be talking to investigators, but their reputation fix is going to be ultimately
with the consumers and they've got to figure out how to reach them better.
You can't rebuild trust if you're still arguing over the fine print.
And right now the story isn't about healthcare,
it's about character and I think that's what Helmsly has got to fix first.
You know, leader can't just say, you know, we're back on track.
He's got to show that the trains changed.
Yeah.
And I think that a lot of the metrics, if you will, that are going to affect their reputation
with the public are maybe different than the metrics that are going to be satisfying
Wall Street and their other investors.
We've got a challenge on multiple fronts here.
Hopefully some constructive thoughts there for the insurance giant.
That's our show for this week.
We want to thank Shawn P Neal and the team at AdvoCast as well as the People Forward Network
for making our podcast possible.
If you enjoy the show, tell your friends in the comms world, hit us up on LinkedIn or drop
us a line by email.
We'd love to hear from you.
Our address is podcast@ocrnetwork.com
Communication Breakdown is a production of the Observatory on Corporate Reputation.
I'm Steve Dowling.
And I'm Craig Carroll.
Thanks for listening.
We'll be back next week.
[MUSIC]
#UnitedHealth #WallStreetJournal #McDonalds #NewYorkTimes #CEOTransition #HealthcareReputation #CrisisCommunications #NarrativeStrategy #MediaRelations #StakeholderTrust #CorporateAccountability #ShawnPNeal #AdvoCast #OCRNetwork