Inside UnitedHealth’s Dramatic Faltering

Summary

Podcast Summary: Inside UnitedHealth’s Dramatic Faltering

Podcast Information

• Title: The Journal
• Host/Author: The Wall Street Journal & Gimlet
• Description: The most important stories about money, business, and power. Hosted by Ryan Knutson and Jessica Mendoza. The Journal is a co-production of Spotify and The Wall Street Journal.
• Episode Title: Inside UnitedHealth’s Dramatic Faltering
• Release Date: June 11, 2025

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Introduction to UnitedHealth

The episode opens with Annie Minoff introducing UnitedHealth as a colossal entity in the U.S. healthcare industry. Joined by her colleague Ana Wilde Matthews, they establish the company's vast footprint.

Annie Minoff [00:05]: "In the United States, healthcare is big business, and one company has spent years on top."

Ana elaborates on UnitedHealth's extensive operations, highlighting its $400 billion annual revenue and its dominance in various sectors of healthcare, including insurance, provider networks, pharmacy benefits, and technology.

Ana Wilde Matthews [00:18]: "They have about 400 billion in annual revenue. They own the biggest U.S. health insurer, which is called UnitedHealthcare..."

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UnitedHealth’s Rise to Prominence

Stephen Hemsley, the former CEO, is credited for steering UnitedHealth to its formidable status through aggressive vertical integration over the past 15 years. This strategy allowed the company to control nearly every aspect of the healthcare system.

Chris Weaver [03:14]: "They started branching out into other parts of the healthcare system... setting off this vertical expansion."

The hosts discuss significant acquisitions, such as the 2011 purchase of Monarch Healthcare, and the pivotal role of the Medicare Advantage program in fueling growth.

Annie Minoff [04:29]: "UnitedHealth grew to own almost every aspect of the health system, including insurance, doctors, pharmacy benefits, and technology..."

Chris Weaver [05:14]: "Medicare Advantage is the part of the Medicare system where private insurers oversee benefits for seniors and disabled people... a huge engine of growth."

Under Hemsley’s leadership, UnitedHealth became a reliable blue-chip stock, consistently meeting Wall Street projections and quadrupling its revenue from $100 billion to $400 billion over 15 years.

Ana Wilde Matthews [06:22]: "Their revenue's bigger than some countries' economies."

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Leadership Transition and Initial Success under Andrew Witte

In 2017, Stephen Hemsley stepped down, and Andrew Witte took over as CEO in 2021. Witte brought a more relaxed, less formal leadership style, contrasting sharply with Hemsley’s detail-oriented approach.

Ana Wilde Matthews [08:04]: "Andrew wore sort of zip-up tops... doing sort of fireside chats with employees..."

Despite his different leadership style, Witte maintained financial success, continuing growth and meeting Wall Street’s expectations for several years.

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Mounting Challenges and Downfall

Regulatory Scrutiny and Cybersecurity Breaches

The episode delves into the beginning of UnitedHealth’s troubles in 2024, marked by multiple investigations from the Department of Justice (DOJ) into their billing practices for Medicare.

Chris Weaver [10:09]: "There's an antitrust investigation looking at United's practices... examining the way that they operate with these many acquisitions."

Simultaneously, a significant cyberattack on UnitedHealth’s subsidiary, Change Healthcare, disrupted the U.S. healthcare financial system, affecting 190 million people and costing the company $3 billion.

Brian Thompson [12:10]: "...people are worried about their private health data. To all those impacted, let me be very clear, I'm deeply, deeply sorry."

Investigative Reporting on Medicare Advantage

Investigative journalism by Chris Weaver and Ana Wilde Matthews revealed questionable practices within UnitedHealth’s Medicare Advantage plans, such as adding unnecessary diagnoses to inflate payments.

Chris Weaver [12:56]: "UnitedHealth was doing these kind of sometimes questionable tactics that generated additional revenue."

The DOJ subsequently launched additional probes, including a criminal investigation, further tarnishing the company’s reputation.

Ana Wilde Matthews [14:27]: "There are at least two more Justice Department probes into UnitedHealth's Medicare Advantage practice, including one criminal probe."

Tragic Leadership Loss

In December, the CFO Brian Thompson was tragically shot outside the company's annual investor meeting in Manhattan, adding to the company's turmoil and instilling fear among employees.

Ana Wilde Matthews [15:07]: "Brian Thompson... was shot to death outside the company's annual investor meeting."

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Financial Decline and Leadership Crisis

As UnitedHealth entered 2025, initial signs of recovery were overshadowed by a disastrous earnings call on April 17, where CEO Andrew Witte announced disappointing first-quarter results and revised earnings forecasts, leading to a drastic 50% drop in stock value, wiping out over $250 billion.

Andrew Witte [17:30]: "We're revising our adjusted earnings per share outlook."

The decline was attributed to rising medical costs, particularly within Medicare Advantage, and an inability to adapt to changes in Medicare regulations.

Andrew Witte [18:13]: "Care activity increased at twice the rate we anticipated..."

Following the financial collapse, Andrew Witte stepped down, and former CEO Stephen Hemsley returned to lead the company.

Annie Minoff [19:15]: "Andrew Whitte leaving his job as CEO and the former CEO, Stephen Hemsley, was brought back in."

Hemsley acknowledged the company's shortcomings and pledged to overhaul its processes, but doubts linger about the company's ability to recover.

Stephen Hemsley [19:32]: "Are they going to be able to continue delivering that kind of growth?"

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Current Outlook and Future Prospects

The podcast concludes with an analysis of UnitedHealth's future, questioning whether Hemsley can restore the company's former glory amid fundamental business lapses and accumulated crises.

Chris Weaver [20:08]: "UnitedHealth appears to have somewhat lost track of the money coming in and the money going out in this sort of really basic way."

The episode encapsulates the meteoric rise and dramatic fall of UnitedHealth, highlighting the complexities of managing a vertically integrated healthcare empire amidst regulatory, cybersecurity, and leadership challenges.

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Notable Quotes

• Annie Minoff [00:05]: "In the United States, healthcare is big business, and one company has spent years on top."
• Chris Weaver [05:14]: "Medicare Advantage is the part of the Medicare system where private insurers oversee benefits for seniors and disabled people... a huge engine of growth."
• Andrew Witte [12:10]: "To all those impacted, let me be very clear, I'm deeply, deeply sorry."
• Chris Weaver [12:56]: "UnitedHealth was doing these kind of sometimes questionable tactics that generated additional revenue."
• Andrew Witte [17:30]: "We're revising our adjusted earnings per share outlook."
• Chris Weaver [20:08]: "UnitedHealth appears to have somewhat lost track of the money coming in and the money going out in this sort of really basic way."

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Conclusion

"Inside UnitedHealth’s Dramatic Faltering" provides an in-depth exploration of how a leading healthcare giant faced a series of unprecedented challenges, leading to its significant decline. From regulatory investigations and cyberattacks to tragic leadership losses and financial missteps, the episode offers a comprehensive narrative of UnitedHealth's struggles and the uncertain path ahead.

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For more insights and detailed analyses, listen to the full episode of The Journal on Spotify or your preferred podcast platform.

Transcript

[Annie Minoff]

In the United States, healthcare is big business, and one company has spent years on top.

[Ana Wilde Matthews]

UnitedHealth is really a healthcare giant.

[Annie Minoff]

That's my colleague Ana Wilde Matthews.

[Ana Wilde Matthews]

They have about 400 billion in annual revenue. They own the biggest U.S. health insurer, which is called UnitedHealthcare. But they're also one of the biggest providers of healthcare. They own a sprawling network of doctor groups, they own a large pharmacy benefit manager, and they own a bunch of just sort of data and technology units. Pretty much any corner of the US healthcare industry that you can think of. UnitedHealth probably has some kind of element of it.

[Annie Minoff]

Ana and another colleague, Chris Weaver, have been reporting on UnitedHealth, and over the last year and a half, they've seen the company experience an onslaught of trouble and setbacks.

[Chris Weaver]

UnitedHealth Group's had one of the most challenging years that any business could possibly imagine. They're facing multiple investigations by the Department of Justice.

[Brian Thompson]

The justice department is investigating UnitedHealthcare's billing practices for Medicare.

[Chris Weaver]

They had a huge hack that crippled portions of the US Health system, a.

[Ana Wilde Matthews]

Cyber hack on the nation's largest healthcare platform. UnitedHealth Group continues to cripple critical services payments.

[Chris Weaver]

One of their executives was shot in midtown Manhattan. The CEO of UnitedHealthcare has just been shot to death, and their investors are in a revolt.

[Annie Minoff]

UnitedHealth shares are tumbling.

[Ana Wilde Matthews]

Today, they're down more than 20%.

[Annie Minoff]

So what happened? How did the country's most powerful health insurer end up here? And can they come out of it?

[Narrator]

Welcome to the Journal, our show about money, business and power.

[Annie Minoff]

I'm Annie Minoff. It's Wednesday, June 11th. Coming up on the show, inside the dramatic faltering at UnitedHealth.

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[Andrew Witte]

What you can achieve.

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That's the power of us. Visit usbank.com today to learn more. Copyright 2025 US Bank UnitedHealth got its.

[Annie Minoff]

Start in the 1970s in Minnesota, but it didn't establish itself as a healthcare juggernaut until the last few decades.

[Stephen Hemsley]

How did UnitedHealth become the behemoth it is now?

[Chris Weaver]

Going back really about 15 years. They started branching out into other parts of the health care system, doctors, groups, pharmacy benefit managers, things like that. And it kind of set off this vertical expansion where they were growing not just in health insurance, but across industries.

[Stephen Hemsley]

Vertical meaning, like in the sense of vertical integration.

[Narrator]

They control everything, soup to nuts.

[Ana Wilde Matthews]

Well, I mean, in fairness, like they don't always control everything. But the dynamic you're looking at is people are paying the insurance company and then the insurance company is using that money to pay other parts of UnitedHealth to take care of patients. So it's really like one hand feeding the other.

[Stephen Hemsley]

So not only are they the insurer, but they might also be the doctor.

[Narrator]

Group that's treating the patient.

[Ana Wilde Matthews]

Exactly right. They're taking a premium. They're taking money from maybe the federal government or maybe an employer or maybe an individual consumer. And they're using that money to cover the care of the the enrollees, but to cover the care. That money is flowing through to elements of UnitedHealth like doctors or a pharmacy benefit manager that was owned by UnitedHealth.

[Annie Minoff]

UnitedHealth grew to own almost every aspect of the health system, including insurance, doctors, pharmacy benefits, and technology like bill processing. Some parts it built out and some parts it acquired. For example, back in 2011, it bought.

[Narrator]

Monarch Healthcare, one of the largest physicians.

[Annie Minoff]

Associations in California with over 2,000 doctors. While the company was growing in all directions, it was also strengthening its core business, insurance. It did this by tapping into a growing Medicare program known as Medicare Advantage.

[Ana Wilde Matthews]

They're the biggest in Medicare Advantage. They're not just big, they are the largest Medicare Advantage plan.

[Stephen Hemsley]

What is Medicare Advantage and why was it great for UnitedHealth?

[Chris Weaver]

Yeah, Medicare Advantage is the part of the Medicare system where private insurers oversee benefits for seniors and disabled people. And it's been a huge engine of growth for UnitedHealth and for other insurers. The program's expanded rapidly over the last bunch of years.

[Ana Wilde Matthews]

Now, Medicare Advantage is growing for various reasons. One is simply that Medicare is growing, right? You know, baby boomers are aging into Medicare. So there's a growing population covered by Medicare. And then within Medicare, Medicare Advantage is taking a larger and larger share of enrollees.

[Annie Minoff]

That reliable Medicare Advantage money, which is taxpayer funded, coupled with the company's expansive healthcare portfolio helped UnitedHealth grow quickly. It became a reliable blue chip stock.

[Ana Wilde Matthews]

They've had the reputation on Wall street with investors as really just kind of a sure thing. Their earnings always go up, their revenue always goes up. They always make the projections that they've promised to Wall Street. They've really been seen as just kind of a gold standard maybe in the industry for invest investors in terms of their performance.

[Narrator]

How much money do they make UnitedHealth's.

[Ana Wilde Matthews]

Revenue last year was 400 billion. So they're really a huge, huge company. You know, their revenue's bigger than some countries economies.

[Chris Weaver]

You know, 15 years ago they were at about 100 billion and it's essentially quadrupled since then.

[Annie Minoff]

The company's CEO at the time got a lot of credit for that success. His name is Stephen Hemsley. Here he is speaking at a conference in 2012.

[Stephen Hemsley]

I will start out with a couple of minutes about UnitedHealth Group. Its mission is to help people live healthier lives. And that really is a mission that is deeply felt. And the role of our business is to make the healthcare system work for everyone.

[Narrator]

So Stephen Hemsley was known as a.

[Annie Minoff]

Detail oriented CEO who ran a tight ship.

[Ana Wilde Matthews]

So one thing that Steve Hemsley was known for in his time leading the company were something called the monthly business reviews which were in person. And these meetings were very intense. They were so intense that I'm told some executives referred to them as colonoscopies because you really, there was nothing left on the table after you got through one of these apparently.

[Annie Minoff]

Hemsley stepped down as CEO in 2017. At the time, UnitedHealth was at the top of its game. Its stock price had more than tripled during Hemsley's tenure. In 2021, a man named Andrew Whitty became the company's CEO. He'd been a board member and then ran the company's healthcare services arms, including those doctor groups that UnitedHealth owned.

[Narrator]

Witty brought a different, less formal vibe to UnitedHealth.

[Ana Wilde Matthews]

So Witty brought a really different style to the leadership of UnitedHealth. Andrew wore sort of zip up tops. They look kind of like, you know, maybe a tracksuit top. He was known for his brightly colored sneakers. He was doing sort of fireside chats with employees, interviewing them, sort of like talk show style. He definitely brought a different vibe to the company. He also was based on our reporting really not as in the weeds on the operational details as say, Steve Hemsley had been.

[Narrator]

Before joining UnitedHealth, Witte had run the British pharmaceutical company GlaxoSmithKline for almost a decade. He didn't have extensive experience with the American health insurance industry, which is a very complicated and heavily regulated business.

[Stephen Hemsley]

And under Witte, how did UnitedHealthcare do at first?

[Ana Wilde Matthews]

UnitedHealth continued to do well financially under Witte. Again he started in 2021 and you know, they kept growing, they kept making their numbers that they had projected for Wall Street. They did well for several years.

[Narrator]

And then its winning Streak was tested. That's after the.

[Annie Minoff]

At the beginning of last year, 2024, UnitedHealth was riding high. Its market cap was almost $500 billion. But it was bad to experience more than a year of trials and tribulations that would test the company from seemingly every direction.

[Ana Wilde Matthews]

It's certainly been like an accumulating series of events that have kind of built up over time. So over time, really challenging things have happened.

[Narrator]

In February of 2024, there was news.

[Annie Minoff]

From the Justice Department.

[Chris Weaver]

Ana broke the story last year that there's an antitrust investigation looking at United's practices that appears broadly to be examining the way that they operate with these many acquisitions that they've brought in over the years between the insurance arm and the health services arm.

[Narrator]

According to ANA's reporting, the Justice Department.

[Annie Minoff]

Was looking into the relationship between the.

[Narrator]

Insurance side of the business and the healthcare services side, which includes the physicians groups and the pharmacy benefit management. The very thing that made the company successful, its soup to nuts vertical integration of healthcare was being probed as anti competitive. So what used to be strengths now.

[Stephen Hemsley]

Are seeming like potential liabilities.

[Ana Wilde Matthews]

Certainly what has been strengths are now getting greater scrutiny.

[Annie Minoff]

Spokespeople for the Justice Department declined to comment at the time. UnitedHealth executives have said that Optum and UnitedHealthcare don't favor one another and routinely work with competitors. A UnitedHealth spokesperson says the company's vertical integration helped deliver better health outcomes and helped transition away from a fragmented US Healthcare system.

[Narrator]

And the same month that the Justice Department probe was revealed, UnitedHealth got hit with another problem, a hack. One of UnitedHealth's subsidiaries, Change Healthcare, had to shut down its system after hackers infiltrated it.

[Ana Wilde Matthews]

Change Healthcare, which is a unit of UnitedHealth, that really is. It's kind of. It's at the guts of sort of the American healthcare finance system. So it moves claims, it handles billing stuff. It's one of these companies that, you know, patients have never heard of. But yet when it seized up because of this hack, money just stopped flowing through large segments of the American health care system. So it was a huge, huge thing.

[Annie Minoff]

UnitedHealth said they were improving their cybersecurity in response to the attack. And CEO Andrew Witte, testifying before Congress, apologized.

[Brian Thompson]

As a result of this malicious cyber attack, patients and providers have experienced disruptions and people are worried about their private health data. To all those impacted, let me be very clear, I'm deeply, deeply sorry.

[Annie Minoff]

The hack eventually cost the company about.

[Narrator]

$3 billion and 190 million people over half of the US population had private data stolen in that one attack. Then just a few months later, in the summer, Chris and Ana started publishing a series of investigative articles examining Medicare Advantage.

[Annie Minoff]

It was a broader look at how.

[Narrator]

Health insurance companies in general were taking advantage of Medicare. But UnitedHealth was a big player.

[Chris Weaver]

Well, we found across the industry that giant insurance companies were basically using all these different tactics to generate more and more revenue from the Medicare system. And a lot of it involved doing things like adding extra diagnoses to patients Medicare records through things like sending nurse practitioners to patients houses to record diagnoses, perhaps that they weren't getting any treatment for, or incentivizing doctors to basically add more diagnoses in a system where diagnoses trigger additional payments. What we discovered was that UnitedHealth was doing these things more per person than any other major insurer. It was kind of the industry leader of doing these kind of sometimes questionable tactics that generated additional revenue.

[Annie Minoff]

A spokesperson for the Medicare agency told us that, quote, beneficiaries deserve a system that delivers high quality, transparent, accountable care. It also said that the agency is expanding its auditing of Medicare advantage plans. A UnitedHealth spokesman has said that the Journal's analysis is inaccurate and biased and that Medicare Advantage provides better health outcomes and more affordable healthcare compared to traditional Medicare. Regarding the nurse visits, UnitedHealth told us.

[Narrator]

That they asked their clinicians to use.

[Annie Minoff]

Their medical judgment in diagnosing. The company also said that it complies with guidance from the Department of Health and Human Services.

[Narrator]

Since these findings were published, the Wall Street Journal has reported that there are at least two more Justice Department probes into UnitedHealth's Medicare Advantage practice, including one criminal probe.

[Annie Minoff]

After the first investigation was reported, UnitedHealth published a statement on its website that said any, quote, suggestion that our practices are fraudulent is outrageous and false. After the criminal investigation was reported, UnitedHealth said that they have not been notified of the investigation, but that they stand by, quote, the integrity of our Medicare Advantage program. The Justice Department declined to comment.

[Narrator]

And then at the end of last.

[Ana Wilde Matthews]

Year, it was just a stunning, stunning, awful thing. In December, a top executive was shot in Manhattan. A shocking and tragic event.

[Annie Minoff]

Brian Thompson, the CEO in charge of UnitedHealthcare, UnitedHealth's insurance arm, was shot to death outside the company's annual investor meeting.

[Ana Wilde Matthews]

So it was an incredibly, incredibly difficult moment for the company. I think it was. The moment was very difficult, and the reaction afterward was also incredibly difficult. Executives at United, and even just frontline employees at United, felt personally fearful about their safety. And I think many of them felt that they were under attack for doing their jobs every day.

[Narrator]

Some people online and elsewhere used the shooting to criticize UnitedHealth and other insurance companies.

[Ana Wilde Matthews]

A lot of us aren't that sympathetic.

[Industry Expert]

If that isn't a loud, clear message to all these CEOs across the board of these health insurance companies, I don't know what is.

[Annie Minoff]

Nobody deserves to get on their way to work. Nobody deserves to get their healthcare claims denied either.

[Ana Wilde Matthews]

And so there has been a sort of backlash that has maybe complicated the perception of the UnitedHealth brand.

[Annie Minoff]

The CEO, Andrew Witte, sent a video to the staff shortly after the shooting.

[Brian Thompson]

Colleagues, I'm deeply saddened to tell you that earlier this morning our friend and colleague Brian Thompson was killed just outside our investor conference hotel in new.

[Annie Minoff]

As UnitedHealth entered 2025, it still had a massive market cap of over $460 billion. And by April of this year, UnitedHealth's stock was actually climbing as the company recovered from its string of challenges.

[Ana Wilde Matthews]

Overall, investors still really believed the UnitedHealth story. The shares didn't really reflect a lot of the bad news that was accumulating.

[Annie Minoff]

But then on April 17, the stock price did take a plunge.

[Narrator]

It wasn't a horrific shooting or a hack or a DOJ investigation that plummeted UnitedHealth's stock price. It was an earnings call.

[Annie Minoff]

Here was CEO Andrew Witte.

[Andrew Witte]

In that call was an overall performance that was frankly unusual and unacceptable. As you saw in our release, we're revising our adjusted earnings per share outlook.

[Annie Minoff]

The company's first quarter results were far below expectations.

[Narrator]

Its revenue was $2 billion shy of Wall street estimates. Witty cut the company's projected earnings for the rest of 2025. Then, weeks later, the company withdrew its financial guidance.

[Annie Minoff]

Altogether. Shares fell to about half of what they were before the earnings call, wiping out more than $250 billion in value. A big reason medical costs, specifically in the Medicare Advantage business, were up and.

[Andrew Witte]

Accelerating, starting with care activity. In UnitedHealthcare's Medicare Advantage business, we had planned for 2025 care activity to increase at a rate consistent with the utilization trend we saw in 2024. Instead, though, first quarter 2025 indications suggest care activity increased at twice that rate.

[Annie Minoff]

UnitedHealth had struggled to adapt to changes in Medicare rules. Several diagnoses that the government had paid more for previously had become less lucrative.

[Chris Weaver]

The factors that they attributed the unexpectedly poor results to were, from the investor's point of view, largely predictable ones. And it was not clear how they could have, like, not accounted for that.

[Annie Minoff]

All this culminated in Andrew Whitte leaving his job as CEO and the former CEO, Stephen Hemsley, was brought back in. A UnitedHealth spokesman said that Witty's departure was for personal reasons and he is a company advisor. The spokesman said Witte led UnitedHealth Group with compassion and dignity through some of the most challenging times any company has ever faced. End quote. After Hemsley took the reins, he apologized for UnitedHealth's recent performance and said it was working to recast many of its processes.

[Narrator]

The big question is whether Hemsley can bring United out of this moment of crisis.

[Chris Weaver]

If you look at their growth over the last 10 or 15 years, just in terms of earnings, the share price, they've grown in a way that looks more like almost like a tech company than an insurance company. And I think the big question here is, are they going to be able to continue delivering that kind of growth?

[Annie Minoff]

For all of the extreme events UnitedHealth has experienced over the last few years, the thing that impacted the company's business, Chris says, is really pretty simple.

[Chris Weaver]

The business lapses here is that they're just, I mean, they're just very fundamental. You know, UnitedHealth appears to have somewhat lost track of the money coming in and the money going out in this sort of really basic way. So I think it's. I mean, it just strikes me as such a fundamental situation from a business.

[Narrator]

Point of view, doesn't get much more basic than profit and loss.

[Chris Weaver]

That's right.

[Narrator]

That's all for today. Wednesday, June 11. The Journal is a co production of Spotify and the Wall Street Journal.

[Annie Minoff]

If you like the show, follow us.

[Narrator]

On Spotify or wherever you get your podcasts. We're out every weekday afternoon. Thanks for listening.

[Annie Minoff]

See you tomorrow.