Every industry is reconsidering trade customs these days as the public, press, prosecutors and politicians (PPPP) raise questions about whether hidden fees and double billing clients and suppliers is ethical.
This week begins with an article in The Wall Street Journal that reports on health insurance benefits consultants who routinely take commissions and bonuses from insurers without fully disclosing their conflicts of interest to the employers who hire them to help good deals with the HMOs and PPOs and pharmacy benefits managers (PBMs). The KaiserNetwork.org summarizes the Journal’s story here. The Journal’s full story is here.
Basically, this is a followup on a similar expose of property and casualty insurers a few yearsr ago. It’s not unlike the stories about mutual funds paying excessive commissions to stock brokers in return for research reports on stocks and the markets. And it’s not unlike the stories about mortgage brokers who pay finders’ fees to Realtors for referrals.
Physicians and drug companies, of course, have been under fire for the gifts that the “ethical” drug companies give to physicians who prescribe and recommend their most profitable products. And who do you think buys the 16-seat boxes at college and professional sporting events for client and political entertainment purposes?
The 4Ps just aren’t as tolerant of such mutual back scratching these days, probably because it’s easier to figure out what’s going on, and whistle blowers are making it harder to keep the insiders’ secrets.
Today’s insurance industry expose is just another warning to business executives that they had better not do anything that will put their names on the front page of the paper or send them to Jail.
It’s amazing how many smart people do dumb things like back dating stock options and trying to use spam to sell on the Internet.