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Cover Story
As Shatter-Proof as Ever!
Women have broken a lot of Gender Barriers in Society, But The Glass ceiling is not Exactly in that List Yet
Issue Date - 17/03/2011
Gail’s Got Game
From being an all-American Basketball pro to leading the biggest division of Unitedhealth group, Gail Boudreaux has grabbed every Opportunity in life. And she’s fared well; very well. So can we declare The Company she leads the flawless victor? Actually, no. There is much left to be done yet.

Three decades back, the best chance you had of catching a glimpse of the six-feet, two-inch tall Gail Boudreaux in action, with a serious intent to win for glory, would have been on the basketball court. She was a standout player for the Dartmouth College’s Women’s basketball team (between 1978 and 1982; she still holds 12 individual court-records from Dartmouth, where she was the all-time top scorer and rebounder), was named Ivy League Player of the Year for three consecutive seasons, and was a three-time All-American basketball player. All she knew then in the name of management was in-game formations that would result in error-free coordination with her teammates. Then, Columbia Business School happened and her life changed forever. Her ambitions did too. Today, she is all of 52 years and the best chance you have of sighting her is in her corner office on the 19th floor of the $94.16 billion-a-year topline earning & the #21-ranked Fortune 500 and the #1 health insurer in US – UnitedHealth Group’s 9900 Bren Road East headquarters in Minnetonka (Minnesota). And the word “management” for her, implies keeping a house full of 42,000 employees in order.

“I told them that I can definitely make a difference as I am a very competitive person,” shares Boudreaux with B&E, recalling the time when she was first approached to join the insurance giant in early 2008 as the EVP of the Group. And difference she did make. Despite the downturn (coupled with rising unemployment rates) having eroded its corporate-heavy membership base, the Health Benefits business (UnitedHealthcare) that she took charge of, scripted a 22.81% growth in topline in the two years leading to FY2010. Little wonder, in the two-and-a-half years that she has been at the company, she has quickly moved up the ladder, from being the EVP of UnitedHealthcare in May 2008, to its President in May 2008 and finally the CEO in January 2011. And this very fact that she now carries the baton of the four benefits units (Employer & Individual, Medicare & Retirement, Community & State and Military & Veterans) that comprises UnitedHealthcare in late January 2011 – a unit which contributes to 92.86% of UnitedHealth Group’s (UHG) revenues (as calculated for FY2010, when the Benefits business recorded $87.44 billion in topline), comes as the biggest piece of good news for UHG’s shareholders. What’s best – the company expects its revenues to exceed the $100 billion mark for the first time in FY2011, with the Benefits division contributing to more than $92 billion in revenues.

For Bourdreaux, the goods were not served on a platter at UnitedHealth when she first came on board. She influenced changes aplenty. Since early 2009, the company made increased efforts to extend and strengthen its regional delivery model, which further helped improve service and create closer relationships with existing and prospective consumers, healthcare providers, brokers and consultants. The group also executed strategies to evaluate and focus on local markets, making more efforts to do business to directly support regional activities. As a result, despite a rise in negative sentiments amidst consumer groups during the slowdown, the group saw across-the-board improvements in customer satisfaction and business growth.

What has also played in favour of the company is its bet on inorganic growth in the recent past. Deals such as the acquisition of AIM Healthcare in June 2009 (which gave it a strong footing in the data mining and insurance claim auditing business), the $570 million purchase of Health Net Inc.’s Northeast licensed subsidiaries in July 2009 (which gave the buyer access to the Health Net’s 578,000 members in the three states of Connecticut, New York and New Jersey, which include 472,000 commercial risk members, and the rest, Medicare and Medicaid Advantage members), and the July 2010 purchase of Picis Inc. (a leading provider of health information solutions) have only helped improve UHG’s financials – while its revenues improved by 8.06% y-o-y to touch $94.16 billion during FY2010, during the same period, its operating income saw a huge jump of 23.58% to climb to $7.86 billion.

Under Bourdreaux (who is a self-confessed “communication” addict), the company has turned over a new leaf when it comes to embracing the latest in communication technologies (one of which was mobile health services, which included launching related mobile apps and games, and taking advantage of social media). It therefore became the first in the industry to adopt online social networking as a means to reach out to the masses, much before even the #2 WellPoint ($65.03 billion-a-year revenue grossing & the 2010 Fortune 500 #31) or the #3 Aetna ($34.76 billion & Fortune #63) did. Despite being a mother of two teenage lads, this multi-tasking CEO works for more than 14 hours every day. And just like she did during her basketball-playing days, today, she hates losing in business. This is how she puts it to B&E, “We all know that it’s good to win and nobody ever plays to lose, be it sports or business. You eventually learn that there will always be someone, who will beat you no matter how good you are. So, you have to continuously raise the bar and improve.” But can Bourdreaux afford to declare herself the ultimate winner? Supposedly not. And statistics prove why she might just have more than just one pair of socks to pull before she declares herself the ultimate winner.

At present, the UHG stock is grossly undervalued as compared to the average of listed entities in the industry. While UHG’s P/E ratio stands at a lowly 10.36, the average value for the industry is 16.38. A reflection of this fact is also found in the Price-to-Book ratio for Q4, FY2010 (UHG – 1.79 & industry’s average– 4.35). Perhaps it is the habit of declaring dividends far too often that is costing UHG dearly (Payout Ratio of 9.69 as compared to the industry’s 3.81 during the previous financial year). Efficiency factors are also worrying. The company’s revenue per employee value ($1.08 million for FY2010) is only half of the industry’s (52.94% during FY2010). A lower asset turnover ratio (1.54 as compared to the industry’s 2.74), lower return on assets (7.59 versus 8.21) and a lower return on equity (18.75 versus 23.33) are enough reasons to believe why Boudreaux has a lot more to prove at this $258 million-a-day earning managed care provider. But if you go by what she has proven in the past, she might just prove the critics wrong yet again, with a long distance 3-pointer or maybe even a slam dunk!


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