It’s Only Money: How PwC Got Jammed Up On The AHIP Report

This post was originally published in GoingConcern.com on October 14, 2009.

It seemed like a good idea at the time.  Analyze a few numbers for an insurance industry lobby and write a report.  I suspect this was, at most, a $150k engagement. Small change.  But that’s what trusted advisors do.  Come, panting, when called.  Help clients make their case using numbers, charts, and well-crafted prose. Sometimes they also whore their “world-class, gold-standard” imprimatur to what, in this case, was essentially a biased political agenda.

Karen Ignagni, the president of insurance lobby America’s Health Insurance Plans…defended PricewaterhouseCoopers…“PWC is a world class firm,” Ignagni said. “They have a stellar reputation and they have proceeded to do this analysis in a thorough and comprehensive way.”

PwC agreed to help America’s Health Insurance Plans (AHIP) – the lobbying arm of the health insurance industry —warn Congress that the Baucus health care bill would increase health care costs. Unfortunately, the report had some very contentious components and the backlash started immediately.  The most controversial claim was that average family health insurance premiums would increase by approximately $4,000 a year if the legislation being voted upon in the Senate Finance Committee yesterday were to become law.

It’s no help to PwC that critics can easily dredge up numerous examples of PwC and the rest of the Big 4 selling their soul and performing “a textbook case of checkbook research.” I Tweeted a story yesterday of Ernst and Young providing paid cover to the payday loan industry, generally characterized in the media as a bunch of vultures. And I’ve written extensively on Deloitte allegedly earning hundreds of millions, especially under the previous administration, for providing cover for unusual and special covert operations in strange parts of the world. And, well, we all know KPMG’s history of accepting suitcases full of money to provide Big 4 cover for illegal tax shelters.

From The Guardian in the UK: “Read this important Jon Cohn post in which he brings scrutiny to bear on some of the assumption used in the report to reach the (desired?) conclusions. Cohn demolishes the report…The report is just a totally dishonest assessment.”

The PwC Healthcare Advisory leadership probably thought, “Hey this is a good way to keep stroking our insurance industry clients, both on the audit and the advisory side of the fence.”  I recently received an email asking about PwC’s desire to bulk up this practice, given that it serves one of the few industries expected to grow, change, and have enough uncertainty to drive bigger dollars to “trusted advisors.”

“I have been told that PWC, under the Global leadership of Dr David Levy is starting a new “high-level” recruitment campaign of consultants with a strong healthcare, pharma, and biotech backgrounds….It’s obvious to me that big pharma on one side and the biotech companies on the other have a lot at stake these days and could use some professional advice.”

PwC Advisory, in my opinion, is only capable of commodity-type consulting, not value-add big thinking that brings major insights and opportunities to clients. However, PwC has already picked up significant market share in this space and went from not even on the list to near or at the top according to Gartner, IDC and Kennedy. According to sources, PwC did a number of major projects for Grady Healthcare, State of Louisiana, Luxembourg, and the State of California.

So…

Nice start, PwC, in pumping up the public policy profile of your Healthcare Advisory practice. Discrediting your own analysis, leaving your client swinging in the wind, and backing down like a frightened puppy does not bode well.