"Most of us know who the founders of the world's largest companies are - Amazon, Berkshire Hathaway, Walmart. But does anyone know anything about the founder of the insurance and healthcare company UnitedHealth, which is just as big? Does anyone know anything about Burke? If so, we'd love it if you can tell us," begins a video on the popular YouTube channel AHealthcareZ, and it wasn't a rhetorical question. Over the 50 years since UnitedHealth was founded, Richard T. Burke (81) has given few interviews.
Now he has given an exclusive interview to "Globes", during what is perhaps the most turbulent period in the history of America's biggest health insurer. In early December, the CEO of the group's insurance company UnitedHealthcare, Brian Thompson, was murdered. A murder is of course shocking and to be condemned, and yet the crime sparked very unusual reactions in the US. Some saw it as an opportunity to let off steam that had been building up against UnitedHealth. They responded to obituaries on Facebook and LinkedIn with laughing icons, printed products with the killer's picture, and even wrote songs in his honor. Folk singer Jesse Wells wrote a song in which he called Burke "the Warren Buffett of health, the Jeff Bezos of fear."
In addition to the murder and the cesspool of negative public opinion, UnitedHealth is facing more concrete problems. "The Wall Street Journal" reported two weeks ago that the US Department of Justice is investigating the company on suspicion of overcharging government insurance. Although this lawsuit was dismissed in court last Wednesday, and UnitedHealth has accused the WSJ of spreading false information, it is only one of several lawsuits and investigations underway against it.
As a result, the company's share price has fallen about 20%, wiping almost $35 billion off its market cap since the murder. But even after these declines, United is still a giant company: the 18th biggest in the US in terms of market cap and the eighth biggest in terms of revenue. According to estimates by the WSJ, 5% of US GDP passes through it every day, and it employs 90,000 doctors, 10% of US doctors.
Burke holds no official position at UnitedHealth today, but he is still a shareholder, and is considered the man who built its business model and organizational culture. He founded the company in 1977, first stepped down from his main roles in 1987 but remained a director. In 2006, he was called to the helm after CEO and chairman William McGuire resigned following suspicions of securities violations. Burke returned to being the company's chairman until 2017 and served as a director until 2022. Although he is careful to note that "all opinions I express in the article are my own" and that he does not officially represent the company, he still refers to it as "we."
"Everything they say about us is character assassination," he tells "Globes." "The system is flawed, even broken, but our part of it is not flawed."
And after you saw the public reaction to the murder, have you learned any lessons, except to beef up security?
"What lessons should we learn? It was simply the murder of a great young man by a disgusting person (Luigi Mangione), not even a customer who had a bad experience with us." He is conducting the interview both on the occasion of his joining as chairman and business advisor to Korro AI, an Israeli startup led by Mati Kochavi, and also because he is a supporter of Israel. "I start every morning by reading all the Israeli press, because you are a fascinating country. Your resilience is unbelievable."
"Integration is not a monopoly"
UnitedHealth has never been just an insurance company. It also owns many of the clinics and healthcare networks that provide medical care to its policyholders, as well as assisted living, mental health services, and more. Over the past 15 years, it has been aggressively buying up such services.
It also owns several companies that serve as influential intermediaries in the insurance sector: companies that tailor the insurance plans they offer to their employees for employers; companies that handle and negotiate with drug companies on the prices they will charge insurance companies; a company that arbitrates in disagreements between insurance companies and doctors; and a company whose job is to set what is fair and acceptable payment for certain medical services for the entire market.
How is it possible that UnitedHealth owns all of these companies? "Conflicts of interest are the business model," wrote reporter Sara Sirota in "The American Prospect" magazine in 2023. "It is so complicated that 25% of its revenue comes from subsidiaries." Some of these conflicts of interest have even resulted in lawsuits or government investigations. Burke, predictably, sees it differently. "Size is not a bad thing. Integration is not a monopoly. There are still a lot of companies competing with us, and any insured person or employer can choose to work with a different insurance company, and any doctor can choose to work with or against a different insurance company."
But ultimately, the patient doesn’t exactly decide which plan to get. There are a lot of middlemen, some even owned by UnitedHealth, which influence the decision.
"The employers or government insurers choose the insurance package, and it’s in their best interest to choose for the patient. They may do a poor job sometimes, but I don’t think an employer or government company would intentionally make a decision for the patient that’s not in their best interest. I find it hard to see that happening."
A dive into UnitedHealth's model could shed light on why Americans feel their healthcare system is so broken.
It all began in 1973 when Burke saw an opportunity in the form of the HMO Law. Until then, doctors and hospitals in the US had been charging for use, and prices had gradually started to rise for both insurers and patients. The then US President Richard Nixon, decided to solve the problem: the insurance company would contract with certain doctors, pay them a fixed amount, and the more expensive treatments they performed, the less they would have left for their salary. These organizations were supposed to be non-profit institutions, something like the Israeli health insurance fund model.
Burke was one of the members of the think tank that developed the concept, but what he founded and eventually became UnitedHealth was not a nonprofit, but a commercial company to manage these nonprofits. "This model almost allowed us not to lose," he admits. "We were very lucky. The HMO law guaranteed us demand, and it was enacted in such a way that it overrode all local state laws. I think this is a rare example of a federal official doing something useful."
How did you become the biggest?
"We signed agreements or directly employed the largest number of doctors. That way, our clients had a wide choice of doctors. The existing clients of these doctors wanted to be insured with us so as not to change doctors. That was an important factor in our success."
The company that has it all
The critics claim that at this point UnitedHealth began to put pressure on doctors to reduce costs as much as possible. "The aim of the law was to cut costs," Burke says without apology. "The system was then without a ceiling. Doctors or pharmaceutical companies could charge whatever they wanted. So we came into the picture, and although we maintained quality, we also controlled the price."
And over time, you weakened more and more factors in the health market.
"We became more sophisticated over time. Today, we directly or indirectly employ about 90,000 doctors and we have the ability to control the entire cycle."
This integration is at the heart of criticism of the company, which operates wearing several hats. First of all, it is a classic insurance company. In this role, there is an allegation that it rejects or delays payments and wears down patients with bureaucracy. Burke says: "That's not true at all. We approve the vast majority of claims we receive immediately, and the rest can be appealed. We approve more claims than rival companies. Bureaucratic exhaustion is definitely not part of our business model."
UnitedHealth said, "We ultimately pay 98% of claims by our customers when they are filed on time and include complete information. For the 2% of claims that are not approved, most are cases where the services are not included in the criteria set by the payer, such as the employer or Medicare and Medicaid. Only 0.5% of claims are not approved due to clinical information or patient safety."
But these allegations have been specifically directed at UnitedHealth for many years, and recently escalated when two families of its deceased customers sued it, alleging that it uses an AI system to process insurance claims, even though it knows that the system makes many mistakes and wrongly denies claims. UnitedHealth argued in response that patients did not exhaust the appeals process. "The naviHealth predict tool is not used to make coverage determinations. The tool is used as a guide to help us inform providers, families and other caregivers about what sort of assistance and care the patient may need both in the facility and after returning home. Coverage decisions are based on CMS coverage criteria and the terms of the member’s plan. This lawsuit has no merit, and we will defend ourselves vigorously," UnitedHealth responded to a question from "Globes."
The second type of claim relates to cases in which UnitedHealth is actually the healthcare provider for the government insurance company. The US provides government insurance for those aged 65 and over and people who cannot afford private insurance, but actually provides the service through clinics that it does not own. The claim is that when the government is the pocketbook and UnitedHealth is the service provider, it inflates costs.
According to a series of articles by "STAT", UnitedHealth held "coding workshops" to teach doctors at clinics it acquired how to report illnesses under the "correct," more expensive, code. Doctors argued that in extreme cases, the more expensive code also required patients to undergo unnecessary testing. They said they were not explicitly told to code one way or the other, but the implication was very strong.
Burke says, "Doctors have to make livelihoods, but I don’t believe they made decisions against patients. This is another character assassination against us. You won’t hear them openly say that’s the case, not because they’re afraid of us, but because it’s not true."
UnitedHealth said: "Our providers and partners make independent clinical decisions and we expect them to diagnose based on medical standards and document the information fully. We provide training and documentation support because the medical outcome is better, and regulators audit our documentation regularly."
Other practices are even more complex. For example, UnitedHealth owns pharmacy benefit management (PBM) companies, whose official role is to negotiate with drug companies on behalf of insurance companies. Today, they are the punching bag of the US health system, and no one understands why they are needed.
PBMs operate on a kickback system. The drug company supposedly charges a list price, but reimburses part of the cost to the insurance company. There are several problems with this system. There is no transparency about the real price of the drugs, it is not always known how the reimbursement is divided between the insurance companies and the PBM, and the PBM may allegedly prefer a drug that yields a more generous profit over the one with the best results (and, unlike the insurance company, it does not even have an interest in the patient staying healthy).
UnitedHealth said, "PBM companies constitute a major counterweight to the monopolistic power of drug companies, which would otherwise set and raise drug prices without limit."
We don't make the laws
These kinds of claims are made to a large extent against all US insurance companies, but UnitedHealth is considered expert in exploiting the interrelationships between its various parts. For example, it has a bank that offers high-interest loans to its doctors who are its service providers. If UnitedHealth delays paying them what they are owed (by denying patients’ claims), they are more likely to take out loans.
The claim, which is perhaps the most serious ever made against UnitedHealth, was made as part of a lawsuit by a male nurse named Maxwell Ollivant. He later withdrew the lawsuit on his own initiative. The lawsuit alleged that the company pressured nursing staff to encourage patients to forgo end-of-life care through "critical illness conversations" with patients who had "aggressive aims for their final days."
This lawsuit suggests that the company tends to examine the condition and profitability of each patient individually. Burke notes that this is indeed possible in UnitedHealth's computer systems. "If you go into our control room, you can see every patient in the system," Burke says, "and we use AI a lot to make decisions. AI helps us improve our medical records and make care better."
Before implementation of Obamacare, which expanded government insurance to groups of people who were not insured at all, UnitedHealth bought the company that had won the contract to build the website that presents the program’s insurees with their options, which may have allowed it to present itself in a positive way there. Burke sees things differently: "The computer systems they tried to implement didn’t work, and even though we didn’t like Obamacare at all at first, we got involved and made things work."
Yet, at the beginning of that period, UnitedHealth bled money and its stock fell. "But what can we do?" says Burke. "We don't set the rules. The pricing didn't make sense, and in the end we decided we weren't participating in it. Only when the reimbursement levels rose to a level we felt comfortable with did we return to participate in this program."
The US pays the most in the world for healthcare by a wide margin, but it is not the healthiest nation, and patients hate the healthcare system. Do you agree that there is a problem with it?
"Sure. But the problem is not with us. Our customers are very happy with us. Not all of them, but not everyone who buys at Costco comes out happy either. What is really broken in the system is the government's part."
In what sense?
"The government pays low rates, and then everyone else in the chain has to pay more. In this situation, we try to provide the most effective and high-quality products."
Do you expect the new administration to change anything in the healthcare system?
"We don't know what its plans are time. It probably won't repeal Obamacare, because people are already insured there and you can't get them out. You can lower the prices of prescription drugs. Drug prices in the US are the highest in the world, by a wide margin. The US subsidizes the use of drugs for the whole world. Maybe he'll deal with drug prices."
Do you think Trump is doing the right thing with his government cuts?
"He won't throw the baby out with the bathwater. The US government is shredding money. It's good to have outsiders come in, who have no interest or connection to the government, and cut some. Trump's appointments were controversial, but he deserves to have loyal people working for him. That's the right of an administrator."
What do you think of Health and Human Services Secretary Robert F. Kennedy Jr., who is considered a conspiracy theorist who doesn't believe in science and medicine?
"Trump is hiring people who do things differently, people who rock the boat a little. Kennedy understands health. He's said some radical things in the past, but he's backed away from some of them."
For example, about the link that has been debunked over and over again between vaccines and autism?
"That link needs to be examined."
An Israel lover who discovered he's Jewish
Burke has given almost no interviews in recent years. The last profile articles published about him were related to his acquisition of the then Canadian hockey team, the Winnipeg Jets. That was in 1995. One personal said, "His fans say he's a classic entrepreneur, while his critics say he's a crude dictator. Another said, "Burke is an aggressive businessman who won't let up."
This aggressiveness doesn't really come through during the current interview, even though the things he says are sometimes harsh. This duality is perhaps the secret to his success. "I've never seen an obstacle as the end of the road, but as a station to be passed. That's been the secret to success for me, but not always. There were times when I probably should have given up, but I didn't."
Burke says that he grew up in a modest home in a small town in Georgia. "I was lucky enough to study with the same group of friends from kindergarten to the end of high school. After that, I went to university in Atlanta and then in Virginia." In Georgia, he worked as an analyst at a company called Interstudy, then founded UnitedHealth under the name Charter Med.
He has been married three times. "I have six children today, and my greatest pride is that they are pleasant, happy people. I was very involved in their upbringing. I always thought they should decide who they were, but I had expectations for them and I am very happy with what has emerged." Three of his children are active on Wall Street, one daughter has a degree in clinical psychology, another son built his own business and sold it to return to manage the family fortune, and one daughter is studying nursing.
His father's family were Irish and British who lived in Texas for many generations. His mother is of German descent and was raised as a Lutheran, but about a decade ago an interesting detail was discovered about her. "A few years ago I started playing with the Roots software," says Burke, "and I realized that my grandmother was Jewish, which means my mother and I are Jewish too. When I told her about it, she was very surprised."
He has an unusual interest in Israel, and not because he is Jewish. Even before he discovered this, he thought Israel was a very intriguing place and used to visit it a lot. That's when he also met Mati Kochavi. "Before Covid, I met through a friend several Israeli startups that wanted to work with the American healthcare system. At the meeting, I got the impression that the companies had failed significantly to understand the system, and the differences between it and the Israeli healthcare system.
"But after two years, I brought a manager from United's investment fund to Israel, and we had a meeting like this with 10-12 other companies, and the difference was dramatic. They had learned the material, and now understood the health system much better. And in the end, the fund invested in seven of the companies."
Burke plans to come back to visit Israel, "When it's safe to do so. You need to close this war so you don't have to do it again."
What do you think of Trump's plans in this regard?
"I'm optimistic. Biden didn't bring security to the world. Trump will deal with the problems in Israel and Ukraine. He understands negotiations. Sometimes in negotiations you have to scare people with alternatives that they don't like."
Are you considering investing in other Israeli companies?
"I don't invest that much myself anymore. My son manages the investments for me. I haven't retired from life yet, but I have from that part of it."
The Israeli startup headed by Burke
Mati Kochavi, founder of Korro AI, and Richard Burke met through a political friend. "When I called Richard, I felt that the conversation was of no consequence for him," Kochavi tells Globes, "But he invited me to a meeting at his house. I brought him a bottle of high-quality whiskey and other things that are not covered by health insurance. In the end, it turned out that he invited me to stay overnight so that he could show the presentation to his wife the next day.
"In the morning, I gave the presentation in the kitchen and I saw that she was enthusiastic. She said: If there had been a product like this when our children were little, I would have told you to invest everything in it and not in United." Burke now serves as Korro AI's chairman and business advisor.
Kochavi is an entrepreneur and businessman who previously operated through homeland security company Logic, which did extensive business in the UAE long before the peace agreements with Israel. He is one of the owners of tech company AGT, the Moonscape Ventures fund, and in recent years his name has been associated mainly with the media sector. He is perhaps best known to the public for the "Eva's Story" project, which made the story of the Holocaust accessible to young people.
Korro AI was founded three and a half years ago, and is focused on child development, mental health, and preventive medicine. The company has developed a series of educational games to train children's physical and mental development challenges in various fields. The system is based on AI to analyze movements, facial and body expressions and build a treatment plan.
"I love children," says Kochavi. "I stop loving people after the age of 17, and there is nothing that breaks my heart more than a child whose opportunity has been taken away. Children and teenagers have been dramatically affected by what the world has been going through in recent years. One in four suffer from developmental or mental health problem. But there are not enough therapists."
In Israel, the Maccabi Health Fund uses technology. Kochavi says, "In the US, the product is everywhere, from the wealthy clinics in Manhattan to the most distant regions. Therapists can treat 50-100 children at the same time, while spending 45 minutes in a room with the child who needs it most."
Kochavi says that Burke is very involved in society, on a day-to-day basis. "Mental health is the area where both Israel and the US need the most help," says Burke. "Ending the war is actually only ending half of the fight against it. Rehabilitation afterwards is a war in itself - hostages, soldiers, evacuees, you have to be prepared to treat them, and that won't be easy at all. I think technology could help a lot. It doesn't replace human therapists, but sometimes it's instead of nothing."
Published by Globes, Israel business news - en.globes.co.il - on March 10, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.