Virtruvian Man
Scientology’s flagship church is still located on Sunset Blvd one-half block west of
Blue Cross of
Southern California started in 1937 and adopted the same symbol still used
today by Blue Cross and Blue Shield partners throughout the USA
The human figure
superimposed onto the cross was taken from Leonardo da Vinci’s Vitruvian Man.
From the late
1930s to the 1970s Blue Cross of Southern California grew from a few hundred
employees to a few thousand. Through
those decades promotions were based purely on seniority regardless of
performance or qualifications. By the
time I was hired, all of the senior executives had risen to their positions simply
because they had been there the longest.
They were a group whose operations experience was limited to steno
pools, punch cards, manual typewriters and ten-key adding machines.
The company’s
personnel policies harkened back to the days of Samuel Gompers. When an employee was out sick for two or more
consecutive days they had to bring their supervisor a doctor’s note when they
returned to work. At the time Medicare
claims were being processed in seven days on average while at Blue Cross things
were so inefficient that the average time was fourteen weeks. There was a bar named Smuggler’s Inn at the east end of the building with a street
entrance on Sunset Blvd. When you needed
to find department managers who were often unavailable for hours at a time,
Smuggler’s was the first place to look.
How was it that this embarrassment of an organization had managed to survive
and grow for so many years? The plain
truth was that there was no competition and when a need arose for cash to
operate, they just increased premiums.
The sharpest
people working at Blue Cross were some of the college students who processed
claims on the swing shift from four to ten in the evenings. They were pretty much left to their own
devices and soon realized that no one was minding the store. A group of them devised a scheme that ran for
years where they submitted phony claims, approved payments to themselves, and
had the checks mailed directly to their homes.
It was a complete fluke that they were ever found out. On a whim the data processing department produced
a report showing the total money paid out to individuals for the prior year. This of course should have been standard
practice for the annual internal audit but no one had ever seen a need for
it. Suspicions arose when the report
listed several swing shift employees as having received sums well above all of
the senior executives. The perpetrators
of the scheme were quietly dismissed and no charges were ever brought against
them as the publicity would surely bring into question the competence of those
running the place. The employees that
were let go didn’t object. They went
home and continued receiving their monthly checks from the rental properties
they had purchased over the years.
I was hired
to introduce basic business practices into various line departments. Since the scope
of my work would be company-wide my boss informed me that it would be useful
for him to introduce me to the senior executives who oversaw these areas. He took me up to a conference room where the
senior executives were having their monthly meeting. I walked in to the room where eight old men
from a bygone era sat in high-back chairs around a large table choking down doughnuts
and coffee. The colors of the suits they
wore included ochre, olive and reddish brown; many had on white socks.
My boss
introduced me to the group and had me briefly describe the types of things I
would be doing in departments operated by their minions. The company had recently hired a new
President who had come from a Blue Cross plan in Iowa
At the time I
was bothered by a vertebra in my neck that had managed to shift out of
alignment. I eventually had it whacked
back into place by a chiropractor but for a few weeks it was very painful. After I had finished my short spiel the old
guys went on to discuss another issue. I
wasn’t taking part in this and I leaned back against the chair I was seated
at. The chairs all had unusually high
backs and I hit the back of my neck against it. This gave me a sharp sudden jolt of pain like
an electric shock. I let out an
involuntary shout that was loud but crisp and short. None of the old men showed any reaction. They didn’t budge, look in my direction or
even pause in the midst of their discussion.
After my boss and I left the conference room we got into the elevator
and were travelling five floors down to our offices when my boss turned to me
and asked, “Phil, back there in the conference room, did you yell?”
I said,
“Yeah, I’ve got this crick in my neck.”
There was
never another word said about it.
Thinking it over later that day I came to understand that the arrival of
the new president had this group of old men flat out traumatized. I was certain they each realized it was only a matter of a few months before their new boss discovered they were complete frauds and hopelessly
in over their heads. The fat salary, the
bloated job title, the car allowance, the wife’s plastic surgery – it was all
about to come to an abrupt end. Unable
to deal with the consequences they had mentally removed themselves from reality
and not even someone screaming in a conference room for no apparent reason was
going to bring them out into the light of day.
Since it was
founded, due to its non-profit status, Blue Cross avoided paying state taxes
amounting to tens of millions of dollars every year for 60 years. In 1974 Blue Cross purchased 32 acres in Woodland
Hills where it built and relocated to a corporate campus including a twelve-story
building in 1977. Where oh where do you
suppose the more than one hundred million dollars came from to pay for this? The only sources of income for Blue Cross were
(1) the premiums members pay for health coverage; and (2), investment returns
from the premiums that are held in reserve.
Plain and simple, premiums paid for the land and the buildings.
If there was
enough money for a new company headquarters, might there also be a chance
premiums would be reduced? Not hardly, rate
increases of 15% were common every year.
Is this an example of serving the “common good?” The public had no say in the matter since
another benefit Blue Cross enjoyed as a non-profit organization was that it’s
paying members had no say in how the company was run.
Last year the
State Tax Franchise Board of California revoked Blue Shield’s tax exempt
status. It seems that Blue Shield had
been raising premiums every year as usual despite hoarding over four billion
dollars in cash reserves. The Insurance
Commissioner of California Santa Clara