Wednesday, February 19, 2014

On AOL's CEO preemie shaming

Here's the latest news about heartless corporations, if you missed it:

CEO of AOL, Tim Armstrong, lacks the compassion gene. AOL's financial performance has been suffering since Armstrong joined the company, so he decided to change AOL's 401(k) plan to save money and make it more difficult to receive an employee match. When asked to explain this decision, he had two targets to blame: President Obama (and the Affordable Care Act) and...premature babies:
"We had two AOL-ers that had distressed babies that were born that we paid a million dollars each to make sure those babies were OK in general. And those are the things that add up into our benefits cost..."
Deanna Fei's daughter, who was born weighing 1 lb, 9 oz.
Yes, that's right...he placed the blame of this unfair benefit change on "distressed babies." Armstrong has since apologized and backtracked on the 401(k) policy change, but that doesn't help much.

One of the mothers of these babies, Deanna Fei, came forward to write about the premature birth of her daughter and Tim Armstrong's hurtful comment:
"I take issue with how he reduced my daughter to a 'distressed baby' who cost the company too much money. How he blamed the saving of her life for his decision to scale back employee benefits. How he exposed the most searing experience of our lives, one that my husband and I still struggle to discuss with anyone but each other, for no other purpose than an absurd justification for corporate cost-cutting...
[T]here was nothing high-risk about my pregnancy. I never had a single risk factor for a preterm birth, let alone one as extreme as this one. Until the morning I woke up in labor, every exam indicated that our daughter was perfectly healthy. ... In other words, we experienced exactly the kind of unforeseeable, unpreventable medical crisis that any health plan is supposed to cover. Isn't that the whole point of health insurance?"
A lot of medical emergencies can result in astronomical costs, and Fei acknowledges that her daughter's NICU stay did as well. But here are some fascinating numbers: 

  • The Affordable Care Act will cost AOL $7.1 million. 
  • AOL lost $33 million because of Armstrong's investments in the news-focused part of the company.
  • Medical care for the "distressed babies" cost approximately $1 million each, a typical figure for micropreemies.
  • Armstrong made $12 million in 2012. 
AOL's business case is completely outdated now, based on subscriber revenue in a world where people can get their email accounts for free. In the five years he's been there, Armstrong has not done anything to change this business model. The company is failing because of his lack of leadership. 

Not because of sick babies. 

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