William Mc Guire's Headache At United Healthcare

United Healthcare CEO William McGuire seemed immune to managed care's woes. But after a surprise $900 million write-off that quashed its deal to buy Humana, the physician-turned-exec is struggling to regain investor confidence. "Bellwether stocks are not supposed to do this," snaps Merrill Lynch analyst Roberta Walter. She thinks it will take a year of solid earnings to restore the stock, off 34% since the announcement on Aug. 6.

What really peeved investors--and shocked some directors--were problems in what they had been told would be a growth area: enrolling Medicare patients. McGuire admits he underestimated the complexity and cost of the business. And there will be larger-than-expected charges for a planned restructuring. "There's no question about humility," says McGuire.

Apart from the internal problems, one director says there had "certainly been some mixed feelings" about the need to do the Humana deal. McGuire insists the charges were not aimed at sabotaging it, but says United is "better off" cleaning house first.

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