By Anna Wilde Mathews and Jon Kamp
The Wall Street Journal, February 12, 2013
WellPoint Inc. named Joseph R. Swedish as its new chief executive, unexpectedly turning to a hospital-industry veteran to lead the second-largest U.S. health insurer through the challenging implementation of the health-care overhaul.
Mr. Swedish, 61 years old, will take over as CEO on March 25, the company said. Since 2004, he has been president and CEO of Trinity Health, a Catholic operator of 47 hospitals with revenue of around $9 billion last year.
The choice is likely to surprise investors, whose displeasure with previous WellPoint CEO Angela Braly helped lead to her resignation last August. Mr. Swedish’s career has been spent on the provider side of health care, and recently at nonprofit institutions, so he isn’t a familiar face for managed-care investors.
Mr. Swedish’s hospital experience could be viewed as helpful, but investors were generally predicting WellPoint would pick a managed-care veteran, said Thomas Carroll, an analyst at Stifel Nicolaus. “This individual is completely out of the blue from an investor-expectation standpoint,” he said.
In general, lines between insurers and health-care providers have been increasingly blurring, and Mr. Swedish said both sides are facing similar “strategic bets” as the industry changes. Indianapolis-based WellPoint is already working on collaborations with providers, and he wants to “accelerate that at a very rapid pace,” he said. WellPoint is expanding the operations of CareMore Health Group, a Medicare plan it bought that also operates its own care centers, and it has launched an initiative aimed at paying primary-care doctors more to coordinate patients’ care.
Trinity is a “well-managed health system,” with stable operations and a strong balance sheet, said Kay Sifferman, a vice president at Moody’s. Both Moody’s and Standard & Poor’s rate Trinity’s bonds highly. Before his announced departure, Mr. Swedish was moving toward consummating a major combination, with Catholic Health East, that would create the fifth-largest U.S. hospital system.
WellPoint has said it is planning and investing heavily to ensure it will have a strong presence on the new health exchanges, as well as doing extensive consumer research to ensure it crafts products that will resonate with buyers. “We will continue to progress with what they have already initiated,” Mr. Swedish said. “Quite frankly, I like our chances.”
WellPoint includes 14 Blue Cross and Blue Shield plans and has a major presence in California, often seen as a tough market for health insurers. The company has “to execute to win,” Mr. Swedish said. “We are all very attentive to that.”
By Don McCanne, M.D.
According to The Wall Street Journal, “lines between insurers and health-care providers have been increasingly blurring,” a fact we already knew. The appointment of a hospital CEO, who is currently involved in major consolidation efforts, as the new CEO of WellPoint – the nation’s second largest insurer – seems to blur even further the line between insurers and health care providers.
Health care providers take care of patients. Insurers take care of business. With consolidation on all fronts, insurers are blending into the providers. With this new model, the insurer/health care provider is becoming well positioned to take care of… well… business. And the patients? As the incoming WellPoint CEO says, the company has “to execute to win.” Isn’t there something Freudian about “execute”?