Saturday, March 24, 2018

'Interim' CEO of WellCare shakes things up

TAMPA — Six months after becoming "interim" CEO of WellCare Health Plans, Dave Gallitano is proving he's no mere caretaker.

He put together a new executive team; boosted spending on computer systems; criss-crossed the country meeting employees; and shifted the managed health care company's focus to its health plan members instead of hitting quarterly earnings projections.

Even the artwork on the walls at the Tampa headquarters and 40 satellite offices across the country showcase the cultural shift. Gone are generic, "Ikea-like" art pieces. In their place are poster-sized images representing WellCare's 3.5 million members, participants in government-sponsored programs like Medicare and Medicaid. The neediest of the needy, as Gallitano puts it. One shows someone suffering from cancer; others depict homelessness and mental illness.

The idea is to give employees a daily reminder of who they serve, a core value that executives say eroded amid years of turmoil and a focus on making Wall Street happy.

WellCare, one of Tampa Bay's largest public companies with $9.5 billion in revenue last year, is at a critical juncture in its evolution. It's searching for a new chief financial officer as well as a chief executive officer as it tries to expand offerings to members and figure out the mixed impact of Obamacare.

Meanwhile, though it has been seven years since a well-publicized FBI raid and fraud investigation, the company can't entirely move away from the bitter episode. Legal battles persist. Just last week, ex-CEO Todd Farha and two others in the former WellCare regime were sentenced to federal prison for a scheme to keep Medicaid money for the company when it should have gone to the state.

Gallitano, who is also chairman of WellCare's board, has the sizable task of getting the company on the right track. There's no place the 66-year-old seasoned business executive and turnaround artist would rather be.

"I've always liked a challenge," he said in an interview with the Tampa Bay Times. "Coming in and babysitting something is simply not for me. It's boring."

Begun in 1985 as a provider of Medicaid plans to Florida, WellCare has since won enough government contracts to become a major provider of Medicare, Medicaid and prescription drug plans in 49 states.

It's a competitive field, filled with the likes of Blue Cross Blue Shield, Aetna, Humana, UnitedHealth, Amerigroup and WellPoint.

In his first media sit-down since becoming CEO, Gallitano offered his vision of how he and his new team plan to make WellCare stand out from the pack. Some takeaways:

• If he could find enough candidates, he would immediately fill 1,000 open positions companywide, including 500 in Tampa alone. The paucity of local health care and IT talent is making WellCare consider expanding its Nashville and Louisville, Ky., hubs instead.

• The company's old model of tailoring its Medicare and Medi­caid program based on the needs of each state or market wasn't working. Now about 80 percent of WellCare's programs are standardized across all states where it operates, increasing efficiency and cost-effectiveness.

• WellCare is still absorbing recent acquisitions that have expanded its presence into Arkansas, Mississippi, Tennessee and New Jersey. Instead of buying more companies, WellCare will focus on growing its current lines of business.

• Rather that focus on one area, he sees all three pillars of the company — Medicare, Medi­caid and prescription drug plans — as growth engines for years to come.

'Looking for my clone'

Gallitano has always been eager to try new things.

His four-decade career took him from running GE Mortgage Capital to turning around a troubled high-tech manufacturer. At PaineWebber, he oversaw a portfolio of about 20 companies, including a uniform manufacturer, a regional department store, an oil and gas company, radio stations and a private bank in London.

Before he joined WellCare's board four years ago, one industry was noticeably absent from his resume: health care.

"There's good and bad to that, obviously," Gallitano said, "but (my background) gave me a pretty broad base of experience."

Given the fraud investigation, Gallitano said he weighed the board offer carefully. His attorney spent a couple of months checking "to make sure I wasn't going to get dragged into the morass."

When he joined, he was the only board member not being sued in connection with the fraud inquiry and its effect on company stock. He became the sole member of a special litigation committee charged with investigating both the board and prior management. The experience gave him a deeper understanding of how the company worked, prepping him for the job he has today.

After being elevated to board chairman last year, he led an activist group that decided the company needed fresh leadership as it grows. The board ousted four-year CEO Alec Cunningham in November amid concerns that he didn't have the training to run a large, geographically dispersed operation.

"You have to have control over what goes on in any company, but it's a much different type of control than if it's a mom-and-pop shop where you can reach out and touch everybody," Gallitano said. "Somebody who has no experience running a larger organization, I think, would have some difficulty stepping into this role."

Having that broad-based leadership quality, he said, is more important than having a background specifically in Medicare and Medicaid programs.

So what's Gallitano looking for in a new CEO? "I'd like to tell you we're looking for my clone," he says with a deep laugh.

There's a sense he's only partly joking.

Eschewing the "interim" tag, Gallitano describes himself as "all in." He and his wife, Marsha, bought a house in Tampa in January and moved down — with their Labrador, Goose, in tow — from what had been their planned retirement home in Annapolis, Md.

Just how long he'll stay is unclear.

"I'm not going anyplace fast. But the harsh reality is I am 66 years old, so how much longer does the world … expect me to work? It's not going to be a 10-year gig," he said. "If we find the right person tomorrow, I'll move on. If it takes a year or two, that's fine."

For now, he's plowing ahead. Just ask his top lieutenants.

"Dave is bringing a build-to-last policy to everything we do," said Dr. Steve Goldberg, senior vice president and chief medical officer.

"I don't feel like there's anything temporary about the work we're doing or that somehow we're waiting for something to happen before we charge forward," added Ken Burdick, WellCare's president of national health plans. "Dave is not functioning as a lame duck or someone who is filling a gap. … We're doing far more than just keeping the trains running. We're really trying to advance the organization."

Mike Polen, senior vice president of operations, is the in-house veteran among top executives, having worked at WellCare for nine years. As such, he's in a unique position to compare CEOs past and present. The change, he said, has been dramatic.

"It's certainly been a cultural evolution. There's no doubt about that," Polen said. "We're not just focused on getting a job done in a particular function. It's about how we interact as a team and how do we do a better job of serving the low-income populations that we've been tasked to serve."

The average annual income of its Medicare members is $19,500. A big segment of them are on Medicaid, as well. Average income for that segment: under $15,000.

Just contacting many of them is a challenge. About 60 percent have no Internet and have never used email. WellCare reps have to knock on doors in some cases.

Taking care of members' medical needs is key, but so is helping them with nonmedical needs, like transportation or utilities. "Things that you don't typically think of as related to health insurance," Burdick said.

One example: WellCare helped put in a gravel driveway for one member to make it easier to get from home to a health care provider.

Though the company stresses treating members as individuals, at the same time it's focusing on how members are alike. Finding common ground means it can standardize much of what it does to save money.

"We're looking to drive to a core, single model of care, regardless of geography, regardless of product," said Goldberg, the chief medical officer.

It makes sense, he said, because many members share one or more attribute: low income, medically complex conditions, behavioral health problems, physical disabilities.

"I don't care where you are, 80 percent of what it takes to care for a member is the same," Gallitano added. "So we're (saying) standardize the 80 percent … and customize the piece you need to customize."

Challenges ahead

WellCare has been growing fast, adding 700 employees this past year in the Tampa Bay area alone, bringing its local workforce to 3,200. But it could grow much faster if it could find more nurses and medical clinicians.

In an ever-competitive industry, the company is also challenged to keep the talent it already has. As such, Gallitano stresses keeping the atmosphere jovial and pleasant and constantly bringing workers on all levels together to collaborate.

He and his management team have taken half a dozen road trips the past few months to meet with associates. Some had never seen the CEO before.

Others apparently were a bit unclear that Gallitano is actively searching for his own replacement. While the executives were holding a Q&A session in Louisville, one employee stood up and told "interim CEO" Gallitano that she really hoped he gets the job.

"I just laughed and said, 'Thank you very much,' " Gallitano said. "Everybody got a kick out of it. I only embarrassed her a little bit."

Jeff Harrington can be reached at [email protected]m or (813) 226-3434.

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