Departing Neidorff Leaves Legacy of Major Growth at Centene

by Peter Johnson

Centene Corp. on Feb. 24 revealed that CEO and Chairman Michael Neidorff took immediate medical leave. That means Neidorff may have served his last day at the helm of the company he built into a Medicaid managed care powerhouse, given the fact that he has already announced plans to retire later this year after 26 years on the job. 

Effective immediately, an “expanded office of the chairman” will handle day-to-day management of Centene. That group includes Vice Chairman of the Board Sarah London, President and Chief Operating Officer Brent Layton, Chief Financial Officer Drew Asher and Chief Administrative Officer Shannon Bagley. 

Neidorff saw opportunity in Medicaid managed care 

• “Neidorff was one of the first to recognize the huge opportunity in managing Medicaid. While most other plans were still focused on commercial health and seemed averse to getting involved in governmental programs, Neidorff grew a tiny health plan to a $100 billion-plus company largely through managed Medicaid,” says Joe Paduda, principal of Health Strategy Associates. 
• That was possible because “Centene figured out a successful and localized low-cost operating model supported by a strong corporate governance model. Each local or state plan gets a blueprint of this low-cost model and are able to localize for their market, but corporate keeps them accountable through strong financial governance,” explains Vikas Garg, principal at ZS consulting. 
• “You’ve got to give the man credit for inventing the whole managed care organization (MCO) at a level that is at the cutting edge of value-based care,” says Michael Abrams, principal at Numerof & Associates. “Oddly enough, the approaches that he has taken the lead in developing are the same approaches that the rest of the U.S. health care system would be using as well, if they had an incentive to utilize health care resources prudently.” 

Privatization drive helped Centene’s growth 

• Centene’s growth has its roots in the push by U.S. policymakers during the 1990s to privatize and cut social services, culminating in 1996’s bipartisan welfare reform. As Abrams put it, “the states themselves were anxious to outsource, going back to the ’90s, this costly and complex task of managing Medicaid. And Neidorff was happy to oblige.” 
• Thomas Johnson, an attorney, Medicaid expert and former director of the Population Health Alliance, tells AIS that the national scale of payers like Centene may make them less effective than community-based health plans. 
• “Not only are they [large firms] growing through mergers, acquisitions and the like, but they’re also limiting competition within a given state for awards,” Johnson says. “I think that’s having an effect across the country. I think that these large companies have more leverage with states regarding their willingness to pull out of a state if they don’t think their business needs are being met. Whereas local, state-based providers are not in the position to do that. I think that they were more affable towards working with the state on rate and other issues.” 

From Health Plan Weekly