Actions speak louder than words, which is why when healthcare executives simply crow about diversity and their commitment to “inclusion” and “healthcare equity,” I’m immediately skeptical. Tina Freese Decker, CEO of Michigan’s biggest hospital system known as BHSH, is one of my best examples. For all Freese Decker’s lofty talk that her biggest priority is building a health system that “celebrates and reinforces diversity and inclusion,” black employees at Freese Decker’s former Grand Rapids-based Spectrum Health alleged they experienced discriminatory and humiliating conditions.
Sarah London, who earlier this year was named CEO of a St. Louis-based Fortune 25 insurance company called Centene that serves poor and disadvantaged persons, rivals Freeze Decker’s disingenuousness. Here’s what London had to say after she was named Centene’s top honcho:
“I am honored and humbled to have been selected as the next CEO of Centene and to work alongside extraordinary colleagues to provide quality healthcare to over 26 million Americans,” London said in the news release announcing her appointment.
“The healthcare landscape is rapidly changing, and Centene’s mission – to transform the health of our communities one member at a time – has never been more relevant. We have a unique opportunity to empower our members, providers, and their communities in this transformation. Together, we can deliver innovative, integrated, and equitable care that meets our members where they live and exceeds their expectations. I’m excited by the tremendous opportunity to leverage the size and scale of this Company to create true, sustaining value for our members, state partners, employees and shareholders.”
This might come as a shock given London’s talk about creating “sustaining value” for the company’s members and state partners, but Centene in July quietly agreed to pay $166 million to resolve with Texas what Kaiser Health News characterized as a “Medicaid drug pricing settlement.” I say quietly because the settlement likely wouldn’t have been made public were it not for a couple of pesky KHN reporters who obtained a copy of the settlement through a public records request and began doing what was once commonplace in journalism: Asking questions and holding companies accountable.
As shocking as the Texas settlement might be to those who took London at her word, it’s not Centene’s only appearance of wrongdoing. “Appearance” is the operative word here because the settlement clearly states that Centene and its various entities “expressly deny liability, any wrongdoing, and/or any violation of any federal or state statute or regulation or common law.”
The Texas settlement is one of about a dozen state Centene settlements, which as best I can tell all involved no admissions of wrongdoing. Nevertheless, Centene has set aside $1.5 billion to cover settlements for allegations the company can legitimately insist didn’t involve any proven illegal behavior.
As deftly explained by KHN, states contract with insurance companies like Centene to cover people with disabilities or poor people whose survival is dependent on state Medicaid programs, which are jointly subsidized by state and federal taxpayers. In many of these states, the insurance company handles Medicaid prescriptions through a so-called pharmacy benefit manager, or PBM, to get lower prices.
As everyone in the know about healthcare will privately admit, PBMs are rife with conflicts, and they are among the primary culprits behind America’s out-of-control drug prices. The parasitic activities of PBM’s have been known for years; KHN in 2018 published an excellent primer on the conflicted business.
Sarah London didn’t assume the CEO position until February of this year, when she took over the top job from Michael Niedorff, who took a medical leave of absence and died two months later. Niedorff was credited with transforming Centene from a sleepy Milwaukee insurer into the nation’s largest insurer for the government’s Medicaid program and a champion of the Obamacare markets.
But London bears considerable responsibility for Centene’s business practices. For starters, she was vice chairman of the company prior to her appointment. Centene’s news release announcing her appointment said London ran the Health Care Enterprises and Specialty divisions, corporate strategy, quality operations, internal audit, compliance and risk management, as well as overseeing the company’s technology and digital strategy.
London was well compensated for her seeming involvement in all aspects of Centene’s businesses, having received $15 million in 2021 compensation. London wholeheartedly publicly endorsed Niedorff’s business practices, promising they “will remain a bedrock of (Centene) going forward.” London can be seen interviewing Niedorff in the accompanying video.
London’s corporate bio indicates that when she began her healthcare career, she had loftier goals than becoming a mega-millionaire on the backs of America’s poor and disabled. She received an MBA with high honors from the University of Chicago Booth School of Business and B.A. magna cum laude in history and literature from Harvard College, where she played Division I tennis. I’m more impressed with an MBA from the University of Chicago than any other U.S. university, including Harvard. The university is a magnet for scholars and brainiacs, underscored by the 32 Nobel Prize winners in economics the school has fostered.
With these kinds of credentials, London could have strolled into the healthcare offices of McKinsey, and played an instrumental role helping pharmaceutical companies market and hook Americans on opioids and other dubious activities. Instead, London joined Health Leads, a Boston-based nonprofit whose mandate is “health, dignity, and well-being for every person, in every community.”
London’s descent to the dark side appears to have begun in 2013, when a company called Optum acquired Humedica, where she served as vice president of client services and operations. Optum is a PBM and healthcare provider that’s gobbling up independent physician practices across the country. It was acquired by UnitedHealth Group in 2011; UnitedHealth and Optum both figure prominently in explanations as to why America’s healthcare is the most expensive in the world. One couldn’t work at these companies and maintain a well calibrated moral compass.
London thrived at Optum, rising to become chief product officer for Optum Analytics, the business unit responsible for driving strategy and commercialization of Optum’s integrated data and analytics solutions. She eventually became a partner at Optum Ventures, the venture capital arm of UnitedHealth Group.
When London joined Centene in 2020, she had seven years of Optum service under her belt, so she had developed a natural immunity to Centene’s controversial business practices.
Optum announced last year that it was getting out of the PBM business but that’s not the only area where the company has been cited for controversial and questionable business practices. As reported by Marty Schladen in the Ohio Capital Journal, Tennessee in May of last year announced it would rebid a $123 million contract that Centene landed to provide behavioral care in the state’s prisons.
A smaller company called Corizon had been providing the service, and it complained in federal court that Wesley Landers, CFO of Tennessee’s Department of Corrections, improperly communicated with Centene subsidiary Centurion Health during the bidding process. The corrections department subsequently raised the requirement for a performance bond, which Corizon couldn’t meet. Centurion landed the contract and then hired Landers as a vice president.
For all of Centene’s questionable behavior, London has little incentive to change it. Centene’s total shareholder return in the past 12 months is more than 30 percent, compared with a more than 11 percent negative return of the S&P 500. Centene’s earnings are forecast to grow by more than 20 percent per year. Wall Street loves the company.
Crime supposedly doesn’t pay but skating close to the line without being forced to admit wrongdoing is a very profitable corporate pursuit. Sarah London seems well suited to lead Centene, an endorsement she shouldn’t be proud of.