By Anna Wilde Mathews
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (November 4, 2017).
Anthem Inc.'s Chief Executive Joseph R. Swedish will step down,
and the insurance giant will name veteran managed-care executive
Gail K. Boudreaux as its next leader, according to people with
knowledge of the matter.
It wasn't immediately clear how quickly the transition will
occur, but the plan is expected to be announced as soon as next
week, the people said. Mr. Swedish is expected to keep his title as
chairman for a transition period, one of the people said.
Ms. Boudreauxis well-known among managed-care investors,
previously serving as chief executive of the biggest U.S. health
insurer, the insurance arm of UnitedHealth Group Inc. She is
regarded as a strong operator, and she has experience overseeing
Blue Cross Blue Shield plans like those that Anthem operates.
Anthem, the second-biggest health insurer, had revenue of around
$84.9 billion last year.
Mr. Swedish, 66, would be leaving after his signature strategic
effort, Anthem's $48 billion bid to buy Cigna Corp., ran aground
earlier this year. However, since the beginning of the year, Anthem
shares have risen by 47%, amid strong results across the
health-insurance sector and Anthem's announced pullback from the
Affordable Care Act exchange business.
The Cigna deal was blocked by courts on antitrust grounds, but
it was already mired in well-publicized acrimony between the
companies' top executives, including Mr. Swedish and his opposite
number at Cigna, CEO David Cordani.
Anthem and Cigna are currently suing each other for billions of
dollars in damages. The litigation focuses partly on the CEOs'
actions and wordsover the years, as the two insurers were
negotiating and then trying to consummate their deal.
Anthem has accused Cigna and Mr. Cordani of sabotaging the deal,
and Cigna has said that Anthem, over Cigna's objections, chose an
antitrust defense and strategy that failed. Cigna has said Anthem
didn't use its "reasonable best efforts" to get regulatory
approval, and as a result the acquisition was blocked.
Mr. Swedish has led Anthem since 2013, replacing previous CEO
Angela Braly, who resigned under pressure from investors unhappy
with the company's direction. The board turned to Mr. Swedish, a
hospital-industry veteran with no experience leading a managed-care
company, to steer the insurer through the challenges of the ACA
marketplace launch. Anthem, which had revenue of $71 billion in
2013, has grown under Mr. Swedish's watch, but his tenure has been
marked by challenges.
Anthem remains locked in litigation with its current
pharmacy-benefit manager, Express Scripts Holdings Inc., with
Anthem alleging that Express overcharged for drugs. Express has
denied the allegations and made its own counterclaims.
Mr. Swedish unveiled a plan last month for Anthem to start its
own pharmacy-benefit manager, to be serviced by CVS Health Corp. A
little over a week later, The Wall Street Journal reported that CVS
was in talks to take over Aetna Inc., an Anthem rival. Anthem
factored in the possibility that CVS might buy another insurer in
structuring its contract with the drugstore giant, according to a
person with knowledge of the matter. The new PBM is slated to
launch in 2020, after the end of Anthem's current contract with
Express Scripts.
Mr. Swedish also made the call for Anthem to pull back in the
ACA's exchanges in most of its markets amid uncertainty in the
business. The law's marketplaces were once expected to be an engine
of growth for the company. But Anthem has retained a bigger
footprintthan other big national insurers such as Aetna. Anthem has
projected that next year its enrollment in ACA plans will drop by
around 70%, but it said the business is expected to be profitable
in 2018, after break-even results in this year.
Anthem's 2017 proxy statement says Mr. Swedish could be due to
receive a payout worth around $26.5 million upon his retirement. In
the case of a company-initiated termination that is "not for
cause," the payout and benefits would be worth around $34.9
million, according to the proxy.
Ms. Boudreaux left UnitedHealth in 2015, at a time when some
analysts said the company was facing challenges with its Medicare
business. She left with a two-year noncompete agreement, according
to a filing that UnitedHealth made when her departure was
announced.
Before coming to UnitedHealth in 2008, Ms. Boudreaux was an
executive at Health Care Service Corp. -- like Anthem, the parent
of Blue Cross Blue Shield plans -- which gave her an understanding
of the how Blue insurers work. Ms. Boudreaux's UnitedHealth
experience may be appealing to Anthem because of its burgeoning
Optum health-services arm; other insurers are eager to add similar
operations.
Among Mr. Swedish's most visible legacies at Anthem is the name
of the company, which changed from WellPoint Inc. in 2014.
--Joann S. Lublin contributed to this article.
Write to Anna Wilde Mathews at anna.mathews@wsj.com
(END) Dow Jones Newswires
November 04, 2017 02:47 ET (06:47 GMT)
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