Highmark is changing its CEO for the third time in as many years. An executive whose work spans jewelry, fabrics and eyeglasses is taking the helm of a new integrated payer-provider in the early stages of a market war.
The board of Highmark appointed 55-year-old David Holmberg as president and CEO to succeed William Winkenwerder, MD, who came to Highmark in July 2012 in the wake of former CEO Ken Melani's romance scandal, and as the acquisition of the West Penn Allegheny Health System was getting underway.
Holmberg joined Highmark in 2007 and has worked in a number of roles, most recently as president of Highmark's Diversified Businesses unit that includes dental and vision products, third party administration and stop-loss insurance.
Before Highmark, Holmberg was operations EVP at Jo-Ann Stores, the fabrics, sewing and crafts retailer, and president of Cole Licensed Brands, covering optical products at Sears, Target and BJs. For seven years in the late 1990s, he was president of the jewelry merchant Zale's Canadian division, earning an MBA from the University of Texas in 2000 towards the end of his tenure there.
"David Holmberg is a seasoned business leader with a sharp focus on consumers and achieving results on behalf of customers," said Highmark board chairman J. Robert Baum in a media release. "This is a time of significant change across the healthcare marketplace, and David will be the right leader at the right time to accelerate the transformation of our organization," said Baum, a professor emeritus of management at the University of Maryland who's nearing his 10th year as head of the board.
"I anticipate that he will work in collaboration with our executive team to continue the implementation of our growth strategy and to diversify our organization regionally and nationally with a comprehensive portfolio of health solutions," said Baum.
Winkenwerder, an internist who previously worked as a health affairs secretary at the Department of Defense and at Blue Cross Blue Shield of Massachusetts, received praise from the board. He brought a "national reputation, high integrity and strategic vision," Baum said, and presided over the beginning of Highmark's evolution into an integrated delivery system with the creation of the Allegheny Health Network, a new rival to the University of Pittsburgh Medical Center.
The terms of Winkenwerder's departure were not disclosed, though he did earn more than double his predecessor during 2013, his first and only full year on the job -- $4.2 million on a base salary of $1.2 million -- as one of 10 executives, including Holmberg, making seven figures. At UPMC, 26 administrative and clinical leaders earned more than one million last year; CEO Jeffrey Romoff pulled in just over $6 million.
Battle with UPMC
With the relationship between the two giants remaining fractious -- UPMC remains opposed to any network contract extension with Highmark next year -- Holmberg will become CEO as the western Pennsylvania healthcare market evolves into what some think is the future of American healthcare in many places: consumers choosing between a few integrated health systems, or paying extra to see certain providers outside a network.
Highmark retains a more than 60 percent insurance market share in western Pennsylvania, and has kept some big contracts on the books. The health plan for Allegheny County's 43,000 public school employees and dependents recently decided to renew its contract with Highmark through June 2018, along with the county's 15,000 public employees and their dependents, through 2015.
But UPMC Health Plan is fast on the trail, selling group, Medicare and individual policies with the pitch of UPMC's "life changing medicine," and is now the second largest provider-owned insurer in the country
While protecting market share on and off exchanges and completing a yet-to-be approved acquisition of Blue Cross and Blue Shield of Northeastern Pennsylvania, Holmberg's largest challenge may be growing business at the Allegheny Health Network's seven hospitals and multiple physician practices -- pitching the network as offering healthcare that's just as innovative and high quality as UPMC's, while differentiating on price.
One such strategy on the clinical side is a recent agreement with Johns Hopkins Medicine to offer clinical trials and specialist consultations for Allegheny Health Network oncology patients. Highmark is also looking for opportunities to help the growing ranks of caregivers, in a region with a relatively old population, launching a support service available to members and non-members on a subscription basis for $79 per month.