Highmark chief builds staff with former UPMC colleagues

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John Paul is putting the band back together.

As Highmark Inc. goes about building a billion-dollar hospital and health care network to take on UPMC, Mr. Paul -- the leader of Highmark's new health care provider wing and UPMC's chief operating officer before departing the system in 2003 -- is relying on several former UPMC executives to build and run the new Highmark network.

That he has turned to former UPMC personnel reflects not only his own three decades of familiarity with the system, but also UPMC's dominance -- if you want to hire a health care executive with knowledge of the Pittsburgh-area business landscape, there's a good chance that he or she is with the UPMC network, or has at least passed through it.

And if you want talent with experience in a vertically integrated health system -- that is, a health system with both an insurance arm and a hospital arm -- there are only a few such major systems in the country, UPMC being one of them.

"It used to be a joke in town that every third person in business was a U.S. Steel refugee," said Jim McTiernan, a principal with Triad USA, a Pittsburgh benefits firm that was bought last month by Arthur J. Gallagher & Co. of Illinois.

Now, the same joke applies to UPMC -- which, as it happens, now has its name on the top of the U.S. Steel Tower and is now the largest employer in the Pittsburgh region.

"Because of the size of UPMC and the success of UPMC," he said, "it's an obvious place to find talent."

Today, the talent in Highmark's provider wing -- which will supervise physician and outpatient clinics, medical supply firms and other subsidiary entities, as well as West Penn Allegheny Health System and Jefferson Regional Medical Center, once all of the hospital affiliations are formally approved -- numbers about four dozen employees.

The executive and management team now includes:

• Patricia Liebman, an executive vice president of Highmark's "Integrated Delivery System" -- Among her many health industry jobs over the last three decades, she was CEO of the fledgling UPMC Health Plan. She also has experience in the Blue Cross Blue Shield network, working with Highmark predecessor Blue Cross of Western Pennsylvania.

• Jacqueline Dailey, chief information officer of Highmark's provider division -- Previously, she was vice president for IT solutions at UPMC, and also worked as the CIO of Children's Hospital of Pittsburgh of UPMC.

• Paul Sikora, chief technology officer in Highmark's provider division -- He held a similar position at UPMC, where he worked for 28 years, until he moved to Highmark in December 2011.

• Daniel Lebish, an executive vice president within the Highmark delivery system -- He's been with Highmark and its subsidiaries for years and, before that, worked for HealthAmerica, now Coventry Health Care. Also on his resume is a term as vice president of administrative services at Magee-Womens Hospital, now part of the UPMC network (though it wasn't part of UPMC when he worked there).

• Megan Sanders, in charge of physician recruitment. Before her time at Highmark, she had a similar position at UPMC.

The rest of Highmark's health provider executive team include: Maureen Peszko, head of Highmark's "ProMed Xchange," a new practice management company; Bonnell Irvin, who heads Highmark's medical mall division; and Thomas Kerr, in charge of communications and outreach.

They all have been brought on board, or into the provider fold from another position in Highmark, by Mr. Paul, who in turn was brought to Highmark in 2011 by its former CEO, Ken Melani, who was fired in April.

Mr. Paul, despite his prominent leadership role at Highmark, is not a full-time employee, but remains an independent contractor and is being paid through a consulting firm that he set up in 2011, JWP Consulting.

Highmark has made at least one standing offer to Mr. Paul -- $900,000 in base salary and at least $1.6 million in total direct compensation, which would make him the second- or third-highest paid employee in the company, according to Highmark's filings with the state Department of Insurance -- but so far, he has resisted becoming a full-time employee.

His employment status, though not preferred by Highmark, isn't unusual. All manner of businesses -- including health care systems, and especially companies that are struggling or have experienced sudden management upheaval -- frequently retain consultants or independent contractors to serve as executives, often on an interim basis.

For example, West Penn Allegheny Health System, which would be part of the Highmark provider network if Highmark's acquisition bid is eventually approved by the state, is being managed by executives from a turnaround firm, Alvarez & Marsal. Keith Ghezzi, a managing director with Alvarez & Marsal, is the interim CEO for WPAHS and has been in that position since last November.

Highmark itself was being run by an interim CEO, J. Robert Baum, who is also Highmark's board chairman, until its new CEO, William Winkenwerder Jr., took over in mid-July.

Mr. Paul would not comment for this story.

Jan Jennings, president and CEO of Downtown's American Healthcare Solutions, has been retained on several occasions to serve as the short-term CEO of a hospital system. Each time, he's done it as an independent contractor, not as an employee.

"I have no interest in being anybody's employee," Mr. Jennings said, "and John Paul probably doesn't either. ... By no means would I characterize him as a permanent fixture at Highmark."

That depends on the definition of "permanent" -- neither Highmark nor Mr. Paul have given the indication that this consulting position is a short-term undertaking, which is implicit for interim executives.

In a "typical, best-practice type of model, your interim executives are there a year or less," said Christine Ricci, spokeswoman for B.E. Smith, a Missouri-based health care executive leadership placement firm. But "there are atypical types of situations."

"It's really not that unusual," said Darrell J. Solomon, a health attorney with McKenna Long & Aldridge's Atlanta office. "Let's say the CFO or the CEO is fired -- in those situations, it's very common for a consultant to come in and run things."

Highmark spokesman Aaron Billger did not comment specifically about the company's contractual relationship with John Paul, but said the insurer attracts talented individuals interested in innovative approaches.

"The development of our integrated delivery system, like all of our major business efforts throughout the years, is being staffed by very experienced Highmark employees and skilled consultants who are working collaboratively."

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Bill Toland: btoland@post-gazette.com or 412-263-2625. First Published August 5, 2012 4:00 AM


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