New Highmark CEO pushes to put patients first

Executive says health insurer has critical issues to tackle

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Two decades ago, David Lynn Holmberg's young son was dying in his arms, out of miracles and perhaps in his final hour. The best pediatric surgeon in the Southwest was on the case -- but he was stumped.

That surgeon, by Mr. Holmberg's account, "picked up the phone and called his rival [surgeon] and said, 'I need help. We're losing this one.' " The region's "top two doctors, who didn't get along, came together and operated on my son."

His son is now 25 and healthy, and Mr. Holmberg, the newly appointed CEO of Highmark Health, shared that story Wednesday in his first companywide address to Highmark employees.

An allegory to the ongoing battle between arch-rivals Highmark and UPMC? Certainly -- but also a testament to how the whole health care apparatus can work when providers and insurers put patients first, and when they together offer products at a price that "leave customers financially standing" when they exit the health care system.

Two years ago, the last time Highmark conducted a CEO search, Mr. Holmberg was mentioned as a possible internal choice for the top job, but ultimately he was bypassed for an outsider with more seasoning and national gravitas.

Now Mr. Holmberg's time has come, replacing ousted Highmark Health CEO William Winkenwerder Jr., to head a $17 billion health services company and one of the largest health insurers in the country. Highmark announced the changing of the guard Wednesday morning, a half-day after the decision was reached at a company board meeting.

Like Dr. Winkenwerder, Mr. Holmberg -- who lives in Texas, headquarters to Highmark's VisionWorks eyewear unit -- is not a locally known and locally trusted commodity. But unlike Dr. Winkenwerder, he comes from within, having spent seven years with Highmark, most recently as the president of Highmark's $3.5 billion, for-profit Diversified Businesses wing.

Before that, he ran Highmark's vision unit and assorted subsidiaries.

The dismissal of Dr. Winkenwerder, 60, and subsequent elevation of Mr. Holmberg, 55, took Highmark employees by surprise Wednesday, but after hearing him speak for more than 20 minutes, many were impressed with his substance and candid style.

"What you see is what you get," Mr. Holmberg told his employees Wednesday. He doesn't view himself as a micromanager; rather, he's an orchestra conductor who sets the pace and vision, while letting his employees and top lieutenants do their jobs.

And if his appointment stunned those Highmark employees and lieutenants on Wednesday, Mr. Holmberg felt much the same way.

"When the board asked me to [come to Pittsburgh], I thought I was coming up for a pierogie event," he joked.

Part of what made Mr. Holmberg an attractive CEO candidate, both today and two years ago, was his experience on the for-profit side of the Highmark organizational chart. As health care and health insurance become "consumer-directed" operations -- with individual health plans, custom-built products, on-demand urgent care, medical malls, even walk-in stores where you can buy health policies -- Highmark needed a leader who understood the retail experience as well as the technical and bureaucratic elements of the industry.

On Wednesday, Mr. Holmberg referenced that experience, asking Highmark employees to commit to a "laser-like" focus on the customer.

"If we do the right things for our customer, we will do the right things for ourselves," he said.

As Highmark board chairman J. Robert Baum said in introducing the new CEO, Mr. Holmberg likewise told employees that the company's relationship with UPMC would be top of mind at the executive-suite level. The contract between the two companies expires at the end of 2014, and without a new one in place, Highmark customers won't be able to access most UPMC hospitals at in-network rates.

Highmark wants a new deal, but UPMC says it does not.

"We're going to continue [to] engage the marketplace around UPMC," Mr. Holmberg said, with a goal of ensuring that customers can have the health plan they want, as well as the doctor access they prefer.

Finally, Highmark's third CEO in 26 months (fourth, if you count Mr. Baum, the company's interim CEO in 2012) asked his employees to be flexible in the months ahead, as the company encounters choppy waters -- profit-and-loss pressures, ongoing rescue efforts at Allegheny Health Network, even some big projects that may have to "come off the plate" so the company can focus on mission-critical issues.

Strategy, he said, isn't a straight line -- it's often a series of S-curves. And "right now, we're in an S-curve," he said.

Before joining Highmark, according to a company press release, Mr. Holmberg was the executive vice president of operations for Jo-Ann Stores, and before that, president of Cole Licensed Brands, an optical retail company with 1,200 stores. Mr. Holmberg received his MBA from the University of Texas at Dallas and is a graduate of the Harvard Business School's Advanced Management Program, Highmark said.

Bill Toland: or 412-263-2625.

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