New CEO Winkenwerder Targets Trust In Highmark

June 05--William Winkenwerder Jr. is no stranger to crisis management. A physician and health care expert, he was plucked out of the private sector in the early days of President George W. Bush's administration, assuming his new job with the Defense Department just 10 days after the 9/11 attacks, and soon was knee-deep in battlefield medicine, prisoner abuse scandals and anthrax vaccines.

Years later, after a Washington Post investigation reported substandard conditions at the Walter Reed Army Medical Center, Dr. Winkenwerder -- the Pentagon's assistant secretary for health affairs -- was among the officials tasked with fixing the problems.

"The trust has clearly taken a hit here," he said in a Feb. 21, 2007, news conference. "I think it's our job to repair that trust, to re-earn that trust and that's what we intend to do."

Dr. Winkenwerder, now 58, never fully got that chance -- he announced his resignation days later in what was described as a long-planned transition and eased out of the job by April.

But he will get a similar opportunity as the new top executive at Pittsburgh health insurer Highmark Inc., succeeding former CEO Ken Melani, who was fired two months ago after being charged in a fight with the husband of his 28-year-old girlfriend, also a Highmark employee.

Among Dr. Winkenwerder's many responsibilities will be repairing the trust in the Highmark CEO's office, doing battle with rival UPMC and restoring to profitability the company's financially ailing business partner, West Penn Allegheny Health System, the region's No. 2 health system.

"Bill's experience dealing with all sorts of challenges [was] very attractive to us in this search," said J. Robert Baum, Highmark's board chairman and interim CEO until Dr. Winkenwerder officially takes over in July. "He fits our need, and our situation."

Dr. Winkenwerder, whose appointment by Highmark's board was announced Monday morning, said his Pentagon job allowed him to put into practice all of his various private-sector experiences -- as a vice president for Blue Cross Blue Shield of Massachusetts from 1998 until 2001, medical director at Kaiser Permanente in Atlanta and chief medical officer with Prudential Health Care.

"It was a very big job," he said of his role overseeing the military health system and its $40 billion annual budget. "It really taught me a lot about how to [move] big rocks, [and] to get people to move in a unified direction."

One of the big rocks, locally, is UPMC. Several area health care leaders and experts said coming into the Pittsburgh market as an outsider could work to Dr. Winkenwerder's advantage in the ongoing battle between Highmark and UPMC over contracts allowing the insurer's members to receive in-network services at UPMC facilities.

"Maybe he could come in here and figure out a way to work this out with UPMC," speculated Stephen Foreman, associate professor of health care administration at Robert Morris University. "Wouldn't that be great for the community?"

"It's a fresh perspective and there's no baggage," said James McTiernan, principal and co-founder of the Downtown employee benefits consulting firm Triad USA.

Tom Tomczyk, principal with Buck Consultants, Downtown, said he believed Highmark had little choice but to look outside for a CEO, despite a strong list of internal candidates available. "Highmark is not a Western Pennsylvania company any longer. It is a company that has tentacles that reach far beyond Western Pennsylvania."

At the same time, added M. Christine Whipple, executive director of the Pittsburgh Business Group on Health, "He needs to understand the nuances of the market, and the challenges of a highly concentrated market both for delivery and health plans."

Local experts were impressed that Dr. Winkenwerder's portfolio includes both the insurance and provider worlds, with the physician having spent time as a top executive with a Blue Cross Blue Shield insurer, as well as at Emory University's academic medical center.

With Highmark on the verge of stepping into the local provider marketplace with the planned acquisition of West Penn Allegheny and the opening of several outpatient medical malls, that varied background should be a real plus, they said.

Mr. McTiernan said the top job at Highmark must have been as attractive for Dr. Winkenwerder as his resume was to the board. It is a position "with lots of target-growth opportunities, and certainly a lot of challenges," he said.

Still, to someone who didn't know any better, Dr. Winkenwerder might have appeared to be on a career track arcing toward semi-retirement. Following two decades in the private sector and his six-year stint with the Defense Department, he has spent the past five years sitting on corporate boards, advising political candidates (he was health policy adviser to John McCain's 2008 presidential campaign), and setting up his own Virginia consulting shop, the Winkenwerder Co.

But he wasn't contemplating retirement -- he was merely biding his time, colleagues said.

"I thought that the last few years he was really just holding until the next good challenge came along," said Joseph R. Antos, a health care and retirement policy scholar at the American Enterprise Institute. "Bill never struck me as the type of guy who would think about taking the boat out and never coming back."

Mr. Antos and other professional acquaintances familiar with the new CEO's workplace demeanor say that Dr. Winkenwerder is the type of person who is subservient, not superior, to his employer and its mission.

"Bill knows what his job is supposed to be," Mr. Antos said. "They didn't hire him to be their chief lobbyist."

"Some of the people you get are more concerned with the themselves than with the ultimate goal," but Dr. Winkenwerder prefers to manage and delegate behind the scenes, said Douglas Holtz-Eakin, former director of the Congressional Budget Office and a colleague of Dr. Winkenwerder's when they were both advising the McCain campaign.

Dr. Winkenwerder has "a very servant-leadership kind of approach," said William Copeland Jr., director at the life sciences and health care division at Deloitte Consulting LLP. "It's not about him or his ego. It's about his people and his organization."

Because he works for a major health consulting firm, Mr. Copeland was one of the people to see the job description sent out by Russell Reynolds Associates, the executive search firm Highmark used to vet its candidates.

He said the list of attributes and professional experiences sought -- somebody with delivery-system experience, someone with health-plan executive leadership history, someone with clinical know-how and policy experience -- weeded out most of the potential candidates.

"I saw what they were looking for -- there are 20, 25 people in the country" who could do that job, he said.

The haste with which the search was conducted -- just two months to identify candidates, screen them to a list of 12 to 15 finalists, schedule interviews and then whittle the finalists down to a short list given serious consideration by Highmark's board and succession committee -- is typical of such endeavors, Mr. Copeland said.

"You had an organization that needed to get a CEO right away," he said.

Highmark's search may be over, but Mr. Baum, the board chairman, said the board is still "in the midst" of working on Dr. Winkenwerder's employment contract and compensation package.

While that's being finalized, Dr. Winkenwerder will be getting the lay of the land, meeting with employees and local leaders, including a meeting with WPAHS officials, which was scheduled for Monday.

That Dr. Winkenwerder isn't intimately familiar with the local market, or recently acquainted with the Blue Cross Blue Shield system, might be a short-term handicap, said Mr. Copeland. But the choice demonstrated Highmark's long-term vision.

"I was surprised, because I think sometimes boards have a hard time seeing the executive they want who isn't doing the exact same job." It would have been easier, he said, for Highmark to stay in-house, or to poach an executive from a smaller Blues plan.

Dr. Winkenwerder, in a phone briefing for reporters Monday, said his first priority will be "to work with the management team to better understand the details of our business, and to understand the local and regional marketplace."

He admitted, "I'm still at a very early stage and I will be learning a lot, hopefully in a very short period of time."

He is a 1976 graduate of Davidson College, according to a Highmark news release, and graduated from the University of North Carolina School of Medicine in 1981. He also received a graduate degree in business administration from the University of Pennsylvania'sWharton School in 1986, Highmark said.

Dr. Winkenwerder now lives in Virginia with his wife, Mary Pride Winkenwerder, a professional artist who owns The Pride Fine Art Gallery in Alexandria, Va. His son, Will, is a junior at Yale University.

Bill Toland: [email protected] or 412-263-2625. Steve Twedt: [email protected] or 412-263-1963.

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