The past few years have shown major corporations both need and increasingly crave leaders with two things: visionary healthcare leadership and track records for getting things done. The pool of talent that fits the twofold bill is not especially large.
Consider the most recent instance. When Walgreens announced the resignation of CEO Rosalind "Roz" Brewer Sept. 1, it noted that its search for a permanent CEO will center on candidates with "deep healthcare experience."
Ms. Brewer — a former Starbucks and Sam's Club executive — led the nation's second-largest drugstore chain since March 2021. In that time, she made a number of steps further into healthcare, including Walgreens subsidiary VillageMD's $8.9 billion acquisition of physician practice group Summit Health. A Walgreens executive described the company's healthcare vision with the goal to make visits for low-acuity healthcare as convenient as errand runs.
At the same time, share prices for Walgreens have fallen nearly 50 percent in the last two years, and it has been the worst-performing component in the Dow Jones Industrial Average this year, The Wall Street Journal reported with news of Ms. Brewer's departure at what it characterized as a "time of upheaval."
Walgreens isn't the only pharmacy-turned-healthcare provider facing challenges. CVS Health is looking to trim up to $800 million from its cost structure after its acquisitions of Signify Health and Oak Street Health, amounting to nearly $19 billion. Rite Aid is reportedly preparing to file for Chapter 11 bankruptcy as it faces numerous lawsuits over its alleged role in the opioid epidemic. The 2,257-store company's CEO abruptly resigned early this year and was replaced by a Humana executive.
Ms. Brewer's abrupt departure from the No. 27 company on the Fortune 500 is the latest in a number of shakeups at large U.S. companies aiming to expand their presence and influence in healthcare. Perhaps the most noteworthy attempt and failure in recent years was that of Haven, the enterprise formed by Amazon, JPMorgan Chase and Berkshire Hathaway in 2018 with an aim to lower healthcare costs for their 1.2 million workers.
The formation of Haven in 2018 was made with much bravado but few details. The company kept quiet, going nearly a year without any news except for an official name and new website. Healthcare heavyweight Atul Gawande, MD — a MacArthur 'genius,' author and surgeon — became the CEO of Haven in July 2018, but stepped down from the role in May 2020 to focus on public policy around COVID-19. The company disbanded in January 2021.
A few months after the company's demise, Berkshire Hathaway Chairman and CEO Warren Buffett, who is prone to espousing the power of one-of-a-kind CEOs, simply said the healthcare tapeworm won. "We learned a lot about the difficulty of changing around an industry that's 17 percent of GDP," Mr. Buffett said in the next annual shareholders' meeting. Jamie Dimon, CEO of JPMorgan Chase, learned in debriefings with those involved in the effort that the project moved too slow — a contributing factor to its fizzling out.
Amazon and JPMorgan have since pursued healthcare efforts on their own accord. Amazon acquired One Medical and launched Amazon Clinic. This week, One Medical CEO Amir Dan Rubin — former president and CEO of Palo Alto, Calif.-based Stanford Health Care — announced he will leave the company later this year after a six-year run at the helm.
JPMorgan launched Morgan Health, led by Dan Mendelson, founder and former CEO of healthcare advisory group Avalere Health, and formed a healthcare venture capital team targeting early- to later-stage healthcare companies. Last year, the startup hired Cheryl Pegus, MD, Walmart's executive vice president of health and wellness, as a managing director.
Real motivations and reasons behind executive changes often go undisclosed. But tumult at a number of large U.S. corporations with healthcare aims raise a few important questions for industry leaders:
1. What's more valuable — visionary or tactical leadership? Business luminaries Mr. Buffett, Mr. Dimon and Jeff Bezos may have had a vision for redesigned employee healthcare, but it's the stuff of MBA whiteboards if not for the right leadership to do the heavy lifting of getting things done with payers, establishing quality standards and agreements with providers, and effectively marshaling people and volumes from high-cost care settings to low-cost alternatives. At the same time, leaders can bolt-on as many billion-dollar acquisitions as they'd like to stake their claim in healthcare. But without a clear vision, they will quickly end up with a bleeding Frankenstein — a motley crew of healthcare assets with a weakened brand, newly created silos and competing interests. In other words, a dysfunctional health system times 10 — with shareholders, too.
2. How hard is it to find healthcare experience without healthcare bias? When Haven was searching for a CEO before signing on Dr. Gawande, Mr. Buffett noted candidates for the job expressed a certain degree of comfort with the status quo. A leader's proximity to one sector of healthcare can create bias, resulting in blinders toward certain problems and exaggeration of others. A provider executive may overclub on payer problems; a payer problems may overclub on provider problems. As Mr. Buffett said: "Everyone thought the system needed some adjustment, just not their part of the system."
3. What's the right balance of legacy and innovation? It's easy to criticize legacy health systems as archaic and to have a good laugh about hospitals' use of fax machines. The joke is on the big companies outside of healthcare when they point to health systems' wrinkles and underestimate their history and institutional knowledge. Kaiser Permanente's origins go back to the height of the Great Depression when a surgeon borrowed money to build a hospital to care for the workers building the Colorado River Aqueduct. That system, and many others like it, might have some institutional knowledge to spare about the business strategy of employee healthcare, no? Rejection of status quo and appreciation of history can coexist. Companies tend to lean into the former and avoid the latter in most healthcare forays.