INDIANAPOLIS (AP) — Health insurer WellPoint Inc. (NYSE:WLP) has surprised analysts and investors by announcing that a veteran hospital executive who has never run a public company will become its next chief executive officer (CEO).
The Indianapolis company said after markets closed that Trinity Health Corp. CEO Joseph Swedish will take over March 25, replacing interim CEO John Cannon.
Swedish, 61, will be charged with guiding the nation’s second-largest health insurer through sweeping changes, as the industry prepares to cover millions of newly insured people who gain coverage under the federal Patient Protection and Affordable Care Act (PPACA).
Insurers also are adjusting to fees and coverage restrictions imposed by PPACA and facing growing pressure to keep ever-rising health care costs in check. Some on Wall Street expected the Blue Cross Blue Shield coverage provider to pick someone with more hands-on experience in the complex business.
“He’s just kind of an out-of-the-blue name,” Stifel Nicolaus analyst Tom Carroll said. “Certainly his name specifically was not bantered about.”
Many investors thought former Amerigroup CEO Jim Carlson was the likely choice for WellPoint, which saw its stock price sink 8 percent last year while broader trading indexes climbed. WellPoint acquired Amerigroup in a recently completed, $4.46 billion deal.
“Going outside the company and getting a fresh perspective might help the company move forward,” BMO Capital analyst Jennifer Lynch said.
WellPoint has been searching for a new leader since Angela Braly resigned last August amid investor frustration over disappointing financial results. Cannon, who had no interest in becoming the permanent replacement, will remain with the company as executive vice president of legal and public affairs.
Swedish’s resume includes work as an executive with HCA, the nation’s largest hospital chain. He also has served as a director for another insurer, Coventry Health Care Inc. (NYSE:CVH). He has served since 2004 as CEO of Michigan-based Trinity, a Catholic health system that runs 47 hospitals in 10 states.
Trinity is in the process of combining with Catholic Health East in a deal that will create the fifth-largest U.S.-based hospital system, with $13 billion in revenue.
Trinithy has been active in efforts to develop care coordination and health system integration programs.