What’s the Story Behind CalOptima’s Brain Drain?

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When CalOptima CEO Richard Chambers announced his resignation earlier this month, he became the sixth top executive to leave Orange County’s $1.4-billion health care plan in less than a year.

The primary explanation offered by insiders for this high-level brain drain is a strong national demand right now for leaders who understand complex health care systems coupled with instability at CalOptima caused by Orange County Supervisor Janet Nguyen’s efforts in recent months to remake the organization’s board of directors.

The departures come at a particularly bad time, for CalOptima will have to absorb a huge influx of new patients in the coming years if the new national health care reform law is implemented as planned.

Chambers will be leaving in April to become president of Long Beach-based Molina Healthcare California, a physician-owned firm that manages Medi-Cal and Medicare coverage for 350,000 people in five counties.

Chambers said he’s leaving because “I had a wonderful opportunity.”

Several CalOptima board members have already made it clear that they want to conduct a nationwide search for his replacement.

“Richard was a very strong leader,” said board member Lee Penrose, president and CEO of St. Jude’s Hospital, during a Feb. 17 planning session on how the board will fill the vacancies. “CalOptima has been a shining star in the world that we play in, and we have a lot to be proud of. Because we are as attractive as we are, we ought to aim high.”

Whoever succeeds Chambers will take over a system that currently serves about 400,000 Medi-Cal and Medicare recipients and would take on 100,000 to 140,000 more in 2014 if new health care law is fully implemented on schedule.

The new requirements mean CalOptima will likely have a lot of competition from health plans everywhere for top talent, said Alwyn Cassil, director of public affairs for the independent, nonpartisan Center for Studying Health System Change.

“That [CalOptima] management expertise is probably quite specialized, and that makes that expertise quite marketable,” said Cassil.

The center’s most recent report cited 2009 figures showing that among metropolitan areas, Orange County has a higher-than-average percentage of uninsured — 17.8 percent compared with 15.1 percent.

Just how much hiring is going on nationally is difficult to estimate because “it’s happening in real time,” she said. “I don’t think it’s surprising at all that they’re gearing up, because they’re going to be bidding on contracts with states to get this [low-income plan] business.”

The U.S. Supreme Court has scheduled a week of hearings in March on the new national health plan. A decision is expected in June that will let health providers know exactly what to expect in new coverage for uninsured adults.

Chambers’ exit comes soon after the departure of two other top executives.

In January, Dr. Greg Buchert, CalOptima’s chief operating officer, left to become a principal consultant at Michigan-based Health Management Associates, an independent national research and consulting firm that specializes in health policy issues.

Margaret Tatar, CalOptima executive director of public affairs, moved to Sacramento to become head of the Managed Care Division of the state Department of Health Care Services. She will direct all California Medi-Cal programs, including CalOptima, for 3.5 million recipients. In addition, the Managed Care Division audits the performances of each county program.

Three other executives, including the chief administrative officer, also left for private industry or government-run health plans similar to CalOptima.

Some who know the dynamics of CalOptima say it is no coincidence that the organization is losing so many top leaders during a time when Nguyen has successfully pushed to remake the board while leveling generally unspecific accusations of mismanagement.

Nguyen was able to persuade a majority of the Board of Supervisors to increase the nine-member board to 11 seats and change membership requirements so the medical industry could potentially have five seats. And by getting a two-year term and adding another county department head to the board, Nguyen could be putting herself and the medical industry in a position to determine how CalOptima is run.

Under Nguyen’s plan, one seat goes to the hospitals or a hospital trade association; one goes to doctors; one goes to an independent doctor’s association or health network; one goes to a for-profit business; and one goes to a member of the public who doesn’t qualify for any of the three consumer seats.

Some others who have left the agency recently, including a few below the ranks of top executives, said the turmoil created by Nguyen and efforts to revamp the board didn’t directly cause them to seek other jobs. But, they said, when they were approached by other organizations, they took into account what was happening at CalOptima and weighed it against the new offers.

The hospital industry is holding a $250-per-person fundraiser Tuesday night as a “Tribute to Supervisor Janet Nguyen.” Nguyen is the only supervisor up for re-election this year.

Nguyen’s revamping of the board ended all current terms except hers and that of the director of the county Health Care Agency, a post that has been vacant since December. It added the Director of the county Social Services Department as a permanent board member.

Two of the old board members didn’t seek board approval to finish out their terms. The remaining five, including Penrose, are from nonprofit organizations that provide services to low-income individuals, among their other work, or make grants to health-related groups.

Penrose said at the CalOptima board meeting that when selecting a replacement for Chambers, it is important for the CalOptima board to consider the impact of all the changes on the staff. “There’s a lot of transitioning going on at CalOptima right now, and several [vacant executive] positions all at once must be pretty unsettling.”

He urged his colleagues to “listen to the staff” and “understand the culture” it was recruiting someone to succeed Chambers. Other board members agreed and also emphasized the importance of a “transparent” process, using a “highly qualified” firm to conduct a national search and getting suggestions on what is needed from both providers and those who are covered by CalOptima.

The board is moving to replace Chambers as quickly as possible.

In a telephone interview, Chambers said he was leaving because of the new opportunity but added, “The last year has been difficult.” He cited the leak to the Orange County Register of part of an audit that pointed to future problems that needed correction. When Chambers proposed a full management audit that would be publicly released, he was criticized by Nguyen.

“We get audited all the time,” said Chambers in the telephone interview. “I’m not afraid of what comes out of an audit.”

Please contact Tracy Wood directly at twood@voiceofoc.org and follow her on Twitter: twitter.com/tracyVOC.

 

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