Managed Care, Niche By Niche

The framed pink slip hangs proudly on Robert E. Patricelli's office wall. As he sees it, the elimination of his job in a 1986 reorganization at CIGNA Corp. may have been the best thing that ever happened to him. It cleared the way for the 53-year-old executive to capitalize on an idea he had broached with the insurer right before leaving: Start a specialty managed-care business to focus on neglected niche markets such as prescription drugs, workers' compensation, and mental health. CIGNA had turned down the idea, preferring to focus on its core health business.

CIGNA's loss has been Patricelli's gain. By buying and combining usually small, regional players and offering their services nationwide, Patricelli has built Value Health Inc.'s revenues to almost $1 billion. The Avon (Conn.) company has achieved a 70% annual growth rate over the past three years, and its stock is up 450% since it went public in 1991. "Bob Patricelli just had a lot of foresight," says Edward C. Bessey, vice-chairman of drugmaker Pfizer Inc., which has entered into a joint venture with Value Health. "It was a terrific strategic move."