Online Extra: The WellPoint CEO's "Simple Philosophy"
Larry C. Glasscock, head of the $45-billion-a-year health-care insurer WellPoint (WLP ), couldn't imagine running a corporate titan when he was growing up. The eldest of seven children born to a factory worker and a waitress, he just knew how to work hard. Today, he figures his experiences building fences and laboring in a rubber factory helped get him where he is today.
Glasscock, who worked at a bank for 20 years after graduating from Cleveland State University, has certainly found his niche in health care, though. WellPoint, which he formed last year by merging his Indiana-based Anthem Blue Cross/Blue Shield company with California-based WellPoint, provides health insurance to more Americans than any other rival -- some 28.5 million.
He talked about his Horatio Alger-like story and discussed issues in health insurance with BusinessWeek Chicago Bureau Manager Joseph Weber. Edited excerpts of their conversation follow:
Q: Tell me about your family. A:
Q: Tell me about your family.
A:I was born in Cullman, Ala., in 1948. But I grew up outside Cleveland. My dad went to Cleveland because he heard there were jobs there, and he got a job in a battery factory. Then once he got enough money, he sent for us.
Q: A modest upbringing? A:
Q: A modest upbringing?
A:Well, modest would probably be a generous word -- economically. Modest would be generous.
Q: It was a struggle then? A:
Q: It was a struggle then?
A:My parents -- my mom always worked. She was a waitress, and then she owned a small restaurant for a while. My dad always had at least two, if not three, jobs.
Q: What was most influential on you? A:
Q: What was most influential on you?
A:Coming from very humble beginnings -- it makes you realize the value of work. That's what always rings to me because neither one of my parents, for example, graduated from high school.
Q: Why did you go into banking? A:
Q: Why did you go into banking?
A:Well, things happen in mysterious ways sometimes. I worked for the Brown Fence Company. One of the co-owners had been head of the training school for the old Cleveland Trust Company [later Ameritrust and then part of KeyCorp (KEY )], which at that time was the premiere bank in Cleveland. He said to me, "When you graduate, if I can make an introduction, I'd be happy to." So I went down and got an interview and got hired.
Q: Did you ever imagine that one day you would be the CEO of a multibillion-dollar company? A:
Q: Did you ever imagine that one day you would be the CEO of a multibillion-dollar company?
A:Never. No. Never. I had a very simple philosophy. In each job I had, it was to do the best I knew how, and that if you did that, opportunities would come.
Q: You went from banking to health care. A:
Q: You went from banking to health care.
A:Well, in the early '80s, when I was running corporate banking, I said we needed to reach out and identify industries that aren't currently in our portfolio because we were lending to steel companies and heavy manufacturing companies. The bank's chief economist gave me an analysis of what other industries we should get a presence in.
One was health care. Then in 1987, I was asked to join the board of Community Mutual Insurance, which was the Blue Cross/Blue Shield licensee in southern Ohio. I joined the board there.
Q: Do you expect further consolidation? A:
Q: Do you expect further consolidation?
A:I think over time, the industry will continue to consolidate. It doesn't necessarily have to mean mergers. It can mean people buying services from other companies, or things like that.
Q: What have you learned in the course of this merger? It was longer than you expected, though, wasn't it? A:
Q: What have you learned in the course of this merger? It was longer than you expected, though, wasn't it?
A:Yes. We thought...that we'd get it done by the summer of 2004, and it took us until the fall. We got closed Nov. 30.
Q: California Insurance Commissioner John Garamendi raised a lot of objections. What did that teach you? A:
Q: California Insurance Commissioner John Garamendi raised a lot of objections. What did that teach you?
A:I think what it taught me is you always have to be listening very carefully to what people's issues are.
Q: Are you limited -- if you do acquisitions in the future -- to the Blues, or can you step outside of the Blues? A:
Q: Are you limited -- if you do acquisitions in the future -- to the Blues, or can you step outside of the Blues?
A:I'd put our priorities in this order. At the very top would be to continue to do Blue Cross/Blue Shield affiliations. Our second priority on the acquisition front would be: If there were any specialty products where we thought we could enhance what we already have, we would have interest in that. The third priority would be if there was a company that had membership predominantly in states where we have the Blue brand licensed -- we'd be interested in those.
Q: What do you say to critics who say you make too much money? A:
Q: What do you say to critics who say you make too much money?
A:I think it's unfair for me to answer that because the people that control the decisions on comp are the chairman, the compensation committee of the board.
Q: Are you overpaid? A:
Q: Are you overpaid?
A:I think the board ties my compensation to what I produce. And I want to do a good job.
Q: You mentioned the uninsured. How should we deal with the problem? A:
Q: You mentioned the uninsured. How should we deal with the problem?
A:One of the best things that we can do with the public, legislators, and so forth is to really understand that uninsured population in great depth. A third of them are in households that have incomes of $50,000 or greater, and, for whatever reason, they're uninsured. Our job is to reach out to them with affordable products with lots of education, and that's what we're trying to do with things like Tonik or Blue Access, for example.
The second segment is a third of the uninsured that are actually eligible for either federal or state programs. They're simply not enrolled. Then the balance are really the working poor. There, we really need to work collaboratively with the government and our industry and figure out what the right solution is.
We've been in favor of tax credits. We've been in favor of giving those people incentives that would allow them to purchase some sort of coverage.
Q: Would a larger role for the government in health care be a good thing? A:
Q: Would a larger role for the government in health care be a good thing?
A:A public/private system is what best serves Americans. We're a culture of people that want choice -- I just can't imagine us going to a place that's going to be a one-size-fits-all. It's just not our makeup as a culture.