LEFT WITH SPECULATION
AG, governor quiet after Harvard Pilgrim CEO’s resignation
Gov. Charlie Baker and Attorney General Maura Healey have both refused to weigh in while Harvard Pilgrim remains tight-lipped about the details surrounding the abrupt resignation of the giant health insurer’s CEO.
Eric Schultz resigned Tuesday as the head of the state’s second-largest insurer after admitting unspecified misbehavior that violated the company’s code of conduct.
The tax-exempt nonprofit company has refused to characterize Schultz’s actions or say if he received a severance package, despite the fact that any money would come from ratepayers who are compelled to buy health insurance under state law. The state’s top elected officials declined to be interviewed about the insurance company’s lack of transparency.
His departure comes amid discussions surrounding a possible merger between Harvard Pilgrim Health Care and Partners HealthCare, the owner of Massachusetts General Hospital and Brigham and Women’s. Both companies said yesterday that those talks are ongoing.
Stanton Professor of Finance at Bentley University Kristina Minnick said she thinks the high-profile resignation could actually facilitate the possible merger, which was announced last month.
“When the merger was announced, nobody knew who the CEO of the combined company would be,” Minnick said. “This answers that question.”
Partners HealthCare CEO David Torchiana has been at the helm since March 2015 and “understands both
companies,” she noted.
When a company is in turmoil and lacking strong leadership, it becomes more susceptible to acquisition, Minnick said — even more so when a scandal is involved or the business is faltering, because the company might be bought for a bargain.
“It’s like a distress sale,” Minnick said.
Schultz’s behavior would have to have been potentially damaging to Harvard Pilgrim’s reputation in order for the board to force him out, Minnick suggested.
“You have CEOs that are known womanizers, you have CEOs that have struggled with alcoholism, CEOs that have dealt with a cadre of personal problems and yet companies haven’t forced them to leave,” she said. “It’s hard to speculate what happened, but it has to be pretty bad.”
She added that if Schultz’s resignation involves personal behavior, Harvard Pilgrim’s reputation should stay intact. However, it might be a different story if his actions involved business practices.
“That would probably be a deal-breaker for Partners,” she said.