For years, Big Health Care has been getting bigger. The industry’s largest companies, including UnitedHealth Group and CVS Health, have scaled our annual Fortune 500 list over the past decade through sweeping M&A that has made them behemoths (and put them in the No. 5 and No. 6 spots this year).
Centene, the St. Louis-based Medicaid and Medicare insurer that stands at No. 25 on this year’s list with $145 billion in revenue, consolidated its way to the top, too: Just a decade ago, it had only $8.7 billion in annual revenues and ranked as No. 303. Now it has more than 28 million members in 50 states, and is the nation’s largest Medicaid insurer, specializing in managed care of lower-income and medically complex populations.
But as others in the sector continue to buy up new business-expanding assets, from home care companies to senior-targeted primary care clinics, Centene, under CEO Sarah London, is streamlining. Since taking over in March 2022, London has been on a divestiture spree, selling off non-core units such as Centene’s pharmacy benefits manager Magellan Rx and its Spanish and Central European businesses.
During a visit to Fortune in mid-May, London explained that these businesses were “keeping us from really focusing and being as efficient as we could.”
Keeping up in the industry race to buy physician practices and build a wide-ranging, vertically integrated health care company just didn’t make sense for Centene, said London, who previously worked in various roles for that race’s leader, UnitedHealth Group, in its Optum unit: “When I first started at Centene I was sitting over all those other businesses. Each one of those is a totally different business model—running a technology business, running a provider organization, and running a payer.” It didn’t make sense, she said, especially when Centene’s current size provides stability and allows it to partner with provider groups, PBMs, and other organizations on favorable terms.
London meanwhile sees plenty of opportunity for growth and expansion in her company’s core businesses. For one, there are many states where Centene isn’t yet in the managed Medicaid market, as well as states, such as North Carolina, that after years of fierce resistance, are opening to the idea of expanding their state Medicaid programs to a greater share of the population, as incentivized by the Affordable Care Act.
London thinks red state opposition to that aspect of the ACA has reached a tipping point. “When you look back at what has happened in states that have gone to Medicaid expansion, it's actually been a net positive,” noted London. “And actually, most—even Republicans—would tell you that. And so I think, I think there may be some momentum there.” Centene is also the largest carrier in the health insurance marketplace, where individuals and families can purchase coverage, and as that market matures, London said she sees lots of opportunity being driven by “awareness and affordability.”
In the fast-growing, highly lucrative Medicare Advantage market, in which private companies manage government health plans, London has refocused Centene on plans for lower income, medically-complex individuals in that population, which she noted “sadly” is bound to grow. “Seniors are getting sicker and poorer and so really figuring out how to catch and care for that population, I think is a huge growth opportunity,” she explained.
Top on London’s to-do list as CEO has been achieving basic efficiencies across the company—consolidating the back-office functions of the various health plans Centene has acquired over the years, for example—and automating certain prior authorizations and claims processing work company-wide to speed care and reduce friction in the system.
She’s bullish when it comes to the role of technology and artificial intelligence in health care in the coming years, imagining it will play out much like the transformation that swept through financial services in the late 1990s and early 2000s, when consumers gained more information and a sense of agency over decisions. “There's a great opportunity to bring down the administrative cost structure of health care in a major way over the next decade, and then those dollars become available to invest in fundamentally different programs for members and ways to reach patients that create a very different experience,” said London, who has spent much of her career in tech-focused health care roles.
As her company was preparing for this year’s massive Medicaid redeterminations process—in which Medicaid beneficiaries across the country have to recertify their eligibility and enrollment—London discovered the Telephone Consumer Protection Act, which protects people from unwanted robocalls and robotexts, also potentially prevented companies like Centene from engaging members in the re-enrollment process through text message; if that were the case, they’d have to reach members in the often transient population by mail. Industry outreach and conversations with regulators ensued, with regulators ultimately ruling that such call and text communications were allowed, to ease the experience for beneficiaries.
That win made London optimistic about effecting bigger changes in the system. “We have this really exciting position of being the incumbent in this space, and therefore being able to see at scale where the opportunities are and… go to the government and say, ‘Let's find that space that is good policy, and see how we can actually start moving the needle.”
She believes that’s possible regardless of the outcome of the next general election. “Because of the fact that we operate in states with a fairly even political divide, we are sort of aggressively nonpartisan in how we do things,” says London, “We feel like we can partner with both sides of the aisle.”
London, at 42, is the youngest of the record 52 women running Fortune 500 companies this year, and one of three, alongside CVS’s Karen Lynch and Elevance’s Gail Boudreaux, to be leading a massive American health insurer. London calls those CEO peers “awesome,” and theorized that the emergence of women bosses in health care—an industry where the workforce is predominantly female—may have to do with the personal qualities demanded of leaders in the space. “It is an industry where a healthy dose of empathy in solution design and how you address problems gets you to a different answer,” said London.
The tensions inherent in serving patients while running a for-profit health care company were on her mind when she took over at Centene. “I worried when I stepped into this role that there was going to be sort of a moral hazard of like, I want to help people and I want to change healthcare, and I also want to drive value to my owners, or my shareholders,” she said. “And then in the government-sponsored space, there is none of that because you are literally a steward of taxpayer dollars. And if you steward those dollars effectively it means that you're driving good outcomes for members and so you actually can do both of those things.”
Have women leaders changed the health insurance business at large? London didn’t want to reduce it to that, but she said she does see a difference underway in her industry. “You're starting to hear a different voice out of this group, in terms of the need for change, the ability to change, a vision for change,” she said. “I think that it's a powerful thing, and something that will help us drive the change that needs to happen in the industry.”
