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Centene CEO says St. Louis has to change. But will Michael Neidorff’s criticisms make a difference?

Centene CEO says St. Louis has to change. But will Michael Neidorff’s criticisms make a difference?

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Michael Neidorff

Michael Neidorff, chairman and chief executive officer of Centene Corp., walks to the morning session at the Allen & Company Sun Valley Conference in Sun Valley, Idaho, Thursday, July 11, 2013. (AP Photo/Rick Bowmer)

CLAYTON — It was a “shot across the bow,” as one area leader called it.

The day after the largest company by revenue in the region, Centene Corp., announced it would build a $1 billion eastern headquarters in Charlotte, North Carolina, and hire as many as 6,000 people there over the next decade, CEO Michael Neidorff gave several interviews to local media outlets. He offered a sharp critique, which he said was intended to be constructive, and one concern was clear: his efforts at recruiting top-notch talent to the region were being hurt by crime and the image it gives St. Louis.

Google “St. Louis,” he said, and “murder capital” comes up.

He needed something different, if he hoped to continue growing his company here.

“I believe in being honest and candid,” Neidorff said during an interview on KMOX (1120 AM). “Charlotte is an alternative and a viable alternative if we can’t fix things here. And I believe we can. It’s not something that has to happen in one day or one month. It’s a process.”

No matter his motives, Neidorff has top leaders in town talking. Some say they were surprised by his comments, and worried that they could further hurt the region’s reputation. Most agree his concerns are valid and his concern for the region genuine, pointing to Centene’s local contributions, such as a $25 million center in Ferguson shortly after the civil unrest following Michael Brown’s 2014 death.

And they note that Neidorff, despite his criticisms, has said the Centene headquarters aren’t moving. The company is still building a $700 million addition to its Clayton campus. Still, Centene, which employs 4,700 here, has been expanding dramatically, and expects revenue of more than $100 billion this year — more than twice what it took in just three years ago.

When he was leading the St. Louis County Economic Council, Denny Coleman sometimes heard from local executives before they would build campuses in other cities. They often told local leaders not to worry.

“It was along the lines of, ‘let’s not put all our eggs in one basket,’” Coleman said. “The difference here is that Michael has chosen to give a bit of a critique of St. Louis along with his decision.”

Sometime in the last year, Neidorff decided to leave Civic Progress, the club of top local CEOs that used to set the civic agenda. Some sources said he quit the group around December, despite an effort to talk him out of it.

The subtext, some said, appeared to be his frustration with local leadership. The business and economic development landscape is fragmented. City and county political leaders are not always on the same page, and Missouri government is dominated by rural, low-tax interests that see little incentive in helping solve St. Louis problems.

Mayor Lyda Krewson, elected with just a third of the vote in 2017, has been hurt politically by protests demanding her resignation after she read the names and addresses of some people demanding the city close the Medium Security Institution, the jail known as the workhouse. St. Louis County Executive Sam Page, appointed by the County Council after his predecessor’s indictment and resignation, is in the midst of a contentious, four-way primary campaign.

A year ago, in an interview asking what has changed in the five years since the Ferguson uprising, Chris Krehmeyer asked: “Who convenes us?” The head of the nonprofit Beyond Housing, which works in the poorest communities of north St. Louis County, still isn’t sure.

“I really couldn’t tell you what our priority for the region is,” he said. “The interesting thing is, no one’s disagreed with (Neidorff).”

North Carolina turns to managed care

How much Neidorff’s comments are frustration with the crime issue or local leadership, and how much the company’s rapid growth or political expediency plays in is difficult to say. Neidorff’s departure from Civic Progress could signal something — be it a clash of personalities or frustration with local civic leadership. Company representatives did not respond to inquiries.

Neidorff said on KMOX he’s hired 2,000 people virtually in the last two months and has 2,400 job openings now. Unlike St. Louis, Charlotte is growing rapidly and could overtake St. Louis soon. Plus, a similar announcement 18 months ago didn’t generate the same stir locally. In February 2019, Centene dedicated a new western headquarters in Sacramento, California.

Political calculations also may be involved. One of Centene’s core businesses is Medicaid managed care, where the company accepts a lump sum from a state to manage its Medicaid population, in theory providing certainty to state budgets and offering an incentive to the company to improve health outcomes by keeping costs down. It pockets what isn’t spent on care.

The day after Centene made its announcement in North Carolina, the state’s governor, Roy Cooper, a Democrat, signed a bill known as “Medicaid Transformation” that will turn North Carolina into a managed care Medicaid state. He had vetoed a similar measure last year, according to the Charlotte Observer.

According to the newspaper, Centene is one of five companies that have contracts worth billions of dollars for managed care in North Carolina, the largest state that hasn’t yet shifted to that system, according to the North Carolina Association of Health Plans.

Though Neidorff criticized the lack of Medicaid expansion in Missouri, an issue that residents may finally approve at the ballot in August, North Carolina hasn’t expanded it either.

In his interviews, Neidorff mentioned other issues, including the lack of flight options at St. Louis Lambert International Airport. And he brought up education funding, which Missouri Gov. Mike Parson recently cut to balance the budget.

Asked about Neidorff’s comments, Parson said he didn’t believe companies made location decisions based on Medicaid availability and that he would continue to focus on “education, health care, workforce and infrastructure.”

Public safety looms large

But Neidorff’s primary critique was clearly public safety. The anecdote he mentioned — the wife of an executive he sought to recruit felt unsafe on MetroLink and led to the couple deciding against moving here — goes to a local issue he has been focused on.

In 2018, Neidorff hired Tom Irwin, the long-time executive director of Civic Progress and, before that, head of Bi-State Development, the agency that oversees transit in the region.

Irwin took on the task of trying to improve security on MetroLink, and clear some of the cross-jurisdictional hurdles that stymie police enforcement across the borders between the city, county, and states, an issue that has bedeviled local officials for years.

In March 2019, Irwin organized a meeting between Krewson, then County Executive Steve Stenger and the police chiefs of the city and county to discuss getting county police officers on the trains in the city. Also discussed was a potential merger of the departments in order to uniformly report crime statistics and reduce the city’s crime ranking, which is often skewed because the city of St. Louis represents just 12% of the regional population yet contains most of its concentrated poverty.

But little progress has been made on those fronts, with the region’s leadership thrust into turmoil shortly after that meeting. Stenger was indicted on federal corruption charges. And the ambitious city-county merger plan, Better Together, collapsed soon after.

Recent moves suggest a new effort is afoot. Centene hired Jon Belmar, the recently retired county police chief, to focus on police relations. The city and the county have agreed to privately funded reviews of their police departments. Though it’s unclear who exactly is paying for them, Neidorff lauded the reviews during his interviews, and Irwin, still employed by Centene, lobbied the St. Louis County Board of Police Commissioners to approve the county review on Thursday. Krewson has said the city will accept the review.

The concern about public safety is real, and drives a lot of decisions about where people live and invest.

When he led economic development efforts, Coleman said he heard similar concerns from executives. Once, he said, the spouse of a top recruit, when told by her husband that he had accepted a job in St. Louis, was almost in tears when she Googled the city and saw articles about crime. But they moved here anyway and grew to love the city and realized crime wasn’t as bad as the city-only stats make it seem.

“But part of that perception is based on a degree of reality,” he adds, suggesting, as others have, a sort of Marshall Plan for areas of the region mired in poverty. “This isn’t just a police issue. This isn’t just a criminal justice issue. It’s also rebuilding significant portions of our community.”

Missouri ranks too low — near the bottom — in too many economic development categories, said Bob Lewis, a longtime partner in planning firm Development Strategies and now a professor at St. Louis University. Higher taxes typically don’t rank too high on corporate CEOs’ big concerns — look at growth in San Francisco, Seattle or New York — as long as those taxes are funding good roads, schools and public safety.

“We’re cutting money to public education at all levels including higher education,” he said. “It’s not helping our cause, at all. We need to be investing in human capital, since that’s where most of the economy is anymore.”

Jack Suntrup of the Post-Dispatch contributed to this report.

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