Each day, executives and analysts at Centene Corp. peer into a digital dashboard, hunting for spikes in health care usage — and costs.

Their proprietary database, known internally as Centelligence, helps them predict the likelihood that a patient will, for instance, develop diabetes or asthma. And they can drill into individual patients' records to pinpoint causes.

Like bond traders poring over rates and yields, Centene's prognosticators dissect health data to play the spread between what state governments will pay Centene for Medicaid management — and what costs Centene can shave for a specific subpopulation's health care.

"We're forecasters," said Michael Neidorff, the company's chairman and chief executive. "It keeps us efficient."

Outside of Wall Street and state health bureaucracies, few understand how Centene operates, or how it has transformed itself into a fast-growing powerhouse. The Clayton-based Fortune 500 firm navigates a complex and controversial field with a simple business model: Save states between 5 percent and 8 percent of the cost to care for their poorest, sickest and youngest patients — and pocket a piece of the difference. To help get those deals, Centene fields an army of lobbyists with a war chest for political and charitable donations.

Centene and its competitors, which include UnitedHealth Group Inc. and Aetna Inc., see a booming future in the science of cost-control. As health care costs keep outpacing inflation, legislative chambers increasingly echo with howls about government "waste, fraud and abuse" and calls for shrewd private managers. Meanwhile, others continue to push toward the ideal of universal coverage. Centene positions itself as a servant of both agendas — better and cheaper care. Less is more.

Federal and state agencies already spend about $400 billion a year on privatized Medicaid services, and Centene executives speak of a $45 billion pipeline of state Medicaid contracts in 2012 alone.

As the nation's fourth-largest Medicaid manager, Centene processes about 2 million medical claims a month and oversees health spending for about 1.8 million people in a dozen states — from foster care centers in Texas to medical clinics on Indian reservations in southwest Arizona. About 78 percent of Centene's enrolled patients are children.

Most of the company's work focuses on the families of low-income single mothers. But Centene and its competitors are advancing into one of the highest-cost areas of health care: serving the aged, the blind and the disabled poor, including those who qualify for both Medicaid and Medicare, the federal program for seniors.

Neidorff, 69, says Centene's work grows directly from necessity.

"This country doesn't have endless dollars. Our job is to provide higher quality care at the lowest possible price," Neirdorf said. "We go to states and ask to take on their sickest populations."


As tax revenue falls and health care costs soar, state Medicaid programs have been forced to get leaner. Many have abandoned the traditional fee-for-service model — paying providers for each service — arguing that it fosters unnecessary care.

Instead, many states have privatized management, paying fixed per-patient rates and letting companies assume the risk of rising Medicaid costs. The less that population spends, the more the manager makes.

In the 1970s, "health maintenance organizations" were vilified for scrimping on employer-provided care. Centene and other companies seem to be earning better marks in the realm of government care.

That may owe partly to closer management of the managers. Federal and state regulators increasingly demand that Medicaid contractors provide more clinical and administrative data. They track, for example, the frequency of patient visits and outcomes of appeals for denied care. Regulators employ 'secret shoppers" to spy on Medicaid contractors and others to monitor firms' marketing activities.

Bruce Merlin Fried, a former administrator at the federal Centers for Medicare and Medicaid Services in Washington, said Centene's success in winning state contracts speaks to its reputation.

"In the procurement process, simply getting to the bottom line number is not enough," Fried said. "The states consider much more — everything from foot and eye exams for diabetics to flu vaccines and customer service standards."

It's a fierce industry, marked by intense lobbying, bid protests and litigation over state contracts, and federal investigations. But Centene appears to have avoided some of its competitors' missteps. For example:

• Amerigroup Corp., based in Virginia Beach, Va., agreed in 2008 to pay $225 million to resolve federal claims that it defrauded the Illinois Medicaid program by systematically avoiding the enrollment of pregnant women and other high-risk patients.

• WellCare Health Care Plans Inc., based in Tampa, Fla., agreed in 2010 to pay $137.5 million to the federal government to settle charges that it overcharged for its Medicare and Medicaid programs.

In the last decade, Centene has moved aggressively into several new states including Georgia, Texas and Louisiana, but has not held the primary Medicaid contract in its home state of Missouri since 2006.

Both revenue and profit have steadily climbed, with Centene in 2011 posting revenue of $5.2 billion and profit of $111 million. It expects to surpass $7 billion in revenue in 2012, reaching up to $10 billion in revenue in the next few years.

Those gains have transformed Centene into one of the region's most successful companies, with about 5,300 employees nationwide, including more than 900 in the St. Louis area. In 2008, Centene caused a stir locally when it canceled its plans to erect a new $250 million office complex in Ballpark Village in downtown St. Louis. It chose instead to build its 15-story headquarters building in Clayton, which won a bidding war by offering Centene a multimillion-dollar package of taxpayer-financed incentives.

Centene continues to grow and diversify. About one-quarter of its revenue comes from specialty markets, including the sale of individual health insurance and long-term care plans, as well as behavioral care and vision care.

"My job is moving the rocks off the road," said Neidorff, whose annual compensation package in 2010 totaled $7.9 million, including such perks as personal travel in the corporate jet.


It takes money to make money. In the case of state contractors, that money gets distributed to politicians and community causes that can help land the public contracts that fuel corporate growth. Centene occupies an inherently political realm, and it embraces that reality by doling out hundreds of thousands of dollars annually in campaign donations. It spends with equal vigor on gifts to nonprofit groups in the states it serves or seeks to serve.

Matt Eyles, vice president for public policy at Bethesda, Md.-based Coventry Health Care Inc., one of Centene's competitors, called Centene particularly aggressive on the political front. (He also said the company excels in pediatrics and obstetrics.)

In Missouri, the company fields 13 registered lobbyists, including attorney Chuck Hatfield, one of Democratic Gov. Jay Nixon's closest advisers, according to Missouri Ethics Commission records. Since January 2006, Centene and its executives have given more than $400,000 in campaign contributions to dozens of Missouri politicians.

About 425,000 people are enrolled in Missouri's Medicaid program — a $1.3 billion market whose contracts are being rebid this year.

Jesse Hunter, the company's executive vice president for corporate development, said Centene's lobbyists are useful in "accelerating our knowledge of local markets ... educating us how to meet the needs of those markets. Health care is a very local activity."

In Illinois, state records show that Centene gave $100,000 to the Democratic Governors Association on July 26, 2010 — two months before the firm received contracts to provide Medicaid services in three Illinois counties.

The company also gives liberally to nonprofit groups in its target markets. The Centene Foundation for Quality Healthcare, which seeks to improve health care for the poor, has donated more than $325,000 since 2007 to nonprofit health-related organizations in states such as Texas and Georgia, where Centene has won significant contracts, as well as states like Florida, where Centene hopes to expand its market presence.

"We are big believers in corporate social responsibility and being active in the markets that we serve," Hunter said. "And that includes giving back."

Centene also has paved the way for contracts through relationships with smaller, minority-owned businesses that can put a competitive bid over the top.

Centene came under scrutiny recently because one of its affiliated businesses, the embattled Missouri contractor SynCare LLC, was ousted as a state contractor after high-profile failures in delivering eligibility assessments of homebound Medicaid patients.

In late December, SynCare's owner, former Centene executive Stephanie DeKemper, filed for federal bankruptcy protection in Indiana. DeKemper's long list of creditors include Centene, which helped her buy and run SynCare with nearly $2 million in business loans. Before it went broke, SynCare was a certified minority business entity — with preferential access to public contracts — in several states including Indiana and Illinois.

Amid public outcry over SynCare's failures, Centene officials sought to play down its relationship with the company. Neirdorf said Centene supported DeKemper's activities in Indiana but did not back her foray into the Missouri market.

"Not everything you try works," Neidorff said.


Contributions and connections can kick open doors to state contracts, but it takes a solid track record to keep them open. Founded in 1984, Centene has proved to be an innovator. Its subsidiary CeltiCare gained experience as the only for-profit, publicly traded company to participate in Massachusetts' state health insurance exchange — giving Centene a foothold in serving the growing ranks of the uninsured.

Centene survives and thrives on data management and analysis. The company's dashboard displays a host of predictive modeling algorithms, analyzing medical, behavioral health, pharmacy claims, and laboratory test data to help identify high-risk patients before they need multiple high-cost procedures.

Its network of providers tries to reduce costly use of emergency rooms by encouraging patients to see primary care physicians, take their medications, go to their followup appointments and pursue healthy lifestyles. About one-fifth of Centene's patients require intense medical management.

About 20 percent of Centene's child patients are overweight, said Dr. Mary Mason, senior vice president and medical officer. So Centene has a childhood obesity team that aims to teach children to eat healthy foods. Centene also has a team of experts working on a diabetes program.

Centene runs 24/7 telephone help programs such as "Nurse Wise" to urge patients to adhere to their medication schedules and to visit primary care physicians rather than the emergency room. Some high-risk patients are provided with cellphones so that health care providers can keep in contact. The average emergency room visit costs about $171; the average cost to visit a primary care physician is $61.

"It's not about withholding care, but ensuring that care is in the right setting," Neidorff said. "We spend money on preventative care."

Centene's health provider delivers more than 60,000 babies a year, and the company has been particularly aggressive in its efforts to fight premature births. In addition to their dangers, pre-term births can cost on average about $51,000 — several times more than a healthy pregnancy.

The firm's "Start Smart" program for healthy babies identifies women at high risk for premature births. For the past several years, women in Centene's care who have had a previous pre-term birth were given weekly injections of the steroid 17P to decrease the chance of a reoccurrence.

Centene has encouraged physicians to prescribe a cheap version of the drug, which is made by specialty pharmacies, and helped physicians procure it at low rates.

But some critics have questioned the drug's safety and efficacy. In approving a brand name version of the drug, Makena, the Food and Drug Administration last year ignored its advisory panel of experts who recommended that any approval be conditional on long-term studies into its effect on the reproductive development of children whose mothers take the drug. At least one animal test indicated the drug may lower the sperm count of male offspring.

So far, Centene appears to be winning its gamble that the drug's benefits outweigh its risks — preventing dangerous and costly premature births.

Centene's company philosophy on wellness and preventive care also extends to its own workforce. In 2010, Centene established an in-house health care clinic, where employees and their dependents get free medical care (not including prescriptions) for their routine health needs.

At the firm's Summit Cafe, employees are charged discount rates for veggie burgers and higher prices for cheeseburgers and other fattening favorites. Joked Neirdorff: "I'm threatening to charge 20 cents per french fry."

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