Starck leaves CorVel, Lisenbey new CEO at Broadspire

Two top positions in the work comp industry will be occupied by new people this spring. Ken Martino, long-time CEO of TPA Broadspire is resigning to take a new position in his home state of Connecticut, and CorVel CEO Dan Starck is departing the company to assume the role of CEO of Apria Healthcare. Starck’s new job, announced earlier this month, takes effect mid-April.
No public announcement from CorVel on succession plans, and no information on their website either. Notably they did file an 8-K with the SEC noting that former CEO Gordon Clemons Sr will be assuming the role. (that notice is not on CorVel’s website as of today). That’s a bit unusual as CorVel is a publicly traded company and one would expect they’d let the market and investors know that a) the CEO is out and b) who’s taking over long-term, or at least that they’re working on it. I did email Clemons to get his comments, as usual he’s been non-responsive.
Martino’s been a very effective leader for Broadspire, navigating the TPA through a very difficult market. After a tough 2010, they’ve had notable sales growth over the last few quarters, landing several large self-insured employers. Martino repositioned Broadspire as a TPA focused on medical management; they broke away from the usual “national contract with Coventry plus a few other networks” model to identify, contract with, and build connections to a multitude of networks; their pharmacy program is solid and internally managed, and they’ve developed medical management applications inhouse as well.
This continues with Danielle Lisenbey’s appointment as Martino’s successor; her years of experience in medical management is a clear indication that Broadspire sees leadership in this key area as critical to the company’s continued growth. She may well be the only TPA CEO with a degree in industrial engineering; this has served her well as Broadspire has re-engineered the medical management and claims processes.
CorVel, the work comp managed care services and TPA company, is likely searching for a more permanent successor to Starck; Clemons is probably not in the seat for the long-term. Gordon junior may be on the list, but the delay in announcing a new boss may indicate an intention to look outside for more experience, particularly in leading a publicly-traded company.
Starck et al have been able to keep the company’s P/E ratio right around 20 for quite some time; this may prove a challenge for his successor, as their most recent report indicates CorVel earnings tumbled in the last quarter. The company’s gross margin declined by 410 basis points while operating margin (down by 320 basis points) and net margin (180 basis points decrease) also worsened.
While the somewhat-hardening comp market may help CorVel’s TPA business, the company’s recent loss of a significant managed care services account has yet to be fully felt on the books.

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