Why this CEO is worried about private equity in Medicaid

The CEO of the nation's largest public health plan plans to keep advocating for Medicaid funding in retirement. 

John Baackes, currently CEO of L.A. Care, which serves 2.5 million members in Los Angeles County, has led the organization since 2015. He plans to retire at the end of 2024. 

In retirement, he hopes to advocate for getting Medicaid funding at parity with Medicare funding, Mr. Baackes told Becker's. 

"If somebody's walking around with a Medicaid card in their wallet, and they go to a provider, they're provider is going to get [paid] 60% to 70% of what they would have gotten if that card was a Medicare card, or half of what they would have gotten if it was a commercial insurance card," he said. "That automatically sets up a discrimination system." 

Mr. Baackes has more than 40 years of experience in managed care. Prior to leading L.A. Care, Mr. Baackes was president AmeriHealth Caritas VIP Plans where he oversaw the Medicare Advantage business unit.

Before AmeriHealth, Mr. Baackes was CEO of Senior Whole Health, a subsidiary of Molina Healthcare in Massachusetts. 

Over his decades in the industry, Mr. Baackes has witnessed several transformations, he said, including improvements in data collection, the proliferation of managed care plans and the Affordable Care Act. 

A trend concerning him, he said, is the influence of private equity and for-profit plans in Medicaid. 

"I am very concerned today that the role of private equity and shareholder plans in the public health sector, Medicare and Medicaid, is a distortion," he said. 

Medicaid is not a well-funded program in terms of reimbursement to providers, Mr. Baackes said. 

"If I'm operating a plan that's taking money from the state and federal government to build a network of providers who would see our members, and I'm taking a slug of money to return to shareholders, that doesn't seem right, because the doctors are generally providing care at less than the cost of providing the care," he said. "That presents, for me, an ethical dilemma that is disturbing." 

Mr. Baackes' advice to up-and-coming leaders: Seize the day. He seized on opportunities offered, even if he worried he wasn't qualified. 

"One of the early people … offered me enough responsibility that I could try things and make mistakes. He realized, as I came to realize, that making an error is the greatest lesson possible," he said. 

Leaders who can learn from mistakes and apply lessons quickly will be successful, he said. Passing on opportunities to learn from mistakes to others is valuable as well. 

"If you wind up in a leadership role and have people reporting to you, give them the ability to make those kinds of decisions. In other words, they're in charge of their job," he said. "Let them make decisions on how to do it. Don't micromanage them. That turned out pretty well for me." 

Mr. Baackes started thinking about succession planning when he signed his last contract three years ago, he said. He recommended a candidate to L.A. Care's board of directors, but the decision is ultimately in the hands of the board. 

"I feel like I'm waiting for the white smoke at the Vatican," Mr. Baackes said. 

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