Back with another one from ya NoCenteam correspondent.
And before I begin: sincere best wishes to everyone leaving Centene today. There's life after Centene. A pretty damn good one, actually. You'll land, you'll remember what it feels like to breathe again, and I suspect a whole lot of you will eventually look back and realize you were better off for it.
Godspeed, fellow Centene employees NoCenteam alumni.
Let’s dig in. Centene has spent a lot of time talking about simplification, efficiency, focus, and Enterprise Optimization, so let's take them at their word. Because at this point, layoffs headcount reduction isn't really the interesting story anymore. The interesting story is: what exactly is Centene optimizing into?
Look around. ACA membership is shrinking. Medicaid membership and mix are changing. State-plan business has been lost or is transitioning in Georgia, Hawaii, and Florida. Centene is choosing to exit Arkansas ARHOME, and Health Net is now exiting traditional commercial group business in California and Oregon to focus on government-sponsored healthcare.
Inside the company, you've got VSPs, ISPs, leadership departures, executive responsibilities being consolidated, and entire functions disappearing. Meanwhile, major work is increasingly being centralized, standardized, automated, outsourced, or handed to outside partners.
None of those things individually proves much. Put them all on the same whiteboard, though, and a pretty interesting picture starts to emerge. This isn't just a smaller Centene. It looks like Centene is deciding which businesses it wants to be in, which capabilities it still wants to own, and who it wants doing the work.
Which brings me to a question I'd really like somebody on an earnings call to ask:
For every dollar Centene expects to remove from employee expense through Enterprise Optimization, how much new spending is being committed to consultants, technology vendors, managed services, and offshore providers? (Attention reporters and analysts… this is the question you should be asking… you’re welcome) 😉
Because reducing payroll isn't necessarily reducing cost. Sometimes you're just eliminating the expense changing who sends the invoice.
And there's another question that's probably even more important:
For every capability Centene removes internally, who owns that capability afterward? (Ahem)
Because if the work still needs to be done after the employee leaves, was the job actually eliminated, or was the employer changed?
Centene has historically sold a pretty compelling proposition: national scale with local knowledge. But there's an interesting tension there. Centralization, outsourcing, and standardization can absolutely make an organization more efficient. They can also slowly remove the local knowledge and institutional memory that made the model work in the first place.
You can consolidate leadership, standardize platforms, outsource operations, automate workflows, and remove people who look redundant on an org chart. Every one of those decisions might make perfect sense individually. The trick is knowing when you've removed cost and when you've removed capability.
That's why I don't think the Centene story anymore is "Why are they laying people off?" We know why companies cut people.
The much more interesting question is:
Managed Healthcare: Managed by Whom?
When Enterprise Optimization is finished, what does Centene still know how to do itself? And perhaps more importantly, what happens when the people who knew how all this sh-t actually worked are gone?
No allegations of wrongdoing here. Just watching the pieces move around the board and asking where they're going to land.
NoCenteam Securities & Organizational Archaeology Division
We read the footnotes so you don't have to.