How a Cigna pink slip made Bob Patricelli a serial, social entrepreneur
June 06, 2011
n Bob Patricelli’s sun-soaked Avon office, the desk and credenza are lined with trophies and mementos from his 46 years in the health care, nonprofit and public-policy arenas.
But the one he proudly displays is the framed pink slip he got in late 1986 from Cigna Corp., after it merged two separate divisions into what is today Cigna Health Plans. Patricelli, in charge of its HMO division, suddenly was out of a job.
No tears — then or now.
“It’s the best thing that ever happened to me,’’ he says, beaming. “This kicked me out of the nest and made me a serial entrepreneur.’’
Robert E. Patricelli, 71, has since displayed a virtual Midas touch — reaping a fortune for himself and his investors — from three successful health care business startups. His first, Value Health, was launched from a five-page business plan in an upstairs bedroom of his Avon home in 1987. A decade later, he and his partners sold it for $1.4 billion cash — seed corn for his next ventures which included one dud.
Just recently, his Evolution Benefits, an Avon electronic health-benefits payment vendor, was bought out by a West Coast equity fund, which is merging it with a Minnesota health-care services vendor. Patricelli will retain a 1 percent stake in the merged company.
That leaves him with Women’s Health USA, another Avon firm of which he is chairman and chief executive. The business provides back-office billing and administrative support to, among others, a network of obstetrics-gynecology practitioners in Connecticut and Long Island, N.Y.
Patricelli’s next big deal is afoot. He and his senior managers at Women’s Health are due to close in July on a buyout of the roughly two-thirds equity stake held by the Sprout Group venture unit of Credit Suisse. (Patricelli currently owns about 35 percent of Women’s Health.) The price is unspecified. Neither Sprout nor Credit Suisse commented.
Some 275 people work at the joint headquarters of Women’s Health and Evolution Benefits at 22 Waterville Road in Avon.
People who know Patricelli praise him as a thoughtful, charismatic businessman whose big-picture grasp of the course of the health care marketplace lies at the root of his success carving out profitable niches.
It’s also a reason, they say, Patricelli has had little trouble attracting awed investors to bankroll him and his ideas. One was Genstar Capital of San Francisco, which last July paid a still-undisclosed sum for a controlling stake in Evolution Benefits.
“We realized he’s a pretty special executive whom we needed to find a way to do business with,’’ said Eli Weiss, a Genstar vice president and Evolution board member who was introduced to Patricelli in 2007.
Others closer to home hail Patricelli for his concerns beyond making money. He’s credited with promoting conservation in the Farmington Valley and the revitalization efforts in downtown Hartford, and for encouraging his managers, employees and peers to give back to their communities.
Indeed, they say, Patricelli’s business accomplishments often overshadow his philanthropy to the Connecticut and global communities.
“He’s actively used his influence in the community as a business leader,’’ says MetroHartford Alliance CEO Oz Griebel, whose relationship with Patricelli dates to Griebel’s days as a Connecticut banker in the ‘80s and ‘90s.
Patricelli’s early years were spent in Hartford, where he was born. His father, Leonard, built then-fledgling WTIC radio into a local entertainment and information dynamo, working first as a programmer and later an executive. He also was active in local civic affairs.
Bob Patricelli graduated from The Loomis Chafee School, Wesleyan University, and upon earning his Harvard law degree, won a Fulbright scholarship to the University of Paris.
He returned stateside in 1965 as one of the first White House Fellows — his entrée into public service.
“But for that,’’ he said, “I would have been off to a Wall Street law firm.’’
Patricelli says his career track has been a combination of personal pluck and bold breaks.
“I’ve been excited about public policy all my life and social engagement as well,’’ he said. “I make my businesses as responsible as I can to both of those.’’
Also, he says, “I’ve been willing to take risks. That’s what you need to be in business … And you have to be a little crazy, too.’’
His first foray as an entrepreneur embraced elements of both. Even before being let go at Cigna, Patricelli says he realized that managed care could be customized for certain kinds of care.
Value Health was spawned, he said, to fill that niche. The company’s model focused on prescription drugs and mental health services and sold its expertise in both to health maintenance organizations (HMOs) and to employers and other group health customers.
But once Value Health was to set sail, with backing from Wall Street investor Warburg Pincus, a potential snag emerged. A tiny company was up for bid that could give Patricelli’s venture a crucial foothold in its market. But he lacked money.
So, Patricelli says he made a bold but scary move. He took a $4 million personal loan from Warburg to bid for the 40 percent equity that the company’s owner was initially putting up.
Fortunately, Patricelli, who won the bid for the company which Value Health later fully absorbed, used proceeds from Warburg’s purchase of equity in his company to repay his debt.
“I couldn’t have paid that loan back if my life depended on it,’’ he said. “That’s an example of crazy.’’
During a recent interview in his modest top-floor suite in a 50,000-square-foot office building his company owns in the shadow of the former Avon Old Farms Inn, Patricelli marveled that more local insurance executives aren’t flying the coop.
His theory: “The people in the big companies are paid too well,’’ he says, quickly adding he doesn’t mean they’re overpaid. “There’s not the drive to take a chance.’’
Patricelli also believes Hartford, with its critical mass of health insurers who either have corporate or operations headquarters in the metro area, could be catalysts for a fresh approach to straightening the kinks in the nation’s patchwork-quilt system of delivering health care.
Patricelli serves on the board of the MetroHartford Alliance, which Griebel says has wrestled the past two years with the same idea for transforming Connecticut into a laboratory for effective, low-cost delivery of health care.
Griebel said he, Patricelli and others envision Connecticut’s two major medical teaching-research schools — UConn and Yale — as anchors for a wellness model in which care providers, insurers and patients collaborate.
“The final frontier … is in [improving] the delivery system,’’ Patricelli said. He says it will take at least 20 years, if it were to start now, to achieve a satisfactory system.
Patricelli’s passion for helping others garners praise from his peers.
Robert Forrester of Farmington runs Newman’s Own Foundation on behalf of late actor and friend Paul Newman. After Newman’s death in 2009, Forrester invited another friend, Patricelli, to join him on the board to help guide the nonprofit through a wrenching transition.
Forrester says most folks don’t know Patricelli’s keen sense of humor or his talent for gourmet Italian cooking.
“He’s a tremendously generous person,’’ Forrester said.
Patricelli’s melding of business and philanthropy led him and wife, Margaret, to donate $2 million to Wesleyan to fund student scholars serving the public good. They also are footing a Wesleyan scholarship for a 27-year-old Kenyan renowned for civic involvement in his homeland.
Says Patricelli: “There’s still endless opportunities to change the world.’’
Robert E. Patricelli
Born: Hartford, December 1939; married 24 years, grandfather
Education: The Loomis Chafee School; Wesleyan University (Class of ‘61); Harvard Law School; Fulbright Scholar, University of Paris
Career: Federal transportation post in the Johnson administration in the mid-‘60s; health services undersecretary in the Nixon White House in late ‘60s, early ‘70s; led the defunct Greater Hartford Process nonprofit in the early- to mid-‘70s; senior HMO executive at Cigna Corp. in the late ‘70s to mid-‘80s; entrepreneur since.
Hobbies: Wheeling a tractor around his Avon horse farm; Italian cooking (signature dish: Tilapia with a tapenade of olive oil, sun-dried tomatoes, capers and “other secret ingredients.’’)
Worst mistake: A dot-com spinoff from Women’s Health USA meant to link hospitals and physicians. Problem: No revenue from the site. Says Patricelli: “If you haven’t got a way to get paid for it, you should leave it on the cutting-room floor.’’