Harvard Pilgrim CEO Eric Schultz Out for Bad Behavior

Eric H. Schultz, the president and CEO of Harvard Pilgrim for the past eight years, resigned today for behavior that he described in his resignation letter as “inconsistent with my personal core values and the company’s core values.” Full text of the letter is pasted in below.

Boston media outlets were chasing the story this afternoon but no details of the wayward behavior had been reported as of early this evening.

Eric Schultz

The Boston Business Journal reported that Schultz had been on leave for three weeks as Harvard Pilgrim conducted an investigation. Michael Carson, Harvard Pilgrim's chief business growth officer, is stepping in as president. 

In his resignation letter, Schultz expressed regret about “recently exhibited behavior.”

“During the past eight years as your leader, I was committed to fostering a workplace culture that was inclusive, welcoming and rooted in integrity and respect. I made mistakes, and I’m truly sorry,” the letter says.

Schultz’s resignation comes at time of uncertainty at Harvard Pilgrim. It has been in merger talks with Partners HealthCare, the large hospital system in eastern Massachusetts that includes Harvard-affiliated Massachusetts General and Brigham and Women’s Hospital.

Financially, the insurer has been racking up operating losses. According to the Boston Globe  it posted an operating loss of $28.3 million on revenues of about $3 billion last year. In 2016, the operating loss was $91.3 million on revenues of 3.1 billion. On its website in a posting last month, the insurer said its operating losses during the first quarter of this year were $9.4 million on revenues of $790.8 million.

Harvard Pilgrim, which has a high profile in health insurance circles, has taken the lead in outcomes-based contracts with drugmakers that are supposed to counteract (to some extent) the burden of their high list prices.

In his letter, Schultz cited Harvard Pilgrim’s expansion into Connecticut as one of his accomplishments. But according to the 2017-2018 NCQA ratings, Harvard Pilgrim was rated lower there than in its home state of Massachusetts and in Maine. And Harvard Pilgrim is not NCQA accredited in Connecticut.

Here is the full text of Schultz's resignation letter:

To the Harvard Pilgrim Board of Directors and employees at Harvard Pilgrim,

It’s with mixed emotions that I inform you that today will be my last day as CEO of Harvard Pilgrim Health Care and Chair of the Harvard Pilgrim Health Care Foundation. Regrettably, I recently exhibited behavior that was inconsistent with my personal core values and the company’s core values and code of conduct. During the past eight years as your leader, I was committed to fostering a workplace culture that was inclusive, welcoming and rooted in integrity and respect. I made mistakes, and I’m truly sorry.

I want you to know, it’s been my great privilege to lead Harvard Pilgrim during a time of great change and turbulence in our industry. Our leading national position as a health services company could only have been achieved and sustained due to the exceptionally dedicated and most talented group of employees and boards of directors that I have ever worked with in all my years in health care. I am exceedingly grateful for the long hours and hard work you have put in—especially during the past few years—which is now producing financial, service and clinical success. And I expect these positive results will persist with your continued focus. These are not accomplishments of a CEO, but are achievements that require a committed team of gifted, tenacious and caring individuals who come together to work relentlessly for a common goal.

I’m especially proud of many significant accomplishments. For example, our expansion into Connecticut and rededicating our company to the needs of seniors in the Medicare Advantage program. I’m particularly very proud of the important work we’ve done to create an inclusive organization. By launching Eastern Harmony, creating benefits for our transgender brothers and sisters, establishing a purchasing program focused on women and minority-owned businesses and taking steps to close equity gaps in health care, we have “created value by embracing differences.”

You should all be proud of the life-changing work that you individually and collectively deliver to our customers, providers, brokers, community partners and one another.

I wish you all my very best.

With gratitude and warm regards,