"Nerdy" accountant ready to lead healthcare merger
NEW YORK (Reuters) - For a self-described nerdy accountant who shuns attention, Express Scripts Inc chief George Paz just thrust himself into the limelight.
With his $29.1 billion planned purchase of rival Medco Health Solutions Inc, Paz would run the clear leader in managing prescription drug benefits for millions of Americans.
He will also operate at the heart of a politically charged debate over rising healthcare costs that are fueling the U.S. budget deficit. But the urgency around that debate may have made this the perfect time for him to move on a deal that is otherwise fraught with regulatory risk.
Paz, 55, said the combined company will be better placed to drive out wasteful spending, giving it even more clout to negotiate with drugmakers and pharmacies.
"I'm not the kind of guy that does a lot of publicity things. That's just not who I am," Paz told Reuters in an interview. "I am an accountant by education so I'm pretty boring and nerdy and I actually appreciate that. That's just who I am."
Still, the CEO notes that he runs a "rather large corporation" and said he will engage with elected officials.
"I have always believed that I have had a very important role in trying to rein in costs of healthcare while improving health outcomes," said Paz, who has led Express Scripts since 2005.
Asked if he will be making more appearances on television as chief of an expanded company, Paz said: "That's not me."
His reputation as a "low-profile operator," as Gabelli & Co analyst Jeff Jonas calls Paz, is in stark contrast to his counterpart at Medco, David Snow.
Snow is gregarious and effusive, at ease not only discussing the prospects of his company but big-picture issues facing the healthcare system.
"George is a finance person and Dave is a marketer," said Avondale Partners analyst Kemp Dolliver. Paz, he said, "always had good information at his fingertips, although he doesn't always disclose it."
Now, however, Paz is poised to replace Snow as the most visible person for his industry, which uses its leverage to negotiate discounts for employers and other clients.
"He is going to be the face of this industry," said Drew Crawford, CEO of rival pharmacy benefit manager Benecard PBF.
Acquiring Medco would be the crowning acquisition for Paz and Express Scripts, which has struck seven deals since 1998, when he joined the St. Louis-based company as senior vice president and chief financial officer.
A University of Missouri graduate, he previously was a partner at accounting firm Coopers & Lybrand.
A LONG CONVERSATION ENDS IN A DEAL
In the Reuters interview, done jointly with Snow, Paz said he and his counterpart had known each other for a long time and ran into each other at quarterly meetings of the industry's trade association.
Asked about how the deal originated, Paz said: "Quite frankly this is a conversation we have been having for years and years. Things got to line up right and the lining up right happened now and we're just excited to put it together."
"A lot of deals unravel and don't get done because of ego," Paz said. "Dave and I have known each other for a long time."
According to a person close to the talks, a serious conversation started "several weeks ago" after Medco executives contacted Express Scripts. Medco reached out after losing key contracts in recent months, said the source, who declined to be named because the person was not authorized to talk to the media.
The two sides had preliminary talks in the past about a potential merger, the source said, so that helped this round of discussions come together quickly.
In the interview, Snow denied that the contract losses drove him to strike a deal.
"Absolutely not," Snow said "We think very far ahead. I can tell you that had we not chosen to do something like this, we were still very comfortable with the 10-year plan and financial projections we gave to our investors last November."
Snow said the Express Scripts-Medco deal could be the first of many transactions spurred by a U.S. healthcare overhaul.
"Everybody is rethinking business strategy as it relates to the changing landscape," Snow said. "You're going to see a lot of interesting approaches as people try to figure out how to navigate the 2,600 pages of change that we call healthcare reform. Don't be surprised when you see other interesting approaches and ideas."
For his part, Snow said he was unclear what he would do next.
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