1 Argyle Conversations by Argyle Executive Forum SM Darren Rodgers, Health Care Service Corporation, and Kecia Serwin, SAS, discussed legislation and trends in the healthcare space and their impact on the industry now and into the future.
2 P ag e 2 KECIA SERWIN: Can you tell us a little bit about your background and your current role as chief marketing officer at HCSC? DARREN RODGERS: I ve been in the health insurance industry since 1986 and with Health Care Service Corporation (HCSC), the nation s largest customer-owned health insurer and operator of Blue Cross and Blue Shield plans in Illinois, New Mexico, Oklahoma and Texas, for a little over 20 years now. I ve been very fortunate to be in a variety of different roles during that time, from sales to provider network management. Prior to my current corporate role, I served as president of Blue Cross and Blue Shield of Texas. I ve been in the CMO role since June, and I hope to use the skills I honed in the trenches of the marketplace and bring them to this new corporate role. How are the changes within healthcare right now, such as the Affordable Care Act, impacting the industry? The healthcare industry has seen a lot of change in recent years. Most of those changes are structural in nature, such as the consolidation of hospital systems and the number of hospital systems acquiring physician practices. This has presented both challenges and opportunities for the health insurance industry, particularly in markets where there is one large provider system in a particular place. The most significant changes facing the health insurance industry are coming from the Affordable Care Act that passed in March However, those changes are being implemented over several years, with January 1, 2014 being the most significant date. That s when the health insurance exchanges bringing price subsidies to many people will go into effect as well as the expansion of the Medicaid program in many states, which will have implications for providers as well as insurers. How do you expect that to impact not only your focus as the CMO but also the strategy of the overall corporation? As the largest customer-owned health insurer our focus has always been and will continue to be on how to best serve our members. Our industry is changing from being primarily state regulated to one that is much more affected by national regulation. Until recently, our Blue Cross and Blue Shield health insurance plans have been primarily driven locally, but now we re being called to manage things more consistently across our plans and to do more at a corporate level to spread the administrative cost across our entire customer base. So, going forward, we re going to do things like plan designs, naming of our products and looking at our customer experience from a corporate perspective. But, regardless of the changing landscape, we will always focus on our customer needs first and foremost. What has been at the top of your priority list as far as evolving and directing HCSC s marketing focus? As the largest customer-owned health insurer, our priority has always been on providing quality products and services to our members to best suit their needs. We ve done a lot of planning leading up to the implementation dates of the Affordable Care Act, particularly as it relates to the health insurance exchanges that will change health insurance marketing. Until recently, health insurance marketing has been oriented toward a business-to-business approach, as most people received health insurance through their employers. But as individuals move into the primary purchasing role, marketing is increasingly moving toward a business-to-consumer approach. We began to see a bit of the shift to business-to-consumer with the economic downturn in Since that time, more and more people have been coming out of employer-based plans smaller businesses have been dropping health insurance plans and individuals are being laid off and need to enter the individual plan market. In addition to individual plans, HCSC believes private exchanges will be an important solution as the rising costs of health care leave employers searching for more predictability in their health care spend, and insurers looking for ways to meet consumer needs in this evolving marketplace. HCSC invested in a majority stake in Minneapolis-based Bloom Health, a private exchange platform, along with Wellpoint and Blue Cross Blue Shield of Michigan, to expand choice and flexibility of employers and employees insurance options.
3 P ag e 3 So you think that the exchanges will take place at the state and federal level? While the Affordable Care Act envisions exchanges being state-based, there is a fallback provision that says that if the states don t implement exchanges themselves, the federal government will operate exchanges in those states. To support our individual and small group market members and ensure a smooth transition to the new health insurance market in 2014, HCSC intends to participate in the exchanges to support their needs regardless if the exchanges are run by the federal or state governments, or jointly. However, we continue to favor the design of a state-based approach. A state exchange system, if properly designed, can make it easier for small businesses and individuals to purchase insurance without compromising the consumer protections that are provided by state insurance departments. The impending changes in healthcare more focus on exchanges and a shift from large groups to more individuals also imply significant changes in managing your customer relationships. What is HCSC doing in this area? As an organization that has traditionally operated through local brands with distinct lines of business and accountable people over each of those brands, it s easy to get into vertical or siloed thinking that is, thinking only about one particular brand or line of business. To avoid that, I m focused on creating a corporate marketing environment that thinks horizontally across various brands and lines of business. I m also trying to make sure that this shift extends well beyond HCSC s marketing team. It s particularly important to do that as our current and prospective customers lives change and they go through our various lines of business. We are committed to providing quality, affordable health insurance products to our members through every life stage. For example, with the Affordable Care Act, dependents can now stay on their parents policies up to age 26. After that, they may either move into a subsidized individual policy through one of the exchanges or, if they have a job, they ll go into an employer plan. And if they lose their jobs, they may go into the expanded Medicaid program. People turning 65 may go into a Medicare Advantage Plan or, if they have a traditional Medicare plan, they ll need to purchase a Medicare supplemental plan. So there are various stages that people cycle through in their lives. That certainly requires us to think more holistically. I want to make sure that we have similar customer experiences across our products so that when our customers go through a policy change, they won t feel that they ve started all over in our relationship with them. This is a pretty big shift from the way that marketing has traditionally been done in healthcare. How are you helping your organization s employees think differently in the midst of all these changes? We re doing quite a few things to make our member experiences as positive as possible. We re building out the customer analytics across all of our product lines and hiring new product development people to make sure that our products are a logical and natural fit as customers change policies. We re also making sure that our primary service platform traditional call centers-- and the new digital self-service channels on the Web and via mobile devices, operate synergistically rather than independently. We re also modifying some our approaches to maximize our customer experience opportunities. For most people, health insurance is a low-touch industry, meaning that our customers don t really think about their health insurance plans or experience it in any meaningful way until they need a medical service or file a health insurance claim. Because of that, our customer tools, such as our website, have been operated with a philosophy of getting people in and out quickly. Now we re in the process of building a more expansive customer experience, and we re using social media to figure out how to do that. We offer tools like My Blue Community, which is a section of our website that allows customers to participate in discussion groups with other customers about things like weight loss, which seems to be our biggest discussion group right now, as well as chronic conditions like diabetes. Additionally, we re trying to improve the shopping experience for individual customers by making our website more similar to retail sites, offering features that allow shoppers to request a brochure online, schedule a call with a health insurance representative or a question to us. We ve also added a shopping cart feature that allows potential customers to save plan selections and come back at a later time, perhaps when they have a family member or someone else to discuss it with them.
4 P ag e 4 Can you expand a bit more on how you re building out your customer analytics? Over the next several years as the market experiences an increased demand for individual products, HCSC is preparing by further expanding our understanding of individual market customers and their unique needs. It s important for us to understand who our customers are today and who they will be in the future, so we re doing a lot of analysis to understand the activities and interests of different types of customers both individuals and employers, who will continue to be a significant part of our business. To help better understand our customers, we ve created a dedicated Analytics and Information Management (AIM) team that works diligently to deliver actionable insights. When someone visits our website and explores a certain product, we want to be able to recommend complementary products to them. To do that, we need to apply what we know about consumers from multiple sources including our previous research, consumer segmentation, well as understanding how consumers engage with us on our website. We have also made considerable investments in technology and human capital to allow for improved evaluation programs and e-reporting functions, just to name a few. So you re delving more into digital marketing? HCSC is committed to providing our customers with the information they need how and wherever they need it. Our digital channels have shown a steady growth pattern for some time. In fact, in a given month, our digital channels are utilized twice as much as our voice channels, which is what we call our telephone service units. Is that by design, or is it a natural evolution in how consumers choose to interact with you? It s a natural evolution. We want our Web and mobile channels to complement our voice channel, and we re letting people choose how they engage with us. Some people prefer the convenience to interact digitally, especially since our Web and mobile features are open 24 hours a day. About 12 to 13 percent of our website visits each month occur via mobile devices, which I believe is on the high end of the industry averages. And it s definitely growing. We have also developed mobile tools like our Provider Finder app some of which are branded and others that are not that we offer to our members to allow them to engage with us when they choose. Many of our clients, particularly employers, have told us that some people don t have jobs that offer easy access to a computer, but many people have smartphones. So we ve made sure members can get any information they need via a smartphone and we ve made sure they can get tangible things like accessing their mobile health insurance card via a smartphone. We want to make our services available and easy to access with whatever devices our customers have at their disposal, so we ll develop more of those tools in the future. Are you doing anything in particular to integrate these mobile channels to ensure that there is a common customer experience across the local markets you serve and that each of the various channels knows what the others are doing? Yes, I think we re doing a good job of making sure that the various channels operate synergistically by aligning goals, syncing up development calendars and cross-channel planning of editorial and promotional calendars. We re also looking at the mobile optimization of not just our web sites, but and social media communications as well. Of course, there is always room for improvement, and we re working to improve where we can. We ve seen that over two-thirds of our individual purchasers use at least two channels before making a purchase. For example, they might visit our website to gather information and then call one of our service centers for further information. Those channels definitely need to be integrated and complementary so that the people who answer the phones have access to the same information that s available online so that they can share that experience with the caller. How does the good work you re doing in marketing improve the overall customer experience, and how is this becoming a part of the DNA at HCSC as a whole? How frequently do you talk about this with the other C-level executives? Our leadership team understands that the customer experience goes far beyond marketing and the designated customer service units. Every time someone logs onto our website, visits one of our Facebook pages or posts a
5 P ag e 5 comment on Twitter, it s a customer experience opportunity. And every time someone goes into a physician s office, their experience there reflects back on us. Those experiences can be either good or bad. If the receptionist in a physician s office makes a negative comment about us, that s a negative customer experience. If a tweet receives no response, that s a negative customer experience that counts against us. But when we connect with one of our customers on their terms, on Facebook if that s their preferred channel, then we create strong brand advocates, develop better customer relationships, and gain an opportunity to obtain new insights and to serve customers we couldn t otherwise. So customer experience is really impacted at all touch points, and being aware of this can help you stay more informed and aware of what your overall member base wants or needs. How have you taken that outside the traditional health insurance borders to work with hospital systems and other providers in order to make the experience more seamless and integrated? We believe that we need to work collectively with the entire health care system to best meet our consumers evolving health care needs. Our deep and extensive relationships with physicians and other health care professionals promote healthier outcomes and enable greater consumer flexibility. We also have a couple of technology partners with whom we work to develop various tools to improve our members experiences. One of them is MEDecision, which is a wholly-owned subsidiary of HCSC that serves our business as well as the businesses of other health insurance providers. We re currently developing some products with them that will allow members to interact with us digitally while they re in the physician s office so that they can input what the physician tells them directly into our care management system. You mentioned earlier that there s been a lot of consolidation and even some acquisition of physician groups. Do you see that trend continuing? What is your outlook on how the industry will evolve in that respect? I think that consolidation will continue. Some of it will be driven by the points-of-care shortages we re expected to experience in this country as more and more people enter the healthcare system via the Medicaid expansion and the general aging of the population. Previously uninsured people will also be coming into the exchanges through the financial subsidies that will be available, and we re already hearing that this will create further shortages in the healthcare system. And whenever there s a shortage, the market naturally forces some organization to step in to fill those shortages, and it will probably be one of the larger health systems already in existence. I see them expanding their reach beyond the geographic boundaries that exist today through any means they can, and that may include acquisitions. Do you see accountable care organizations (ACOs) continuing to expand and become more prevalent? Yes, we see continued growth for ACO s and all models that shift from fee-for-service initiatives to a fee-for-value model, ensuring quality, safety and service for each patient. For HCSC, that includes a variety of specific approaches including ACO s and Medical Homes, what we refer to as population-based models. We re still in the infancy of organized systems of care, including ACOs, but we have seen some examples of these kinds of organizations. For example, HCSC s Illinois plan, Blue Cross and Blue Shield of Illinois (BCBSIL) and Advocate Health Care (Advocate), Illinois largest health care system, launched an Accountable Care Organization (ACO) in late With more than 420,000 attributed patients between BCBSIL s participating provider organization (PPO) and its health maintenance organization (HMO), the BCBSIL-Advocate arrangement is the nation s largest and most mature commercial ACO, and it is already demonstrating success in terms of improved quality and lower costs. After a successful first three quarters, the ACO has seen a 4.6 percent cost improvement versus the market benchmark, with improved clinical outcomes such as lower admission rates. So yes, there will be continued growth for ACOs. A lot of the expansion will be reimbursement-driven as long as those entities can prove themselves to be of real economic and quality care value to both health plans and consumers.
6 P ag e 6 Obviously, healthcare is a very complex system, whether you re looking at it from just the health insurance perspective or at the overall healthcare ecosystem. Making progress is going to require concerted efforts in a lot of different areas. What are some key metrics we need to focus on? One obvious metric is whether the number of uninsured people throughout the country is increasing or decreasing. Another metric is the ability to increase the value of the healthcare spend. The latter includes increases in healthcare quality such as reducing hospital-based infection rates, which is a problem in certain parts of the country, and lowering the rate of the anticipated trend in healthcare cost. As we approach the next couple of years, it is inevitable that the health care system will be met with increased complexity and major changes. HCSC is committed to doing everything in our power to meet the needs of all of our customers as they navigate these impending changes. ********************************************************** BIOS: Darren Rodgers As senior vice president and chief marketing officer at Health Care Service Corporation, Darren Rodgers is responsible for marketing for all business segments. He oversees marketing research, product development, installation, marketing training and communications, as well as sales operations and strategy. Prior to assuming this position in 2012, he was president of the Texas Division and Southwest Region, where his responsibilities included sales and account management, health care management and medical policy. Previously, he served as divisional senior vice president of Texas Health Care Management. He also served as president of the Caring for Children Foundation of Texas. He earned a bachelor s degree from the University of Georgia, a master s degree from Duke University, an M.B.A. from Tulane University and a master s degree in dispute resolution from Southern Methodist University. Kecia Serwin Kecia Serwin is the Vice President and General Manager of the Americas Health & Life Sciences organization within SAS, the world s largest privately held software company. In this role she leads the comprehensive business and operations of three primary industry lines of business: healthcare providers, health plans and life sciences. Her organization has ranked in the top three industries within SAS every year for the past six years. Serwin is a member of the SAS executive committee that is responsible for investing in new industry-specific solution offerings and go-to-market strategies for health and life sciences. Their mission is to provide technology innovation that helps facilitate information sharing and analytical insights between the various members of the healthcare ecosystem with the goal of enabling much needed healthcare transformation. Serwin is the executive sponsor for the SAS Center for Health Analytics and Insights, an industry-leading think tank focused on emerging applications of advanced analytics across the health and life sciences sectors. During her tenure at SAS, Serwin has served in diverse roles within sales, marketing and business development. Prior to being named general manager of Health & Life Sciences, she served as a regional director for the Atlantic Coast region. Serwin graduated with honors from North Carolina State University with a bachelor s degree in statistics.
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