Blue Cross’ new CEO says R.I. needs a more ‘consumer-oriented’ insurance market

One of the reasons I came to this company was the philanthropic and community-based focus.
One of the reasons I came to this company was the philanthropic and community-based focus.

In June Kim Keck became the seventh president and CEO, and the first woman to hold both posts, in Blue Cross & Blue Shield of Rhode Island’s 77-year history. A Cumberland native, Keck spent the previous 28 years navigating multiple leadership roles in the health care and health insurance industry at Connecticut-based Aetna Inc.

She described her broad experience there as “an inch deep and a mile wide” and looks forward to having a real impact, both socially, in terms of the company’s philanthropic impact in the community, and in balancing the supply and demand nature of health care in the Ocean State.

As a Cumberland native, welcome back to Rhode Island. You spent 28 years in leadership roles with Aetna before taking over as CEO and president of local competitor Blue Cross. How does your experience prepare you for the challenges facing Blue Cross in Rhode Island?

One of the great things I did at Aetna was sit in lots of seats and see how the health insurance business worked across many different functional elements, [like] the financial perspective or from the sales, network or operations perspectives. … The other thing that was great was I got to see a lot of different [geographic] markets. … I really saw how innovation could work in certain markets across the country and how that looked very different compared to what I now see in Rhode Island.

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Knowing that consumers are much more directly involved in decisions surrounding insurance today, how do you expect to improve the experience for them?

One of the things that was surprising to me when I came back to Rhode Island was how much this market is still business-to-business. Even one state away from here I’d say north of 50 percent of residents buy a different kind of product that makes [the market] more consumer-oriented. For example, health savings accounts are something that has existed probably north of 10 years, and in some segments of the country the adoption of those are well on to 20 percent or more. That is not the case in Rhode Island. [We’d like to] focus on getting the individual user of our service, a member, an employee or the direct purchaser, more engaged in tools and technology, making choices in [their] network. … There are many different things we can do to think about segmenting the population to meet their specific needs or even their experiences. … That’s a fairly new or novel idea in Rhode Island and something that’s existed in lots of places for many years … it’s an evolution that we’ve got to hasten here. I think we will, we have the tools and capabilities, for sure.

Blue Cross has increasingly entered into provider partnerships recently, such as HealthPath and a shared-savings initiative with Lifespan and some physician groups. Can you discuss the cost savings anticipated or realized thus far from these initiatives and how important a role you see such partnerships playing in increasing both affordability and access to care?

One of the things I was pleasantly surprised about was how much work the company had already done with respect to setting up those partnerships. … There is a huge foundation already built and it really attracted me [to Blue Cross]. There have been great results to date. North of 50 percent of our members are already in what we call a system of care, and we have a goal to get that to 75 percent in the not-too-distant future. We have many different financial results in terms of, ‘Do these systems of care work with respect to the goals of affordability?’ And the answer is, yes. … [We want to] align those incentives and components and help drive what is a simpler and more affordable experience.

Blue Cross has reached an agreement with Carousel Industries to improve its information technology infrastructure. Can you share the cost of this three-year deal and whether it comes with projected cost savings?

The IT work undertaken by Carousel isn’t member facing, but does play an important part in assuring that our team has the technology infrastructure it needs to support our members. Carousel is a terrific local company and we are pleased to collaborate with them on an effort that improves our service and minimizes administrative costs.

How does the partnership with Carousel fit with the long-term plan to improve members’ access to care?

In general, the kinds of things we’re looking to do, with respect to affordability and simplicity goals, do have access in mind as well. For example, some of the initiatives we’ve done on our system-of-care work also have to do with putting primary care physicians at the center of what we do, ensuring there is adequate access to the physician and [analyzing] how they practice care and how we provide information to the primary care physician to coordinate care in a meaningful way.

According to the 2015 annual report, the company reported a $21.6 million gain in operations and a $29.7 million addition to company reserves. Can you provide some context for that information, in terms of how it compares to the previous five years and what the projections are for 2016?

I’ve been here for not quite [four months] and I am very focused on thinking about our financial position. The first six months of the year were not the strongest first six months of the year the company has had, largely driven by what I call medical-cost inflation. … One of the ways we’ll think about the provider partnerships, taking them to the next level, is thinking about the specialist in the state of Rhode Island. They are not necessarily as tightly coordinated with our systems of care and that’s a huge opportunity for us to work more collaboratively with our primary care and other systems of care partners to say, ‘Do you know this is what your patients are doing once they leave your office and how do we integrate that differently?’ Once we do those kinds of things, that actually reward the providers, it takes the medical-cost inflation we’re experiencing this year and mitigates it to some extent.

There are many things underway, both for the latter half of this year as well as future years, that will provide financial flexibility and help us get at some of the underlying issues of what’s driving our financials.

The first time the company invested in its reserves in a long time was 2013 – has that investment increased or decreased in the past three years?

I don’t know what the goals and objectives were in the prior years. What I would say is I’m focused on creating financial flexibility for the company. In Rhode Island we need a fair amount of innovation, and innovation costs money. While we will drive towards simplicity and affordability, having the financial flexibility to create innovation will be an important component of our future strategy. Our reserves provide us with some flexibility, I would like more flexibility because there’s real innovation that can happen here.

Does the company feel financially stable in the increasingly competitive Rhode Island market?

Rhode Island is fairly competitive. I’ve lived in other markets that are more competitive than Rhode Island or just different, but our reserves are more than adequate, they’re stable.

The Office of the Health Insurance Commissioner approved lower 2017 commercial rates than most insurers requested, including Blue Cross. Are these rates now set, or is there still an opportunity to appeal, and how will the approved rates impact Blue Cross financially?

The rates are set and we’re committed to the rates and to making health care affordable. Rates are specific to the products and services we provide to the market and they’re hard to compare because, unfortunately, it is difficult to compare products and plan designs side by side and most importantly, across that, is the breadth of the network. Being a Blue plan we have not just access to the state of Rhode Island, but we have access to a national network. That component alone is a markedly different feature that we have and it’s an important reason why many of our customers buy our products.

Blue Cross schedules a lot of philanthropic work. In 2015 alone the company spent $1 million on philanthropic causes within the community, how does this compare to previous years over the past decade?

I feel badly speaking about history because I can take no credit for it. One of the reasons I came to this company was the philanthropic and community-based focus. I really don’t think it’s just a ‘nice to have, something I could do if I so chose [benefit].’ It’s a requirement and I love that. … We have our fifth annual Blue Across Rhode Island [day] as an example of our community focus, [which was] held on [Sept.] 23rd. Over the last several years, we’ve touched something like 25,000 Rhode Islanders and dozens of organizations and donated 15,000 hours of our employees’ time [during this annual event in which we aid the community]. It’s not just the money, it’s the impact we can have with our time.

Does Blue Cross see that involvement as a metric that can be tracked and paid back to the company, or is it the cost of doing business in the community and getting your name out there?

Oh, I actually think it’s part of who we are. We track it, but I think it’s more because it’s so important to us to have that impact, we want to say, here’s what we stand for and here’s how we’re doing. … It’s not just because we think people feel good or we feel good about it; it’s about the demonstrable impact we have in the community.

If Blue Cross weren’t a nonprofit, do you think it would be as much of a priority in the mission?

“I don’t know that it ties right to the nonprofit status, but this company has, in my words, a business focus and a community focus, and it’s all rolled into who we are. … The community involvement was something I longed for and actually, was somewhat envious of, in my prior life because the Blue plans, in particular in the state of Rhode Island, [because of] how big we are and how small the state is, can have a big impact.

Some national insurers say they have lost money participating in various state exchanges. Has that been the case for Blue Cross in Rhode Island and what is your view of the future of Rhode Island’s health exchange, in light of the problems other states have had in creating competitive exchanges?

The state-based exchange here has been largely successful, I would say. I wasn’t here at the inception in 2014 and, in my prior life didn’t compete in Rhode Island, but saw some of the challenges that many federal and state-based exchanges had in the rollout. Here we are three years later and I would say many aspects of the exchange are working. The question for me, and what I would like to do [moving] forward, is think about that population a little bit differently; [especially], how they use services, the kinds of services they need and the kinds of tradeoffs they’re willing to make.

If I take a big step back, in Rhode Island, in general, it’s still a very business-to-business-focused market, where employers make decisions on behalf of their employees. We need to think about … [an insurance] network design that would work for the affordability and … different tools and services that an individual purchaser may want that’s different than the business-to-business purchaser and mentality that exists here.

Is Blue Cross prepared for the possible repeal of the Affordable Care Act, as one of the presidential candidates has called for?

It’s a funny question because, I think, in some senses, the question is really, what does repeal mean? It is just how we do business for the most part and it could mean something really specific like, do subsidies go away, and I think if subsidies do go away that is a material change to all insurers in every state. … We haven’t talked a lot at Blue Cross about what our contingency plans are because I think again, [health insurance coverage is] so woven into what we do for a living now.

Are brick and mortar stores still proving to be an advantage for communicating with customers on the ground level?

In my prior life there were many things I was envious about not being a Blue. I longed for the brand, which is a huge competitive strength … and the retail presence. … We have three stores [in Rhode Island] and the foot traffic our first year was much greater than anticipated. I’ve seen percentage increases [in foot traffic] year-over-year that are in the triple-digit range. It is part of who we are and … there are certain people, certain buyers, certain customers, that want that face-to-face experience and retail stores allow us to meet those customers where they are. … The retail presence is something I’m really proud of because there’s a long way to go in using that capability for the future.”

Are there more stores planned?

Rhode Island is small and people don’t like to drive very far. I would love to have more of a presence over time, the question is where should the stores be? One example might be putting a store colocated next to a provider’s office, in a way that helps the system of care and integration of services differently than we have today.

Do you find that operating on that grassroots level is creating a more loyal customer base?

I’m not sure I’ve thought about it that way. To me it’s about meeting their needs and not just being loyal for the sake of being loyal, but helping them and their goals toward affordability and simplicity because they’re our goals, but they’re driven by what our customers tell us. We are lucky and fortunate and work hard to retain a significant amount of our membership year after year in many segments of the population … but, I think the service and capabilities that we provide give them a reason to stay.

What are your priorities for your first year as president and CEO?

One of the big areas of focus for me is continuing what has been done in the provider side and marrying it with the employer side. It may be a simplistic way to frame it, but I think about the provider side as the supply side; doctors and hospitals provide a service, [Aetna] worked very comfortably and collaboratively at finding the right partners to create what we call systems of care and that has gone very well … we’re just a year or two into that evolution and it can go much further. … Equally as important is getting the demand side, the people who use the doctor and the hospital, sometimes the purchaser as an employer, to balance with that supply side, to create better equilibrium in the market. … Over time there is an evolution that we can help the purchasers [move toward in order] to make some of those decisions about how they want to change both their experience and their benefit design. … For example, a value-based plan design for the employer that matches the system of care to work for the provider and hospital and make those incentives aligned so we can really get this scale to balance. •

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