The Age of the Empowered Consumer Has Arrived in the Healthcare Market
12/8/2014 | The Age of the Empowered Consumer Has Arrived in the Healthcare Market
DistilNFO had an opportunity to interview John Ladaga, CEO of NASCO. John is regarded as a thought leader in
the healthcare industry. He has been leading NASCO through the many changes driven by the Affordable Care Act while ensuring NASCO is a successful and collaborative business partner with the Blue Cross and Blue Shield Plans it serves.
The Age of the Empowered Consumer Has Arrived in the Healthcare Market – John Ladaga, President and CEO of NASCO.
Consumerism is penetrating healthcare in a big way and is changing the payer landscape at an unprecedented rate. From healthcare exchanges to the proliferation of mobile devices and the emergence of wearable wellness gadgets, we are embarking on a new era in healthcare – quickly – and it is now
increasingly important for payer executives to operate with their eyes wide open. Formulating dynamic strategic plans, investing in core systems and embracing emerging technologies and consumer-centric business models will be vital to remaining competitive in this age of the empowered consumer.
1. John, thank you for taking time out of your busy schedule to talk with us. DistilNFO appreciates it. To start with, tell us a little bit about yourself, and your journey all the way to being the CEO of NASCO. Also,
JOHN LADAGA: I recently celebrated my eighth year as President and CEO of NASCO. NASCO is a premier product-based shared services company supporting Blue Cross Blue Shield Plans. In my eight years we have experienced phenomenal growth, more than doubling the business, a true testament to the dedication and customer focus of the NASCO associates. Today we support over 20 million Blue Cross Blue Shield members and process over 250 million claims annually. I joined NASCO after enjoying a career of over 20- years at Electronic Data Systems (EDS). My last position at EDS was President of the Latin America division where I was responsible for growing and delivering services to a broad array of clients across all industries. Prior to running that division, I was VP and General Manager of the Americas Delivery organization at EDS, responsible for over 50,000 employees delivering IT outsourcing and application development and maintenance to over 500 customers. Coincidently, I started my career at EDS working in Detroit at General Motors; the payer solution we built for GM eventually was the seed that has grown to become NASCO.
2. The healthcare industry is going through a lot of change;; what in your view is the biggest driver for change and how is NASCO gearing up to lead the wave of change?
JOHN LADAGA: There are many disruptive forces at play, all contributing to an unprecedented amount of change throughout the healthcare industry. An argument can be made that government regulation is the biggest driver of change. My view is that although government regulations are indeed a huge contributor to the change that is occurring, government regulations will increase and decrease over time and are highly dependent on political elections. I think the biggest driver for change is the increase in consumer-centricity in healthcare. As they say, the genie is out of the bottle! NASCO has been working on developing a consumer-centric mindset and associated capabilities to support consumerism in healthcare. We have partnered with a couple of Blue Cross and Blue Shield Plans to develop the next generation multi-channel customer service platform. The platform will be at the center of our new business model for interacting with consumers. The new digitized consumer experience will include a call center system we are building and will extend out via mobile, chat and other communication channels. The experience must be real-time, current and personalized. We are focused on simplifying interactive business processes designed around consumer interactions. Our solution will drive value by providing information at the time of need and through a consumer- personalized information source and preference at any touch point throughout the healthcare cycle.
3. We see a lot of M&A activity, for example, Cognizant buying Trizetto. Share with us your views on how this activity is going to change the healthcare marketplace.
JOHN LADAGA: Improved confidence in global market economic stability is helping fuel mergers and acquisitions across all markets, and healthcare is no different. I won’t be surprised if some of the remaining independent healthcare software companies that compete with Trizetto and NASCO are acquired in the near future. Often an acquisition like the one you mention spurs copycat acquisition within the same sector. I believe the greatest impact of the recent acquisition by Cognizant of Trizetto is going to be felt by the other information technology and consulting companies, especially if Cognizant is successful in selling a synergy model to the Trizetto customers. Cognizant will likely try to capture more information technology “wallet share” of the payers, at the expense of the other IT services companies. However, I don’t see the acquisition of Trizetto itself impacting the end payer or provider segments directly.
4. Information technology is playing a big role in reducing administrative costs and driving innovation in the healthcare industry. How can organizations drive higher IT and business alignment in a dynamic business environment driven by health reform?
JOHN LADAGA: Aiming to achieve tighter alignment between IT and business has been a primary driver behind why many payers have reorganized themselves, bringing operations and IT under the same senior leadership. Our industry is littered with examples of well-executed IT initiatives that failed to achieve the desired business outcomes because of misalignment with the business. Organizational structure isn’t absolutely necessary nor is it necessarily going to guarantee results, but it can help. Some organizations have turned to business process re-engineering or business process management (BPM), which, simply put, is about redesigning the way work is done to better support the organization and reduce costs. IT plays a very big role in BPM. It’s been my experience that IT initiatives yield the greatest value when the business is at the design table right from the beginning. The chances of an organization achieving its optimized state increases exponentially if IT and business are working together from the start of an initiative and iterate the solution together. In the end, the administrative costs are directly impacted by the level of automation achieved. In a dynamic environment, organizations must be able to adapt quickly to change and in order for IT to change quickly, an organization must have at its core a comprehensive IT strategy and the fortitude to adhere to standards. Adopting BPM and technologies that assist with BPM can help organizations achieve their goals in a dynamic environment.
5. It’s a talent war out there in the healthcare and health IT industry;; how should healthcare companies manage talent acquisition and leadership development?
JOHN LADAGA: The key to having a talented and dedicated workforce is to have a clear business strategy, one that is easy to communicate and understand. With a strategy in hand, then you can focus on the talent necessary to execute the strategy. My preferred staffing model is a combination of home-grown talent with a few strategically placed additions to the team that come from outside the organization. The blending of the talent helps strengthen the culture and keeps things fresh. As you pointed out, it is very competitive in the health IT industry, and people want to work where they feel like they can contribute and make a difference. I would suggest that leaders share a winning business strategy with new recruits, have them meet the existing team of talent and then have them explore together the possibilities of their new partnership. A similar philosophy holds true for leadership development. Leaders want to be part of winning teams. Start with a strong business strategy, and then articulate how the leaders can learn and develop by being part of and contributing to the journey. Help the leaders connect the dots between their roles and the impact they have on the overall strategy. And work with them to chart their development intertwined with the business strategy. The business grows, the leaders develop and grow, and the cycle keeps repeating itself.
6. There is a lot of buzz on social media in other industries;; what is your view of social media and its adoption in the payer industry?
JOHN LADAGA: Social media has many benefits; however, one of the downsides to social media in healthcare is the “trust” factor. Consumers need to be cautious when using social media to help navigate the industry. Personally, I think it’s all about picking and choosing trusted sources. I believe this is why the Mayo Clinic website is considered a gold standard in our industry when it comes to researching cures for diseases and answering clinical- type questions. In general, I believe that the provider market has been quicker to adopt social media than the general payer market; of course, there are exceptions. Payers understand that historically there have been trust concerns between some members and the insurance providers, and the payers are doing what they can to offer clear and concise information via social media. The adoption of social media varies across generations, with the younger generations being much more comfortable interacting on health topics via social media than in person or via phone. I believe payers are embracing the technology in all aspects of their business, from marketing to servicing their members and providers. In my opinion, members are quicker to trust and engage their insurance carrier on administrative and wellness topics, and will lean more to the provider industry for disease and illness related topics. I also believe that payers are already seeing an uptick in the adoption of social media to provide overall customer support. Social media is one of several channels that payers need to embrace as part of their comprehensive customer support framework.
7. Healthcare exchanges are going to drive significant consumer-centricity in healthcare;; what role do you see technology playing in this transformation?
JOHN LADAGA: Technology is playing a huge role in enabling exchanges and ultimately driving the industry to a more consumer-centric model. Technology plays a role in helping consumers across the many decision points that they are now faced with as a result of exchanges coupled with the increasing shift in healthcare risk to the consumer (i.e., high deductible plans). The use of technology may start for the consumer with the insurance shopping experience, whether it is a private exchange or healthcare.gov, but the use doesn’t stop there. The consumers will increasingly use technology in making medical service decisions (i.e., which provider do I see, what is my out of pocket maximum, etc). And then the consumer will use technology to assist in managing their personal health. Technology also plays a huge role in enabling the new customer support channels, which include web-based self-help, chat, social media, and so forth. Bottom-line, technology is the game changer.
8. The amount of data collected seems to be increasing exponentially year after year;; how are your teams leveraging data to make business decisions?
JOHN LADAGA: The reason why the amount of data being collected seems to be increasing exponentially is because it is; digital storage of data is growing at 60 percent annually and still climbing. Some organizations are feeling the burden of data overload. We are in the technology cycle where acquiring and amassing data has surpassed the ability of most organizations to analyze and use that data in making sound business decisions. However, this cycle will correct itself, as it always has in the past, and the analytics and algorithms needed to use the data to make sound and timely business decisions are emerging almost daily. NASCO’s role in the healthcare data world is twofold. First, we assist BCBS Plans in acquiring data: we enroll members, process claims, process bills, capture customer service encounters, and so forth. Our job is to capture clean and accurate data so it can be used downstream in healthcare analytics and can feed decision- making processes. Second, we make clean and accurate data available for servicing. Whether it is feeding portals, mobile devices, medical management, customer service applications, provider servicing applications and other third-party payer partners, we are responsible for making the data available for end- user consumption. It’s all about easy, efficient access to timely and accurate information however and whenever an authorized entity (consumer, provider, employee, group, etc.) desires the data.
9. What do you think are the top challenges payer executives have to prepare for in 2015 and beyond?
JOHN LADAGA: Payer executives need to have their eyes wide open; they need to have a 360-degree view of the market. And for this reason, it’s increasingly important that payers develop “strategic planning” as a core competency. The market is changing so rapidly that if payers believe they have their strategy 100 percent baked and they put it aside for a couple of years and focus on implementation, by the time they have completed executing their strategy they could have totally missed the market. The payers have to balance their investment in core systems and processes with investments in the emerging technology solutions and new markets. For example, if payers focus only on the emerging technologies at the expense of the core systems, they will soon find out that it’s the core systems that make the new sexy technology solutions work. It’s the data out of the source of truth systems that feed the new analytics and mobile solutions. Payer executives need to balance the impacts to their business as a resultof government regulations and select the balance of target markets that best fits their company and strategy. They have to determine the right balance of investments to reduce administrative costs with investments focused on improving population health. They need to balance between investments in provider-centric incentive programs and networks with consumer-centric capabilities. The challenges are many; the answer comes from ensuring that payers develop strategic planning as a core competency.
10. Give us your vision of where the payer industry may be in 2020.
JOHN LADAGA: I do not believe that we’ve seen the end of payer market consolidation. I believe that we will see additional payers merging or partnering out of necessity to drive down administrative costs and grow market share. I think the verdict is still out regarding whether we will see much more vertical integration in the market. Payers will continue to focus on the consumer. There will be a lot of focus on market stratification, getting to know consumers across markets more intimately and designing health plans that meet the changing needs of the various markets, similar to the evolution of financial institutions and their respective products. I believe that as health insurance profits get squeezed by market forces and government regulations, that payers will seek other services that can be cross- sold to consumers, especially now that they know more about their consumers’ life styles and buying habits. Well before 2020 payers will be in the next phase of the evolution in partnership with providers to manage population health. There will be a continued exploration of payer-sponsored provider incentives as payers and providers balance the financial risks of providing healthcare services.. And the backbone of the payer in 2020 will be information technology! The payers who develop the strong backbones needed to stand tall in the competitive 2020 payer market will be the ones who invested wisely in systems that support the sources of truth, embraced emerging technologies and built consumer-centric business models.
11. Any closing thoughts you would like to share with our subscribers?
JOHN LADAGA: We have seen a lot of changes in the past several years, especially since the adoption of the Affordable Care Act. We have finally seen the age of the empowered consumer arrive in healthcare, albeit much later than many of us thought. And I believe we have just scratched the surface. A number of factors are converging in a perfect storm for the health IT industry: the proliferation and quick adoption of mobile devices,the emergence of wearable devices, increased use of cloud technology and breakthroughs in cognitive computing. We are embarking on a new era and I truly believe there is no better or more exciting IT industry segment to be in for at least the next five years than the health IT industry.