How insurers’ race to digitize has changed the role of CIO

Last February, Lisa Davis started her new job as chief information officer of Blue Shield of California, entering the healthcare industry for the first time with a new set of responsibilities and a charge to transform the Oakland-based insurer’s previous operating model. A month later, COVID-19 hit.

“Who knew that when I took the job on February 24, 2020, that we would be entering into this global pandemic?” Davis said.

Davis considers herself fortunate. Blue Shield of California had already laid out its digital transformation strategy. Insurers’ tight focus on crisis planning helped the industry adapt well during COVID. But even the most prepared underwent transformation.

A recent survey of 1,300 insurance CEOs by KPMG International found that 85% of respondents said the pandemic turbocharged the digitization of their operations. Nearly 80% said it brought new urgency to create new business models and revenue streams.

“It really brought to the forefront the critical need for transformation in the healthcare space, in order to drive better health outcomes and better experiences for our members,” Davis said.

Before COVID-19, many health insurers’ CIOs focused on keeping the lights on, overseeing back-office functions and often sat separate from the rest of the organization. The pandemic has given these leaders proximity to the CEO because technology is key to powering insurers’ present and future operations and that requires collaborating more closely with the business operations than ever before.

It has forever changed the role CIOs play at insurers and, in doing so, has altered the broader healthcare system for patients and providers, said Terry Rowinski, president of Health Payment Systems, a provider of insurance for self-funded systems.

“It’s evolved the CIO from the traditional insurance industry roles of the past, to be more of a CIO of almost an e-commerce services company,” Rowinksi said. “This really brought the product and the IT teams together and, even though it was maybe very hair pulling and stressful, it probably created some of the most harmonious moments between these non-harmonious functions within organizations to get things out the door that actually serve the consumer community.”

Iterative development results in lower costs at Blue Shield CA

Last year, Blue Shield of California started its switch from a traditional waterfall development style—where developers focus on one project at a time, with a set timeline—to an agile methodology, where tech staffers partner with the business side of the house to create incremental, iterative improvements based on market feedback. Davis was brought in to help facilitate this move, as well as develop a new cloud computing, security and data analytics strategy for the insurer.

The change came at the right time, Davis said—the pandemic forced Blue Shield of California to immediately rethink how it connected with its approximately 4 million members and view itself as a tech company, rather than a traditional insurer.

“(IT) started looking at opportunities or issues or problems that the business may be having,” Davis said. “‘Where can we better automate? Where can we move things digital? What is the product we’re bringing to market for our members?’ Those conversations, and that engagement through this new portfolio model, has completely changed the business.”

The company reorganized itself around its seven business lines and horizontal functions, creating individual teams devoted to its Medicaid business, commercial offerings, customer services and more. Each team, known as portfolios, is made up of IT personnel, customer-facing associates and works directly with the company’s data and analytics group.

But making this change happen required acknowledging the tension that traditionally existed between the two company units, which had previously operated in silos. Tech can often be accused of not working fast or cheap enough, while business teams have failed to ask what IT thinks of new initiatives. Building relationships between the two units required executive buy-in to the digital strategy, Davis said.

“A lot of times you hear folks say we don’t speak the same language,” she said. “It’s just not IT-led, and only an IT issue. It really needs to be viewed and communicated and led, from the entire executive leadership team, as IT and business and transforming the company as a whole.”

Although the switch to a new work style is ongoing, Davis said the insurer has already realized results from the move—Blue Shield of California was able to integrate CVS’s pharmacy vendor operations into its organization three months ahead of schedule. This translated into new member savings, she said. She believes every insurer should adopt an agile mindset and embrace iterative development.

“We all should be thinking as a technology company, and a data company, and technology and data need to be at the core of how we think and execute as a company,” Davis said. “If you’re not, you will likely be disrupted, or you will likely go out of business.”

A data-driven approach helped Anthem respond to COVID-19

Anthem’s digital transformation started about three years ago, when the company’s CEO Gail Boudreaux came onboard. Boudreaux charged the organization with using technology to enable its business functions, and using data to streamline the insurance experience for its 43.5 million customers.

As part of the change, all Anthem associates received a primer on the meaning of terms like “digital-first,” and completed a professional development course on how technologies like AI operate. The emphasis on data also led the Indianapolis-based insurer to instate a chief digital officer rather than a CIO, said CDO Rajeev Ronanki.

At Anthem, Ronanki’s job is creating the strategy, partnerships and developing the newer technologies used at the insurer and integrating them into the existing suite of technology products. Ronanki said he reports to the office of digital transformation within Anthem, which operates Blue Cross and Blue Shield plans in 14 states.

“It’s really signaling to our team the way in which we communicate the role of technology at Anthem, which is to say that it’s more a synchronous part of the business strategy,” Ronanki said. “Whereas contrast that with, let’s say, the traditional way, in which it is a bridge to them.”

The evolution of Anthem’s Sydney Health member engagement app illustrates the insurer’s digital-first shift. Launched in 2019, Sydney was initially developed with the business side of the house establishing the requirements to the IT teams that developed the actual app.

“What that resulted in was this kind of guesswork on what our consumers actually needed,” Ronanki said.

Now, the insurer tracks what consumers like and dislike about Sydney Health’s experience through hundreds of A/B tests, gathering data on which customer segments seem most engaged with the app, what features drive the highest member satisfaction and what’s driving drop-off rates. Anthem associates then compare the results to figure out what changes need to be made and develop new features from there.

“It’s purely data-driven, and that’s led to us introducing new things on a weekly, monthly basis, whereas before we were on, let’s say, once a year, twice a year, kind of cycles,” Ronanki said.

A change in development style allows Anthem to respond more quickly to consumer needs. It has also led to a culture shift in the organization. Relying on data to help chart product development and investments has led Ronanki to feel much more comfortable admitting when certain projects don’t turn out the way he expected. When the COVID-19 pandemic threw the world in flux, he credited Anthem’s flexible company culture—and technology investments—for helping quickly shift its 80,000 U.S. associates to working remotely.

“It requires a whole different culture around patient learning, and learning from failure and, in fact, applauding failure, because failing quickly is much more effective than having a long product that has middling success,” Ronanki said.

Digital differentiates health plans at integrated delivery networks

Along with the pandemic, a broader industry push toward value-based and consumer-centered care has also continued to raise the CIO role at health plans, particularly those that are part of integrated delivery networks.

“It’s become a much bigger role,” said Zachary Durst, a senior associate at executive search firm WittKieffer, of CIOs. They have continued to “elevate” in the C-suite and are increasingly reporting directly to the CIO. “The CIO today really requires someone that has that strategic perspective,” he said, and who can bring new ideas for how to use data and technology.

From a member’s perspective, consumer-facing digital tools are often what “differentiates” a health plan from its competitors, according to Durst.

Members expect it to be easy to ask questions, pay bills and manage care.

That’s one of the reasons why UPMC Health Plan, the health plan arm of University of Pittsburgh Medical Center, has been building out mobile app capabilities, including an app called RxWell that’s designed to help members manage anxiety, depression and stress, said Scott Haas, vice president of payer applications at UPMC Health Plan.

There’s way more on a CIO’s plate today than five years ago, with a proliferation of digital engagement tools and new expectations for managing member data, such as those stemming from recent data-sharing regulations from CMS, Haas said. While Haas’ official internal title is vice president of payer applications, his role also involves serving as the health plan arm’s CIO.

He reports to UPMC’s senior vice president and CIO at the corporate level, although he also works closely with UPMC Health Plan’s president and CEO.

Haas has spent the past 13 years at UPMC Health Plan, before which he worked at health insurance company Health Care Service Corp.

“The demands of the digital world continue to accelerate,” he said.

The need for health insurers to focus on digital engagement will only increase as the COVID-19 pandemic subsides.

“A lot of the members and consumers have now gotten used to—and are really looking for—ways to utilize easy, convenient and intuitive healthcare solutions,” Haas said, noting roughly 100,000 new members enrolled into UPMC Health Plan’s telehealth program amid the pandemic.

At Kaiser Permanente, a growing focus on technology strategy and digital experience led the Oakland, Calif-based integrated delivery network to give Diane Comer, who was named the top technology executive for Kaiser’s hospitals and health plans last month, the title “chief information technology officer.” She replaces Dick Daniels, who retired from his role as Kaiser’s CIO in June.

Comer reports to Kaiser’s chair and CEO Greg Adams, and will be responsible for developing the organization’s overall technology strategy and digital transformation work, as well as implementing and overseeing technologies like a traditional CIO, she said.

“We will continue to see a shift, similar to Kaiser Permanente, in more CIOs at health systems and health insurers focusing on the overall technology strategy and digital transformation efforts within their organization, in order to expand and improve the digital experience for their customers and patients,” Comer wrote in an email to Modern Healthcare.


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