Ken Burdick, CEO, WellCare shares his perspective on major trends and opportunities in US healthcare with David Nuzum, Senior Partner, McKinsey and Company.
DISCLAIMER: The views and opinions expressed are those of the interviewee(s) and are not necessarily those of McKinsey and Company.
David Nuzum: Looking at the big picture, what do you see as the two to three biggest trends in US healthcare in today's environment?
Ken Burdick: The first one is not a new trend—but it continues—and that is the affordability crisis. A second would be the blurring of lines between providers and payors. And then the third would be the increased consumerism that certainly hit the commercial markets and to some extent is headed there for Medicare and Medicaid as well.
Focusing on the things that we do well
David: What implications do those have for your business?
Ken: Well the blurring of lines is sort of an intriguing strategic issue. We have made the decision that we're going to focus on the things that we do well. So, stay[ing] within a traditional payor space. We think there's a lot of room to strengthen the relationship that we have with both our members and with providers, the physicians that we work with. So we're observing the blending, but we're not participating in the blending. We are not launching into ownership of hospitals or provider groups, etc.
Opportunity as a recurring theme
David: And what about the affordability challenge? Does that represent more of an opportunity or a complication for WellCare?
Ken: I really do think it's an opportunity, and that's going to be a recurring theme. There's so much discussion around uncertainty and change. I think we need change and so, sticking with the affordability crisis, the cost of healthcare continues to escalate faster than the gross domestic product.
There's really no segment of society that you look at that isn't burdened by it. You can start with the federal government, move on to state governments, move on to employers, and move on especially to individuals and families. It's a great opportunity for us to raise our game and to look for ways to improve the way the system works. It's going to be affordability without sacrificing quality because in healthcare, you don't have to trade one off the other.
Member engagement and physician alignment
David: And so, does that really represent the biggest priority for WellCare?
Ken: Continuing to bring great value to our state and federal customer. And the way we do that is by engaging with our members and delivering quality care. Facilitating care at a cost that is less than if the states or the federal government was trying to do it on its own. So, traditional fee for service, if it's Medicare or the unmanaged environment that states have had relative to Medicaid.
Now, the way you do that, it sounds simple, it's actually pretty complicated. As you know, physician alignment is critical to our success, so when I think about priorities, I would simplify it down to member engagement and physician alignment.
David: How are you hoping to strengthen physician engagement?
Ken: Because we operate in the Medicaid and Medicare space, it represents some interesting challenges. Medicaid, as you know, is not the highest level of reimbursement. So, we look at it a few ways. We have to be a great partner for the physicians. And how do you become a great partner?
Number one, you try to provide data that is meaningful, timely, and actionable. Number two, you try to minimize the administrative challenges. I'll never pretend that we can eliminate them but we can certainly try to simplify the experience both for the physicians, for the nurses, for the front office staff, etc. The third is making sure that when we do the right thing on behalf of the member, and for the sake of our state and federal government partners, that everybody benefits. That's the alignment of incentives that I think is really important. We've got to share, ultimately, both upside and downside.
David: As you're working to strengthen physician engagement, is that primarily through value-based payment arrangements and some of the supporting data that you describe?
Ken: Yes. The value-based payment arrangement is certainly important, but what we're learning is that that's not the whole answer. The alignment of incentives is critical. But those other areas that I was talking about, making sure that we are providing a timely, comprehensive, actionable data and then doing everything we can, and this is a journey, to simplify their administrative processes as it relates to the work that they do with us. We've simply got to make that a better experience for all involved.
David: I'm interested to hear whether you see that taking the same form in both the Medicaid space as well as Medicare Advantage? Or if there are any meaningful differences in terms of how you would approach physician alignment?
Ken: There are fundamental differences in approach. I would say it's a greater challenge in Medicaid, largely around the reimbursement because there isn't large amounts of revenue and profit to share. In Medicare, there are few provider groups that you encounter that aren't interested in some kind of risk sharing.
In Medicaid, it's been much slower to come, but I think that's where we have to go so that we're all in it together and constantly trying to find how we can improve the cost without one iota of regression in the quality that's being provided.
Maintaining focus on our value proposition
David: You had mentioned some of the regulatory and legislative uncertainty that we're operating within today. How are you thinking about growth in that context? What do you see as necessary to be successful in providing government-sponsored managed care services?
Ken: I look at the uncertainty and some would say it can be distracting or paralyzing. I don't view it that way. I think it's important as a leader, to keep folks focused on our value proposition. What is our purpose? And the purpose is to help states and federal governments use taxpayer money in a very cost effective and efficient manner.
I think it raises the stakes. But if we keep our organization focused on the core values and the mission, then the discussion that's going on around the funding source and the amount of funding sort of takes place on the side and doesn't interrupt the important work that we have to do. The fundamental work only becomes more important, not less important, given the budgetary constraints that our clients deal with.
David: Looking at where we are today and the path ahead, what do you suggest business leaders need to be thinking about?
Ken: Well, some of it would be that it's important for us to share information. But it's also important for us to provide the context so that people don't get distracted and start to swirl. So, get folks grounded in what we do, how we do it, the values, and the mission.
It's important that in addition to being transparent and communicating, it's critical that you build resilience and some agility into your organization. As you're thinking about everything from your policies to the technology that you use, the system platforms that you use, it's critically important that you look for ways to retain flexibility and optionality.
David: That's great. Are there specific examples of that within WellCare?
Ken: In this dynamic industry, it becomes even more important that you hire, retain, train, and develop the very best people so that decisions can be done as close to the customer, as close to the physicians, as possible.
Healthcare is local. And so, I believe that if you try to run an organization like ours in a highly centralized way, where few people make most of the decisions, that's a recipe for disaster. It's much better that you develop the talent within your organization so that decision making can be delegated and dispersed.
David: Is there anything else you wanted to add on this topic that we haven't covered?
Ken: If you think about healthcare in the United States, the costs escalate at a rate that's unsustainable. So, when folks stress about uncertainty and change, I would encourage them to think about it very differently. The status quo is not working. So, we ought to think about change and innovation, new ideas, and experimentation in a positive light because the next generation really deserves that we come up with a better mouse trap.