DISCLAIMER: The views and opinions expressed are those of the interviewee(s) and are not necessarily those of McKinsey and Company.
Celia Huber: As you think about the next five to seven years, what do you see as the two to three biggest challenges or disruptions in the industry?
Patrick Conway: I think you’re seeing consumers [and] employers increasingly frustrated about the current state, and really expecting better healthcare quality and outcomes, lower cost, and a great service experience.
And so then, I think that the three things that we’ll see are, one, a move to value. I think you’re going to see over 50% of payments, across private and public payers in two-sided risk arrangements with providers that are true partnerships, like ACOs.
Second, I think a much more seamless and digital consumer experience that’s tailored, based on people’s needs and their healthcare needs.
And then third is advanced data and analytics. Both the healthcare consumer and healthcare providers, at a much deeper level, [can] tailor benefit designs to meet people’s needs, are able to understand what’s driving healthcare cost and quality gaps, and really addressing both the cost, and the quality, and the experience of care at a much more rapid pace.
Delivering care beyond the hospital setting
Celia: Let’s talk about consumer experience. How do you think that’s going to evolve for patients? And in the way care is delivered, how will providers have to change? And how will you see even family members or other caregivers be involved?
Patrick: Yes, so in terms of patient experience, now, people often wait a long time, they don’t necessarily get evidence-based care, and that care is too costly. So, if you think about what that looks like in the future, I think you will see a seamless care experience, where people’s healthcare needs are met when, where, and how they want them met.
I think much more of that will be telehealth and virtual, so not met in bricks-and-mortar visits. I think you’ll see much more care delivered at home, so not in the hospital setting, but in the home-based care environment, whenever possible.
And then lastly, I think in terms of customer experience, I’ll give you an example—Blue Cross Blue Shield has a Net Promoter Score in the high teens. That’s actually quite good for a health plan, believe it or not. There’s no health plan in America above 40 right now, on an aggregate Net Promoter Score. But how could we work to have a seamless care experience, where we and other health plans could be a 60 or more in terms of Net Promoter Score?
Trust-based, targeted partnerships
Celia: What are some innovative partnerships that you think are changing the landscape of healthcare, more broadly—they may or may not be in North Carolina—and how are those partnerships helping patients?
Patrick: [We], in North Carolina, are focused on partnering with providers to care for patients, both the total cost of care, quality, and experience.
We can have documentation and coding focus on risk adjustment and quality measures, and not other aspects, so that the provider can focus on care delivery for the patient. We’re doing a lot of partnerships in the data and analytics space, so bringing technologies that have been used in other industries, including artificial intelligence (AI), to bear on the large amount of healthcare data.
Across the Blue system, we insure 105 million lives, so with the other Blue CEOs, we’ve been having a lot of discussions about how we partner better together on capabilities, and other aspects to deliver better care to people.
Celia: Partnerships can be difficult. What do you think are some of the key success factors?
Patrick: I think the keys are trust, clear delineation of roles and responsibility, a focus on long-term partnerships, and that often means, potentially, with less partners and vendors and others.
There are some things we say we should build ourselves because we think we have that capability and can do it. But there are many things where we say, “If we can deliver better value to our customers through a partner, then let’s proceed through a partnership model.” A lot of our work, at Blue Cross North Carolina, is done through partners now.
Bringing the provider perspective
Celia: When you were at [the Centers for Medicare and Medicaid Services (CMS)], you were really pushing towards the infrastructure needed for value-based care. So, I thought I’d just ask you, given your background as a pediatrician, how has that shaped your focus on value-based care? And how did you think the experience for a practicing physician would change? And how has that impacted your views?
Patrick: I am a practicing pediatrician and I take care of children who get hospitalized. I do it because I love it. I think it’s an honor to care for those patients and families. Most of the children I care for and their families have multiple chronic conditions; many of them on Medicaid.
That allows you to see the good and the bad of our health system. And so, the good news is [that] providers [as] a whole are very focused on better patient care. The bad news is the system doesn’t always support [providers], patients and families with addressing all the healthcare needs.
In this country, we still have large gaps in things like food insecurity, transportation, housing, aspects that we know drive better health outcomes and lower costs. But we haven’t built a system to address those social determinants of health, to give an example.
Another thing I [have] learned in going through the process for this role [is that] there’s no physician leading a health plan of this size, and there’s no practicing physician that has ever led a health plan of this size in the US. The recruiter told me, “Don’t mess it up.” So, I’m trying not to mess it up.
But in all seriousness, I think that [the] perspective of being a physician matters in running our health insurance business and all the related health solutions companies that we work with. But also, when we work with providers, it’s a different dynamic, when you’re in a negotiation or a discussion with a provider, that they know that you actually understand care delivery, you know, as a practicing physician.
Celia: And then how has that impacted your perspectives on value-based care?
Patrick: I’ve worked in systems, for example, Cincinnati Children’s, that had value-based contracts. And it allows you to focus on what you would want. Instead of focusing on volume, you’re focusing on better health outcomes at lower cost and a great service experience for the patient.
At Cincinnati Children’s, that meant if the patient wanted to be cared for at home by telehealth, we did that. If a very complex child or adult needed an hour office visit with multiple specialties, we arranged that. Because you’re no longer getting paid by 15-minute office visits or by procedure. You’re getting paid to care for a population of adults and children over time.
And that’s really our focus at Blue Cross in North Carolina, [it] is to work with providers, so they can focus on what they do best, which is caring for patients over time.
Aspirations for the future
Celia: And how do you believe that the trends that we talked about and the industry shifts are going to impact Blue Cross Blue Shield of North Carolina? And what do you aspire to change over time?
Patrick: We started by talking about being a model Blue very early in my tenure. I’m now nine months in. We’re now often talking about that plus being a model of health system transformation. So, focused on higher quality, lower cost, best-in-class experience.
And then, I’d call out [the] areas that we’re working on. One is these deep provider partnerships and really having payments in advanced alternative payment models, where the provider and [Blue Cross of North Carolina] are jointly accountable for quality and total cost of care. Second, is the data and analytics, where we’re making major investments in data and analytics. Third, in terms of social determinants of health, we are investing in communities across North Carolina on things like housing, food insecurity, transportation.
Fourth, we want to be the best customer experience of any health plan in America and a seamless customer experience. Actually, it should be six areas. Five, we’re making major investments in primary care, both working with primary care practices in North Carolina, also, in-home primary care. We have a partner delivering in-home primary care for chronically ill patients and frail elderly.
And then lastly, we are looking at partners for new bricks and mortar [settings]. We’re in Medicare, commercial and [the individual exchange market] now but we’re planning to go into Medicaid, as well. So, we need providers that really specialize [in] taking care of some of the sickest, often poor, patients with multiple chronic conditions.
And I want us to be the best mental and behavioral health plan in the country. And what I mean by that is that we focus on actually providing mental and behavioral health to everyone who needs it which, unfortunately, is not always the [easiest]. So we’re looking at an array of partners, both integrated into primary care, to deliver mental and behavioral health, [and] telehealth enabled.
I’ll give you one example that I found interesting—we’re actually looking at a company that did a study of counseling to people who needed behavioral counseling in person, versus telehealth with a person, versus avatar powered by AI.
The avatar powered by AI had better health outcomes, lower cost, and especially in the Millennial generation, it was, by far, the preferred solution. So, it’s really thinking about healthcare differently and how we solve the access problems, and the quality issues in mental and behavioral health.
Increasing access and lowering costs
Celia: How are you thinking those things are going to come together around affordability?
Patrick: We want premium increases that are less than 5% across all lines of business every year, if at all possible. But the cost of healthcare, as you know, has gone up and up and up over [previous] years. It’s becoming unsustainable. I interact with families across North Carolina and one example, a farming family I interacted with the other day, you know, their total healthcare costs are on the order of $32,000 a year.
This is not sustainable for people and families across America. So, 85% of our costs are medical costs, but we can’t use that as an excuse. That means we’ve got to partner with providers and others to bring down those medical costs.
The other area that, as a nation, I think we’re going to have to tackle is pharmaceutical costs. So obviously, innovation in the drug space is incredibly important and has saved, you know, literally, millions of lives. But that innovation won’t matter if people can’t pay for it. So over time, how do you solve this issue of both access and lowering the costs of healthcare?
Celia: Is there anything special you’re doing for rural healthcare—both access and affordability?
Patrick: The rural health issues are real, where you have many very small practices and critical access in small hospitals. So, we’re doing a couple [of] things. One, on those small practices, we are bringing resources to them. So, you cannot expect them to invest in [electronic health record (EHR)] optimization, population health management, [and these types of] tools that we know can help achieve better healthcare quality and lower costs.
So, we’re going to partner with somebody to bring those services to those rural primary care providers. On the hospital side, you know, in Pennsylvania, when I was in the innovation center, we put in place this population-based model for rural hospitals.
We’re not there yet in North Carolina. But we are talking to rural hospitals about how we shift their payment model to be more population based and not based on fee for service.
Strategy and relentless execution
Celia: Any advice to other new CEOs who are coming into this changing healthcare environment?
Patrick: Focus on your customers and your people first. My literal first day, I said, “I don’t know anything about this company. But I’m pretty sure, if we focus on our customers, and we focus on our people, our employees, we’ll be okay.”
We have a more advanced strategy now. But in reality, I think if you focus on the customer, and you focus on your people, most everything else can fall into place.
I’ve now had the opportunity to lead in a number of different organizations—provider, government, now Blue Cross of North Carolina, [and] the pace of innovation and learning that we need, especially in today’s fast-changing world, [is that] we have got to go quicker and learn faster. Interestingly, some people don’t do strategy and just execute. And some people have strategy and never execute. The combination of strategy and relentless execution is actually, in my experience, less common than we would like.
We [recently] brought Alan Mulally in to talk to our whole leadership group. And he talked about what makes great leaders. He talked about passion, service, and love. I actually think that’s apt. If you lead from a mission-driven standpoint, and it’s clear to your people you care about them, and it’s clear to your customers that you care about their needs and are focused on that, I think that’s what makes for strong leadership.
We’ve recruited a tremendous senior team. [We] had great people in Blue Cross and have added some additional people to that senior team. And I just think we’re poised to really change healthcare in North Carolina for the better, and hopefully, be a model of what’s possible for our entire health system.
Advice on transitioning to the public sector
Celia: Any advice for folks who want to make the transition from being in the private sector to public service?
Patrick: I’ve had the pleasure to serve in government twice—[in both] Democrat [and] Republican administrations. First, I’d say, do it. When the opportunity comes up, if you feel like it’s the right opportunity, you should jump in and do it.
Two, those kinds of jobs can have a huge impact on people. I mean, if you think about CMS, we insured 140 million people, $1 trillion-plus a year of spend. The scope of impact is truly unparalleled. The third thing I’d say is, you [have] got to be persistent. To get things done at CMS, you had to push through multiple rounds of clearance, [and] congressional oversight. There were always hiring processes that were antiquated. There were always barriers. But if you keep pushing, you can make major change.
If you think about Medicare, we went from 0% of payments in alternative payment models to over 30% in less than five years. That’s over $200 billion. That’s millions of patients, over 200,000 signed provider agreements. That’s a huge shift in our health system.
So, I think, if you’re persistent, you can generate some real positive results for people.