The changing face of healthcare leadership

January 3, 2016

The changing healthcare industry is leading organizations to prioritize new skill sets during recruitment efforts.

Ten million people are expected to hit the insurance marketplaces to enroll in healthcare plans by the end of 2016, according to the U.S. Department of Health & Human Services. More than 25% of them are expected to sign up during this fall’s open enrollment period that ends January 31, 2016.

What kind of experience will consumers be looking for when they log on to the insurance marketplaces? According to the consulting firm Accenture, 87% of U.S. consumers want to be able to project expenses and select coverage levels.

The consulting firm found that consumers are also looking for:

  • A simple, retail-like shopping experience;
  • Increased choice and flexibility with benefits;
  • A diverse product set; and
  • Decision-support tools that help them “chose what’s right for me.”

Delivering on the needs of those 10 million consumers descending on public and private insurance exchanges to buy their insurance is a challenge that will require a new way of thinking within payer organizations, says Sherry Rohlfing, principal at DeltaSigma, LLC. “Healthcare reform has changed the way that consumers get into the insurance market. Historically, members have joined health plans through their employers or brokers or agents. That meant that payers rarely dealt directly with consumers.”

Payers will have to meet the needs of consumers who have grown accustomed to the experience they have on Amazon.com or on PetSmart.com or when they gamble at a casino in Las Vegas.

Thus, it’s not a big surprise that Aetna snapped up Gary Loveman, former chief executive officer of casino giant Caesars Entertainment Corp. to serve as president of Heathagen, the payer’s population health technology services and enablement entity, says Rachel Sokol, senior consultant for the health plan advisory council within the Advisory Board Company's strategic research division.

Loveman’s tenure at Caesars includes the development of a customer loyalty program called Total Rewards, in 1998. According to The Wall Street Journal, the program allows loyal customers to earn and redeem points for meals. In return for providing benefits to these 45 million members, the casino captures data about them and uses it in marketing campaigns to drive revenue at its 50 casinos around the country.

While he may shake up things at Aetna, Loveman is certainly going to bring with him a deep understanding of consumer behavior. And having him onboard could be a game changer for the company. “If you’re going to understand the consumer space, you have to have people in your organization who understand consumer buying behavior,” says Managed Healthcare Executive Editorial Advisory Board Member Don Hall, principal at DeltaSigma, LLC.

For that reason, retail entities such as Amazon.com and high-tech companies such as Google should be one of the first places health plans look when recruiting new leaders, he says, adding that Disney could also be a good place to source talent because of its high-touch consumer focus.

Here's more on how the changing industry is leading healthcare organizations to prioritize new skill sets during recruitment efforts.

Seeking customer-obsessed leaders

Payers are now in direct competition for consumers because of the public and private exchanges, says Rohlfing. That means they need to focus on being more consumer-friendly. As a result, she believes that health plans need leaders who can put together products based on what’s important in the marketplace.

Looking at telehealth through the consumer lens will also make a difference for payers, says Hall. “The feeling among a lot of people today is they…want to be able to see a doctor within 15 to 20 minutes, and they want to get their diagnosis and pick up their prescription within an hour. Health plans need executives who can see the level of change that’s required to make that happen.”

He cites the example of CalPERS (the California Public Employees Retirement System) as an insurer that’s paying for telemedicine, as are some large employers. Video chats with a clinician are typically around $35, which is well within many people’s deductibles, says Hall.

“Payers need to get involved in providing this experience for patients, since it doesn’t require them to wait in a waiting room for an hour and miss work-all to confirm that they know what’s wrong with them with a urine test and get a prescription,” he says.

Sokol agrees with Hall and Rohlfing that payers need to focus on tapping leaders who can provide a positive customer experience. “Many health plans have a very large fleet of customer service agents, in addition to customer portals and online tools,” she says. “In order to deliver a consumer-friendly experience, they need leaders who have worked for companies that focus on the customer.”

Seeking leaders who can minimize the “noise” about mergers

The proposed mergers-one between Anthem and Cigna and another between Aetna and Humana-are on the minds of the leaders of virtually every insurance company in the country, not to mention provider organizations and the medical associations who want the government to prevent the mergers from happening.

As payers evolve into larger conglomerates, they are going to require new kinds of leaders, says Tim Frischmon, principal with Furst Group. Leading and making change is very different for a CEO of a single-state insurance company, says Frischmon. “You’re running your own claims and operations and actuarial. You have your fingers on all of it. That’s one way of leading.”

Going forward, UnitedHealthcare and Aetna, for example, will need leaders who can drive operational efficiency across the whole country, says Frischmon. He believes that the ability to lead in an increasingly matrixed environment, where leaders may have to lead by influence rather than by title, will likely be a required skill as the industry continues to consolidate.

Payers should also look to leaders who can keep their teams focused on achieving the ambitious financial and market goals set by these companies. “The challenge will be to keep employees focused on executing on [their work], despite all the noise going on about the expectations the outside world has about the mergers,” says Frischmon.

Soft skills that healthcare leaders should brush up on include the ability to understand and inspire people, says James Smith, senior vice president at The Camden Group. “You’re going to have to drive the skills of people you may not see. You have to set a common vision and goals.”

Managing teams by teleconference-as opposed to having direct reports face-to-face in the office-may require new skill sets for health plan executives, he says.

The merging payers have put out big numbers, in terms of the money they will save as a result of the mergers, and that’s a “high bar to cross,” says Sokol. “In the insurance industry, there are some fixed costs, such as IT costs and claims services costs. At the same time, there are lot of things happening in the local markets where these payers are competing, such as negotiating with providers and coordinating sales with small physician groups.”

Thus, she anticipates that national payers will need to focus their energies on maintaining close relationships in those local markets. These national payers, with their headquarters in states hundreds of miles away, will need to continue to develop deep relationships in these markets. And that, too, requires leadership, she says.

Seeking leaders who are willing to get uncomfortable

With all of this change and uncertainty in the midst, how can current and future leaders in the payer world prepare? “Stop complaining and get out of your comfort zone. Get out of the echo chamber,” advises Hall.

He believes that today’s healthcare leaders should have the following books on their must-read lists:

  • “The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care,” by Eric Topol;
  • “The Checklist Manifesto: How to Get Things Right,” by Atul Gawande; and
  • “Nuts!: Southwest Airlines’ Crazy Recipe for Business and Personal Success,” by Kevin and Jackie Freiberg.

Hall hopes that today’s leaders can tap into the type of disruptive thinking that led Jeff Bezos to create Amazon.com, an online marketplace that had never existed before, and apply those lessons to reinventing healthcare.

Seeking leaders with diverse backgrounds

The leaders of today and tomorrow will need to prepare for a whole new way of thinking about healthcare, namely, in an environment where the consumer is king. One way health plan executives can prepare? Pursue promotions outside their functional area of experience as they progress through their career, says Frischmon.

For example, healthcare leaders who have only worked within network management should consider roles that will get them closer to sales or operations or products, he says. “At some point, you hit a ceiling and you need to be able to diversify your professional background. It’s a mistake to fundamentally stay committed to a single functional role within this environment.”

Because payers need a diversity of skills in their leaders, Frischmon sometimes advises potential job candidates to pursue director-level positions over vice president positions, if the director-level position provides a first chance to step out of that functional track and into progressive responsibility in other areas.

He cites, for example, a situation where two candidates are seeking a senior-level contracting job at a payer organization: One candidate has worked in contracting throughout their career, and they’re going up against someone with ten years of experience in contracting, in addition to experience in sales and marketing. The candidate with a more well-rounded portfolio may get the job, he says.

Today’s middle managers and freshly minted MBAs should also take heed, says Sokol. She advises any recent business school graduate who wants to be a leader at a health plan to figure out how they can apply creative thinking to the health insurance industry. “There have been big dynamic shifts within this industry. That’s regulatory mechanisms, risk adjustment, and more.” Health insurance is a place that needs out-of-the-box ideas to figure out how to make all of this work, she says.

Seeking leaders who can run profitable, customer-obsessed businesses

Despite all the change health plans are facing today, there’s one key way of measuring leaders’ effectiveness that won’t change: Profitability.

“Payers still have to be profitable,” says Frischmon. “Leaders will still have to demonstrate how they build deep, solid relationships with providers. They’ll also need to demonstrate how they’re able to identify and build some stickiness with their brand among members, and they’ll have to measure their success.”

Other areas where executives will be measured include member engagement rates and the Centers for Medicare & Medicaid Services’ Star Ratings, he says.

Sokol says health plan executives will be evaluated based on the sustainability of their businesses during a time when profit margins are tight. They'll also be measured based on their ability to retain employees and maintain current local relationships, she says. “Health plans will be investing in a lot of new talent. That means that leaders will be measured on their ability to grow their teams, while maintaining deep relationships in the communities where they’re doing business.”

Aine Cryts is a writer based in Boston.