David W. Anderson, who served the last seven years as CEO of UnitedHealthcare’s Southern California region health plan, had never spent any significant amount of time in Western New York.
So when he was contacted about the opening for the top job at Buffalo-based HealthNow New York, he did his due diligence in researching the area and the company – the region’s largest health insurer.
The 59-year-old decided to take on the challenge of running HealthNow, which operates locally as BlueCross BlueShield of Western New York, at a time of significant upheaval in the competitive insurance industry.
He replaces the retiring Alphonso O’Neil-White as president and CEO of an insurer with more than 800,000 members, 2,300 employees and $2.5 billion in revenues last year.
Now in his second month on the job, Anderson – who started his career in 1980 as a broker after graduating from Indiana University with a finance degree – has been evaluating HealthNow’s leadership team and meeting with employees, clients and providers.
He’s preparing for the major provisions of the Affordable Care Act to go into effect next year, moving into a residence in downtown Buffalo and getting an introduction to the life of a Bills fan after watching in person as the team lost its season opener to the Patriots.
Q: It can be hard for companies here to recruit non-natives. When you first heard about this opportunity, what was your reaction to the idea of Buffalo?
A: It was a little bit of a harder sell. Buffalo has more of a negative connotation outside of Western New York than it does inside Western New York. And I had kind of the normal reaction.
The opportunity at HealthNow was pretty compelling, for a bunch of reasons. So I began to look, and look pretty hard, and the more I looked the more interesting it became. A little surprised, maybe a little overwhelmed, by the positive nature of the responses I got from the community. People in Buffalo really like Buffalo and they really enjoy the Western New York lifestyle. Outside of the area, it’s not really thought of that way. And so I think one of the things we need to do as a community is to change that perception.
Q: What made HealthNow an attractive opportunity?
A: It’s an opportunity where the BlueShield BlueCross brands are clearly the strongest in the health care space. I competed against them for a long, long time. I can tell you, after being here for a month, it’s a lot better to be with them than against them.
And so a Blues opportunity that has scale, that HealthNow has, is financially well-capitalized, and has the market share that it has, particularly in Western New York, and still remains standalone as an independent company is really pretty unique. There aren’t very many of those situations around any more.
Q: What difference do you see between the national, for-profit players, and the not-for-profit players that dominate the landscape here?
A: I think day-to-day, when you’re running the company, there isn’t, operationally, too much different. But there’s clearly a community support mission at HealthNow that doesn’t always exist in a for-profit environment. And I’m not saying that to be critical of them, I think it’s just the reality that a not-for-profit environment, and company, that there is a community investment that exists. We’re very mindful of that. And you can feel it when you’re here, and in how you interact with the community.
Q: What are the main challenges facing HealthNow?
A: If there’s a singular issue that I think is a challenge, to your question, it’s a movement and an adaptation of the company towards more consumerism. The process of purchasing health care and accessing health care products and services, in the past, has largely been on an aggregated-model basis, through an employer, or a state system.
And so we have not formed our companies into consumer-oriented and consumer-focused companies. It won’t happen overnight. We won’t have to be Apple computer overnight. But we need to begin to be more consumer friendly, consumer focused, and that will color much of our initiatives going forward.
Q: What are your impressions of this insurance market?
A: There weren’t a lot of surprises. I think that, first of all, we welcome the competition. I think it makes for a better marketplace. As far as the nationals are concerned, I think that part of the reason they haven’t had the foothold here is because the regional plans have done a good job. And it’s not an easy market to break into.
I’m also becoming more aware of the provider systems that are here and also quite impressed with the level of sophistication of our health care delivery systems here. I do have some concerns that there may be some overcapacity for the community on the health care delivery side.
Q: In terms of hospitals? In terms of doctors’ networks?
A: Not so much doctors’ networks, but specialty care and facilities. And generally, in situations of overcapacity, then there is a cost effectiveness that could potentially be improved on. And one of our responsibilities to the community and to our members is to deliver quality care as effectively as possible, and that’s one of the things that I’m addressing.
Q: Can the trend of transparency in pricing, of releasing data on prices paid for medical services, lead to lower costs?
A: One of the aspects of consumerism, and that being a broad term, is transparency. And that movement will bring transparency more within a consumer model. And the ability of the purchaser to have a better idea of the cost structure of what they’re buying, which happens in almost every industry – and they have been shielded from largely, and often for good reason, in health care – as we move toward consumerism that transparency will become more apparent and, I believe, have an impact in pricing and market price points over time.
Q: How successful will the Affordable Care Act be in its stated goals of reform, expanding access and reducing costs?
A: As I sit here today it’s a bit of a mixed bag. Clearly it will expand access, and we believe that’s a good thing. It will drive this process towards a more consumer model. We think that’s a good thing. We think that it will bring transparency to the process, which has been a long time coming, and we think that’s a good thing.
I believe there needs to be some additions to the process, to the ACA, around controlling costs. It largely expanded access. As a legislative act it talked a lot about trying to reduce costs and control costs; I don’t think it went far enough.