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Advice and Information for Finance Professionals

Don't Postpone Innovation During a Crisis

Guest Author

By Sandra Clarke, CFO, Blue Shield of California 

Every day, millions of healthcare workers across our nation strive to achieve the goals of increasing the quality and decreasing the cost of care. These true American heroes inspire me every day to improve the financial and operational process impacting our network of healthcare providers, suppliers, physicians, and health plan members. As chief financial officer of Blue Shield of California, one of the largest health plan providers in our state, I’m proud to carry the flag for our mission of creating a healthcare system that’s worthy of our family and friends, and sustainably affordable for everyone. 

Compared to the rest of the world, America’s healthcare challenges are singularly unique. As a geographically vast country with a large and diverse populace, we face unrivaled scale and complexity in healthcare delivery. Administrative spending as a percentage of total health expenditures in the United States is 8.3%, significantly higher than any other high-income country. The latest data show that the average American spends $1,229 annually on prescription and over-the counter drugs. Again, that’s much higher than any other developed country in the world and spending continues to rise.

I believe that we can’t postpone conquering these challenges—even in the midst of a crisis such as the novel coronavirus. The needs are urgent. Technology-enabled solutions will serve as a catalyst to driving innovation that can dramatically move the needle to more positive outcomes for patients, providers, and payers.

Health Reimagined 

Under the banner of, “Health Reimagined”, Blue Shield of California is continually innovating to transform the healthcare system for our more than 4 million members. In 2019, we created and invested in Altais, a new subsidiary that provides technology, tools, and services that help physicians reduce administrative costs and devote more time to patients. 

Additionally, I’m very passionate about our new partnership with other health plan providers in joining Civica Rx, a not-for-profit generic pharmaceutical company. This alliance seeks to drive down prescription drug costs; nearly 40 Civica medications are in hospitals or under contract to help secure the supply of quality medicines at fair prices. 

The healthcare industry has been hard hit by the pandemic, and I’m proud of the way we’ve responded. Our CEO, Paul Markovich, is the co-chair of Governor Newsom’s COVID-19 testing task force. We’ve donated millions of dollars to communities that are the most vulnerable to financial and health challenges. We’ve waived fees for members to receive virtual care and screening and testing. We are providing up to $200 million in direct support to providers and hospitals as well as restructuring contracts. This initiative provides physicians and the hospitals with a different revenue mechanism that is less dependent on the elective procedures which dropped so precipitously during this time and plunged many healthcare organizations into financial crisis mode. 

Finance innovation can’t stand still in a crisis 

I like using the terms "agility" and "adaptability" along with "innovation” when talking about the impact of cloud technologies. Fortunately, our transformation to digital technologies and innovation was well in progress before the pandemic. I believe in taking a programmatic approach to adopting technologies to ensure that organizations gain the maximum benefit for our investments. 

When I joined Blue Shield of California about two years ago, I supported the creation of a Finance Transformation team to help business units apply process improvement and project management principles. As a natural offshoot of that initiative, I sponsored the creation of an Oracle Center of Excellence to govern our rollout of Oracle Cloud across enterprise resource planning, human capital management, and Oracle Cloud infrastructure to ensure that individual pillars operate in a unified manner. Executive sponsorship and consistent communication were key to ensure success of these two programs.

Additionally, I championed the formation of a cross-functional team across finance and IT. This close collaboration led to a reduction of silos and improved information sharing. The team identified bottlenecks causing delays in the close process, such as manual workflows and approvals. The project team leveraged standard Oracle functionality to categorize and identify journal entries that could be automated, resulting in faster processing times and reducing manual labor. 

As a result, we now do our period financial close 40% faster, a reduction of 4 days. I know we can be even faster. I doubt we could have sustained a seamless virtual close process during the pandemic—with the entire finance team working from their homes—without cloud technologies. 

These combined efforts have also led to the following improvements: 

  • Reduction of financial consolidation cycles by two business days each
  • Approximately $500,000 of cost savings via increased automation
  • Improved strategic decision-making enabled by producing financial reports four days sooner
  • Adoption of a framework for future innovation using machine learning and artificial intelligence 

A lot on our plates across finance, supply chain, and the patient experience

By establishing a center of excellence, we are not just improving single processes but also accelerating transformation that drives more cost out of all our financial and operational processes. 

The pandemic has exposed deep flaws in supply chain across many industries. I would not be surprised if there is an urgent push to identify multiple supply sources in different geographies, some of which must be closer to home. I know of instances where hospitals had critical supplies on the ground at airfields in other countries—such as personal protective equipment—when governments stopped shipment because they felt their countries needed the supplies more. 

When it comes to our patients’ experience, we are working with the provider community and state and local government in areas such as digitization of healthcare records. Just last year, a medical student told me, "Yes, it's really true; they have to teach us how to use fax machines in med school, because most of us have never seen them." By making patient records securely and remotely accessible, our providers will become more adept at the assessment of patient conditions and what the next steps in providing care should be. 

Cautiously optimistic for the future

We believe in the old saying, “Never let a crisis go to waste.” It’s impossible to ignore the humanitarian impact of the current crisis but every organization must learn from it to remain viable. I’ve learned that what you always thought needed to be done in the office now doesn’t need to be; productivity in a non-standard environment is not just possible but table-stakes in whatever the new reality is. The lessons I learned managing through previous crises also stood me in good during the pandemic: refocus people on what’s essential and deprioritize non-essential initiatives so that your teams don’t get burned out. 

Healthcare is a team sport, and my team will must increasingly become a partner to every aspect of our business. As we implement digital cloud technologies across more and more processes, we’ll gain the same flexibility and access to information that we are enjoying from our move to cloud for finance and human resource management. 

Hear more from Blue Shield of California's CFO in this webcast with Fortune Magazine.

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