Reflections from the Board Room

Cathy Eddy, President, Health Plan Alliance

05/10/2016

  

Cathy K. Eddy, President 
Health Plan Alliance 
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For more than a decade, I’ve had the opportunity to see the health industry from the board room. It’s both a privilege and a challenge for those that contribute their time and insight at a governance level. 

As someone who works in health care, it is easier for me to understand the trends and the direction of an industry that has been through a lot of change due to economic pressures, regulatory scrutiny and major legislative reform. For my fellow board members that come from outside of health care, I admire your willingness to devote the time it takes to understand the dynamics of a complicated business and to offer credible direction and advice. Often, the best value a board member can offer is to ask tough questions. 

My board service began in October 2005, when I joined the Presbyterian Health Plan board of directors.  During my tenure, I had the opportunity to be part of an ad hoc committee that helped redesign the board meeting to allow more time for strategic discussions. We went from 6 meetings to 4 a year and lengthened the meeting from 2.5 hours to 4.5 -- we use the first couple of hours now to go deep into topics that are facing the health plan. The one comment I often hear from other boards is that too much time is spent listening to presentations by the executive team (often the same material read in preparation for the meeting) and little time in strategic discussion. 

Several years ago, Presbyterian started bringing their health system and health plan boards together for a couple of days in July to have a joint strategic retreat. This allowed both boards to get to know each other and to discuss the strategic challenges facing the integrated delivery system. These included the impact of New Mexico’s redesign of its Medicaid program. Centennial Care expanded the populations it serves and pulled in long-term care and behavior health. Presbyterian was one of four remaining managed care organizations after the bid, down from nine. That bid put more of the revenue of the system at risk. The development of the exchange marketplace was another expansion move for the plan.  The past couple of years have focused on a growth strategy that leverages the health plan. 

In 2013, I was asked to be a member of the Health First Board of Trustees, a health system in Rockledge, FL that owns a health plan. I’m also a health plan board member. 

During the past decade health systems with health plans, which is the model for the majority of the Health Plan Alliance members, have shifted in their thinking about the insurance component of the organization.  It has become much more of a strategic asset for growth, the shift to population health, understanding risk and a way to transition to value-based reimbursement.  Having a health plans has given health systems a leverage point for partnerships and joint ventures. 

Board members are being asked to meet with possible partners, consider how to “share” the business through different legal structures. Health systems without health plans are looking for a partner to the “value-based” dance, but honest discussions about what it takes to truly be integrated, the tradeoffs and changes to the delivery model aren’t for the faint of heart. If you are going to share a strategic asset, as a board you want to make sure the partnership is solid. 

Boards are also challenged by succession planning – for the CEOs and for fellow board members. We have seen quite a lot of turnover in the top position in our member health plans in the past four years. And more are expected in the next couple of years. When a health system develops bench strength for the C-suite, a health plan CEO transition can go more smoothly. Some of our plans have promoted from within. However without that internal candidate, we are seeing health plans go outside to do a CEO search. There are more requests recently for interim CEOs as systems look for the right person to lead the plan.  

More boards are moving to select fellow board members using competency-based governance. The new requirements in ORSA (Own Risk and Solvency Assessment) now approved in 40+ states and promoted by NAIC (National Association of Insurance Commissioners) want insurance companies to have board members who understand the industry. 

Recently I had a chance to talk to two plans that are looking at their health plan board configuration and direction, while they are also going through a change in leadership at the CEO level. Governance input into strategic direction is more important now than ever to health plans and health systems. Recruiting board members who can add perspective and insight will be important in these challenging times. 

The Alliance will be holding its 5th annual Health System/Health Plan Value Visit in Chicago June 7-9. Our first day will focus on governance issues and the next two days will be directed at strategic alignment. We hope you will join us for this discussion and bring along your board and system leadership. To find out more about the meeting, click here.

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