Executive Q&A: Jeff Roe

Jeff Roe, who took over as CEO of Premera Blue Cross at the beginning of October, is a strategist who sees significant opportunities for growth in the coming years as the health care sector moves from a once sleepy entity to one in the midst of disruption and innovation.

EARLY YEARS: My father, a Boeing engineer and executive, was a hard, hard worker who taught me a lot about work ethic. My mother was born Canadian and had a sunny outlook I always admired. I went to Sammamish High School and then got my degree in economics and political science at the University of Washington.

CAREER: After school, I joined [Senator] Slade Gortons campaign in 1988 as Slades driver. Hes a cerebral guy, and I became good friends with him. I spent four years working for him in Washington, D.C. He was always committed to doing the right thing. I worked with Mike McGavick [then on Gortons staff and later CEO of Safeco Insurance], who was one of the best strategists around. In 1989, I came back to Seattle to work at the Gallatin Group, a public affairs firm that McGavick helped start.

PREMERA: Premera, a client of the Gallatin Group, hired me in 1996 as vice president of communications. In 2002, I took responsibility for individual and small group business sales. [Former CEO] Gubby Barlow taught me that there was no problem that couldnt be solved with teamwork. He really believed in the power of people working together. He encouraged it and required it.

SUCCESS: Premeras small group business had been losing $1 million a month for two years and we turned it around in eight months. It has since grown by 40 percent. Our mid-market business became the largest in the market as well. Today, we have more than 1.9 million members at Premera, double what we were in the late 1990s. In 2006, we adopted the lean methodology. In seven years, weve had 105 rapid process improvement workshops. Our claims error rate is down by 40 percent. The number of claims that require no manual intervention has climbed from the low 70s to 86 percent. This enabled us to hire 400 fewer claims processors than we otherwise would have had to hire.

ROLE AS INSURER: Financially, we bear risk for about a million people. We also serve as stewards of our customers resources. We are also looking for best practices as to the delivery of care. I see our role evolving from an administrative role to better assistance in helping people navigate the system.

GROWTH: Health care coverage is a mature industry. Yet we see ourselves growing by 25 to 50 percent over the next five years. One area is the individual market, where we added 66,000 members in Washington last year. We recently entered the Medicare Advantage product and have 10,000 members there and see growth. We can also continue to provide value to large groups in costs and administrative simplification. In the small group area, companies with one to 15 employees are challenged by the cost of health care and will be more inclined to look at alternatives such as sending employees to the [state health] exchange.

AFFORDABLE CARE ACT: The ACA has been a catalyst for change that is beneficial to the entire system. It brought all the stakeholders to the table at the same time and it made the public and the industry more aware of the need to change. The ACA also opened access to health care insurance to everyone regardless of health status. That my best friend who is a diabetic had trouble getting insurance never sat well with me. That problem has been solved.

POTENTIAL: When I joined Premera, health care was a snoozer. Today, its wide awake and energized and very exciting. New technologies like telemedicine are going to transfom the way people get care. In January, Premera began offering a new service that will allow its members to receive care remotely over video either through their traditional health care provider, if they have the capability, or through Teladoc, the largest provider of telehealth medical consultations. Seattle companies like Amazon, Nordstrom and Alaska Air deliver world-class experiences. People expect the same in health care. Health plans will have an essential role in delivering that experience, not just by what we do but by how we make people feel when we answer the phone.

PATIENT VIEW: We take all claims information on you, profile it and run algorithms to assess the risk you face based on claims and labs. We put that entire picture before the doctor in the exam room. We can tell if someone isnt getting care they need or if there is potential for drug interactions.

FUTURE: For the next three to seven years, we see a tremendous opportunity for growth. Over the next seven to 12 years, there is more uncertainty because of technology. We are focusing on the short term while putting in place a foundation for the long term. Health care is fragmented. Its not proactive. Technology will help us to get ahead of that. When you have a more integrated system you can provide a better outcome. Everyone recognizes the need to move from fee-for-service to value. The challenge is how do you get there. We have contracted 18 providers to offer global outcomes contracts, for example, that give incentive to providers to deliver care more efficiently, and have produced $23.6 million in savings.

ALL-PAYER CLAIMS DATABASE: Premera is a big believer in transparency and we are coming out with the best transparency tool in the market. I completely agree that transparency changes industries. It happened with Expedia in travel and with Zillow in real estate. But thats different than saying an all-payer database [which provides users access to what insurance companies actually pay providers for health care] is the answer. The database is just raw information. Im not entirely convinced that it adds a lot of value. And our contracting rates with providers are proprietary to Premera and are the basis of our competitive advantage. But we are working today with the state to find the appropriate middle ground. In most industries, people do respond to information that serves their interest. Cost and quality information would do that.