ASQ - Team and Workplace Excellence Forum

Online Edition - April 2000

Issue Highlight - Hard Measures for Human Values
--- We have now made the stock market our primary measure of well-being. It is the lead story on the news, it stares me in the face at the top of my home page. It peers at me from the lower right hand corner of my TV screen...

In This Issue...
Looking For Adventure
Healing Blue Cross And Blue Shield
Applying The Magic Of Disney
When Teams Are Destructive

Peter Block Column
Views for a Change

Diary of a Shutdown

Healing Blue Cross And Blue Shield
Louisiana Health Care Insurer Realigns for Success

--Blue Cross and Blue Shield of Louisiana is used to providing health care.

--But in 1996, the company found itself in need of some healing. Blue Cross and Blue Shield of Louisiana (BCBS-LA) was facing a time of extreme turmoil. The Department of Insurance had placed the health care insurance company under supervision. The CEO, senior team and the board of directors had been removed. The company was experiencing extremely low levels of trust and confidence among Louisiana citizens and the company had vast morale problems within its workforce.

--To make matters worse BCBS-LA had just completed a quality/business improvement pilot program that had failed to improve the company's performance or public image.

--In the competitive realm of health care insurance providers, any of these pitfalls could have easily translated into devastation for the insurance company. BCBS-LA needed to take immediate action in order to turn around public option, as well as the company's performance. BCBS-LA was focused on being the preeminent health care insurance provider in Louisiana. The road BCBS-LA took to achieve this goal was one filled with systemic change-a change effort that required input and participation from the entire company.

The Challenge
--The problem facing BCBS-LA was clear-turnaround the company or lose customers. BCBS-LA turned to the Baobab Group, a Denver-based organizational consulting firm, to help guide their company-wide improvement processes.

--According to Jeff Hoye, the Baobab Group's Managing Director, BCBS-LA needed to quickly do four things if it was going to improve:

--1. Fill the void at the top. The disbanding following the Department of Insurance takeover had left voids at the topmost levels of the company. BCBS-LA desperately needed to establish a new board of directors, CEO and senior management team.

-- 2. Rally around a vision. BCBS-LA needed a common vision that would focus the entire organization-one that would increase the company's competitiveness, strength in the marketplace and help BCBS-LA grow throughout Louisiana.

--3. Improve employee moral. If BCBS-LA was to survive the problems at hand and also improve in the future, employee moral needed to improve.

--4. Build public trust. A health care insurance company with low levels of public trust will not succeed. BCBS-LA needed to show the people of Louisiana that it was a reliable and competent source of health care.

--"The word reengineering came up and people had horror stories of changing things for no rhyme or reason," Hoye said.

A Time for Action
--Focused on these four points, BCBS-LA quickly took steps to ensure its success. First, the insurance commissioner appointed a new board of directors who brought in a new CEO from outside the company. The new CEO formed a new senior management team from within and outside the company who would guide the improvement processes.

-- Together, the CEO and the senior team established a company vision - to become the preeminent provider of health care insurance in Louisiana. To achieve this vision, goals were structured in a balance scorecard fashion. These goals were designed to address:

  • Market Share: BCBS-LA sought to double its market share.
  • Financial Stability: The company needed to grow, but at the same time it needed to remain financially stable.
  • Quality Performance: If it was to deliver high quality services to twice its current market size, BCBS-LA needed to install quality control measures and processes.
  • Resource Management: Preeminent companies operate with refined technology and possess employees with highly developed skillsets.

--The senior management team and the new CEO launched four strategic initiatives in order to achieve the aggressive goals the company had set for itself. A Decision Support Unit was created, a Learning Institute was formed, an Information Technology unit was assembled and a Business Process Management project was initiated.

-- This newly formed Business Process Management (BPM) project was designed to provide the quality performance needed in anticipation of the organization doubling its market share. While the BPM was only one of the four strategic initiatives identified by the senior leadership, it was the one initiative that encompassed all of the organizational goals.

--If BCBS-LA was going to double its size (Market Share goal), remain economically viable (Financial Stability goal), improve performance (Quality Performance goal) and develop technology and skill sets (Resource Management goal) it needed to apply increased attention to the quality of its services and operations.

-- "We put together a strategic plan and focussed on marketing its message," Hoye states. "We went out and let the businesses and customers throughout the state know that Blue Cross Blue Shield wasn't going away."

Tools for Success
-- Blue Cross and Blue shield of Louisiana and the Baobab Group developed a tool set for the BPM project to use in its quality improvement processes. These tools included customer surveys that measured both qualitative and quantitative customer feedback. This ensured that BCBS-LA customers were ever present in company decisions and they were aimed at reversing customer distrust and ill opinion. According to Hoye, the BPM was "designed to include the customer voice." BCBS-LA used the Corporate Pulse survey instrument, which was developed by Provo, Utah-based Vitality Alliance. The survey was designed to gather both qualitative and quantitative customer input. The quantitative data showed BCBS-LA specific areas for improvement while the qualitative data exposed areas where customer opinion could be improved.

--The second tool the BPM project used was the Process Model modeling software. This software tracked processes and identified opportunities for improvement. It was also used to assess cycle time, cost and overall quality. The modeling software also showed what results BCBS-LA could expect from individual scenarios it planned to implement. The strength of the Process Model tool was its ability to show individual employees how certain process changes could effect numerous departments and impact the business in a positive manner. The software also provided the senior team and board of directors with evidence of the BPM's success.

--"With the modeling software you understand relationships," Hoye adds. "The business process was complex-there were a lot of interdependencies. This tool let everyone understand cost, the effect of changes and let employees justify the program."

--A third tool that the BPM incorporated was a bundle of problem-solving and design improvement tools that were used to guide conflict resolution and system change.

--Finally, BCBS-LA used "dashboard" presentations on a continuous basis. These dashboard presentations tracked key metrics throughout the company and provided regular feedback as to the success or failure of the change efforts.

The Importance of Leadership
-- One aspect BCBS-LA had learned from the earlier, failed quality improvement process was the need for strong senior support.
With the new Business Process Management process, BCBS-LA developed operating principles that senior leadership would follow to help ensure the success of the project and of the company.

-- "The BPM had to be lead by all senior execs," Hoye states. "The early plan didn't have the support from the top." One operating principle the senior team followed was the documentation of decision making and the expected return on investment for the company.

--The senior team also consistently and continuously communicated with all stakeholders in order to raise support for the change efforts. These stakeholders included the employees who performed the day-to-day tasks that were being impacted by the quality improvement processes.

Bottom-Line Benefits
-- Because of the attention the senior team and BCBS-LA placed on the BPM and other change initiatives, the company was able to realign and achieve its goals. Blue Cross and Blue Shield of Louisiana grew its market share by 70 percent, increased its cash reserves by $50 million and expanded its employee base by 70 percent.

-- Blue Cross and Blue Shield of Louisiana was faced with hard times. By aligning its resources and employees around a vision of preeminence the company was able to build itself up to the level of Louisiana's top provider of health care insurance.


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