Serving the state with the second lowest population in the US, Blue Cross and Blue Shield of Vermont has developed a knack for delivering a wide array of services comparable to its larger counterparts in the industry while maintaining a small company’s personal touch.

William Milnes, President and CEO

“As a small plan, we don’t have economies of scale,” he said. “On our own, we can’t spread our cost and get as deep into technology or other areas of expertise as we would like. To get over that hurdle, one of our core strategies is partner management. When we have a need, we do a national search for great companies that would be a great fit for us, and we work hard to form true partnerships with them. As a result, many people are shocked at what this little company can offer.”

Listen and respond
BCBS of Vermont is an independent, not-for-profit corporation operating under a license with the Blue Cross and Blue Shield Association, a 38-member organization of independent BCBS plans that provides health insurance coverage for one out of every three Americans.

Though the company was formed in 1944, it was operated jointly with the New Hampshire plan until the late 1980s when the departments of insurance in the two states forced a separation. At that point, Vermont’s oldest private health insurer finally started to build its own operations capabilities. “We’re a relatively old Blue, but we’re the newest Blue operationally,” Milnes explained. “Even today, I view us as a teenager company. We’re still at a point where we’re trying to reach operational maturity.”

If the Vermont Blue is now a teenager, it was still in its infancy when Milnes became chief executive in 1998. At the time, financial troubles had the plan on the verge of having its trademarks revoked. Milnes and his team immediately began working to lead the company to financial stability by analyzing all of its products and making sure they provided a fair value to customers. For approximately 18 months, the chief executive visited with clients and providers, learned their wants and needs, and tweaked the product portfolio accordingly.

“In our core portfolio, we eliminated more than 1,000 product options,” Milnes said. “Two-thirds of our portfolio was dated. We had to restructure it around meaningful product variations and options that our customers wanted. Pruning back the portfolio gave us focus, accuracy, and timeliness.”

Important partners
Following Vermont Blue’s portfolio update, the company found it would need a major technology upgrade to improve operations. The organization was working with three separate claims systems, and consolidating and upgrading them was a project that proved to be too massive for the small company’s IT department to handle on its own.

In 2001, BCBSVT began working with Boston-based business and IT consulting firm Keane, Inc. Keane delivered a comprehensive IT assessment and established a program management office. In 2003, BCBSVT extended its strategic partnership with Keane and signed a seven-year agreement with the company to manage and administer all of its ISAT functions. Under the agreement, 53 BCBSVT employees were transitioned to Keane while remaining on-site at the health plan’s headquarters in Berlin, Vt.

The strategic partnership enabled BCBSVT to consolidate its claims systems and significantly enhance customer service. The project increased claims first-past throughput rates from 57% to 81%, and open inquiries from members and providers were reduced by 95%.

“This move provided BCBSVT access to the diverse resources of a professional business and technology consulting partner, enabling us to benefit from process efficiency improvements that Kean’s methodologies offer while containing IT expenditures,” Milnes said. “Within 24 months, they were doing all of our IT jobs and meeting or exceeding our goals on every one of them. That allows us to focus on what is core to us—serving our customers.”

Enhanced services
A customer-centric focus has enabled BCBSVT to develop innovative products and services tailored to its customers’ needs. Last year, the company unveiled Blue HealthSolutions, a comprehensive care, pharmacy, and disease management program with more than 24 product options.

In care management, BCBSVT doctors and nurses provide members with support and assistance in coordinating the medical care that’s most appropriate for their needs. The specialty case managers work as advocates, reviewing conditions, and providing comprehensive assessments to optimize healthcare outcomes and help members get the most from their benefits. Members for case management are selected through claims data or referrals by physicians, and there is no additional cost for the service.

“It was an initiative our customers asked for,” Milnes said. “We went from one program to more than three dozen care, disease, and pharmacy management programs. For a plant our size in a rural market, that’s unusual. Our customers view it as a validation of our quality. We’ve gone from a weak program to one without peer, and we’re in the process of applying for National Committee for Quality Assurance accreditation and certification.”

This past year, BCBSVT also introduced Healthcare Advisor, a program that gives members and providers access to hospital comparison information, pharmacy information, treatment costs, and various other informational resources. According to Milnes, the program is part of an overall effort the health plan is taking to move from an administrative into more of an advisory role.

“We have a comprehensive portfolio of products. That can be bewildering for some clients. Rather than simply telling customers what we have, we ought to be an advisor. We want to have a conversation with our clients and become responsive to their needs. It’s something we’ve always envisioned, but now we have an organized program to make it a reality.”

By listening and responding to customer and provider demands and forging strategic partnerships, BCBSVT regained its financial footing and built a solid platform for future growth. According to Milnes, sales are at a record high, and marketshare is the highest it has ever been. “Our goal is to beat the median Blues in our service metrics. We’re making reasonable progress on being well above the median routinely. We have isolated examples of excellence, now our job is to consistently reach that level.”