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A Shot in the Arm

Anthony Watson prescribed a dose of technology for once-ailing HIP Health Plan.

When Anthony L. Watson arrived at HIP Health Plan of New York (New York, $3.36 billion in total revenue) in 1986 as executive vice president, the health insurer and provider of medical services enjoyed a blissful disregard of real-world business demands. Since for-profit health insurers were not allowed in the state, the company felt no competitive pressure. But by the end of the decade, that changed, and HIP faced an unprecedented challenge.

That challenge became Watson's responsibility when he was appointed the company's president and CEO in 1991. "We had to either pick up the pace or we wouldn't be in business any longer," Watson recalls. "The company needed a shot in the arm."

Prepping the Patient

The shot was to be a massive dose of technology to dramatically improve service and operating efficiency. But in order to get to the point where Watson could really pull the trigger on technology transformation, he first had to convince the board of directors that cultural transformation was necessary, and he then had to build a team to make that transformation possible. By the time he had the present management team in place, Watson had replaced 27 of HIP's 30 top executives.

Among the most important changes was the appointment of John Steber, HIP's executive vice president and CIO. "I knew that technology represented the only way for us, so I went to find the best technology officer who would accept the challenge," Watson says. Steber, who was with Aetna US Healthcare at the time, had decided he no longer wanted to work for a large company. But the CEO made him an offer he couldn't refuse. Says Watson, "I invited him to build from scratch." Steber came on board in 1997 and recruited Pedro Villalba to be CTO the following year. "They have made an unbeatable team," Watson boasts.

With Y2K looming, the team faced the prospect of enormous expenditures to make HIP's antiquated systems compliant. Since those steps still would leave the company at a functional disadvantage, HIP chose to place its bets on newer technology. "We left our core system on the mainframe, which does the main processing for claims, enrollment, billing, etc., and wrapped around it the new Web browser client/server technology," Steber relates. "We replaced a lot of our financial systems with PeopleSoft [Pleasanton, Calif.] equipped with a Web browser front end, implemented a new medical management system, MEDecision [Wayne, Pa.], also based on newer technology, and integrated it all back to our back-office platform."

In early 2001, the carrier went on to launch its customer Web site, which provided quoting, provider claims and online member enrollment functionality, as well as a direct sales platform, by the end of that year. Today, the site includes functionality for prime dental insurance, hospital notification, an online referral system and Medicare member services, as well as access to WebMD - a company that HIP co-founded in 1997, relates Watson. Addressing the cultural diversity of HIP's New York City member population, the site's content is available in English, Spanish, Chinese and Korean.

Pushing the Envelope

HIP continues to push the technology envelope, piloting such technologies as voice-print-enabled IVR and wireless PCs with handwriting recognition software for use in medical management.

It's all about business value in the end, Watson stresses. To make the point, he refers to the company's rate increase statistics, which have beaten the industry average by 5 percent over the past three years. "It's been our technology that has allowed us to be that efficient," Watson notes.

Anthony L. Watson, President and CEO, HIP Health Plan of New York

TECHNOLOGY PHILOSOPHY: "The future of healthcare will be won by technology, especially with regard to servicing policyholders and healthcare providers. We will need to be able to communicate worldwide with various related entities and we will only be able to do that with technology that truly works."

LAST BOOK READ: The Da Vinci Code,by Dan Brown.

HOBBIES/PASTIMES: Fishing and hunting.

BACKGROUND: Watson competed in the 1960 Olympic Games in Rome in the long jump as a member of the U.S. track and field team.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio

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