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Empire BCBS Continues Recovery

The biggest IT challenges New York City-based health insurer faced involved hardware resupply and connectivity.

Some two months after the total destruction of its One World Trade Center headquarters on September 11, Empire Blue Cross Blue Shield ($2.2 billion in assets) continues its process of recovery. The most significant impact was the loss of nine employees. But having maintained business continuity in the wake of attacks, the carrier's biggest administrative challenges have been replacement of lost equipment and relocation of operations and staff.

In recent years, Empire had been "very focused on making certain that from a technology point of view we've always had full failure and redundancy built into every single element of our technology configuration, whether it be data or telecommunications," says Dave Snow, president and chief operating officer. "This has also been measured by us in terms of meantime between failure, which we have constantly worked on increasing for all the systems across the board for the company."

Snow reports that contingency plans were built in anticipation of such possibilities as cables being accidentally cut by construction crews, cutting off the flow of electricity or data to a facility. But, he adds, the principles Empire applied worked equally well for a crisis of the magnitude of the Sept. 11 terrorist attack.

When the disaster struck, Snow relates, "We immediately had all our Web, data and customer service services switch over to all of our other customer service centers throughout the state." As a result, none of the parties interacting with Empire would have noticed a difference in service, according to Snow.

"If you couldn't get us, it was because the phone company had a major disruption and the lines were jammed," Snow says. "We were able to answer phones with no problem, and it's largely because of the way we've architected our technology infrastructure. We had also digitized everything, so it was backed up."

In many ways, Internet technology was the essential element in being prepared for such a disaster and being able to provide a measure of reassurance, according to Snow. "For us it was a godsend because, while people couldn't get service over the phone, for a variety of reasons, the Web service is 24/7 and working all the time," he says. Using the online communication channel, Snow adds, those concerned could "go right on the Web site and get current information 24/7 about where we were with the tragedy and could actually get self-service any time they wanted online."

The only information assets lost to the disaster were paper files relating to physician contracts and credentialing, along with a number of vendor contracts, all of which are currently being replaced, according to Snow.

Since the majority of the firm's customer service and claims processing operations are located in upstate New York, the IT challenges faced were chiefly in securing hardware and connectivity for employees temporarily relocated to Empire's facilities in Melville and Middletown, NY, and to space provided by Horizon BCBS in Newark, NJ. "It's a nice thing when you're part of a big system," comments Snow. "We got a lot of help from our friends."

In addition to good internal contingency planning, Empire benefitted from stellar service from hardware suppliers such as IBM (Armonk, NY) and Cisco Systems (San Jose, CA) in getting its employees up-and-running, according to Snow. "They performed beautifully to get us those pieces of hardware we needed to get online and get our temporary spaces working properly," he says. "We were very fortunate in that regard." IBM also provided Empire with hotsite facility space, Snow adds.

Allocating Resources

Priorities for technology resources allocation were set by a body of senior Empire officers called the Operating Committee, chaired by Snow. "The group meets weekly and we're able to say, 'OK, there are 400 PCs coming in this timeframe and here's how the spaces are lining up,'" Snow says. "We just had to look at our business and set the priorities together, then we directed the resources to get those people up first. It worked very well, with very little confusion."

Empire's major challenge since the disaster, "beyond the trauma to our employees, and dealing with those that we lost—has been procuring space, both short-term and permanent, which makes sense geographically and is affordable," Snow says. With 460,000 square feet of office space, Empire BCBS was the fourth-largest lessee at the World Trade Center, he adds. Since the attack destroyed about 30 million square feet of office space, the availability and cost of appropriate real estate has been significantly affected, Snow says.

One month after the attack, Empire had about 65 percent of its 1,900 displaced employees back to work and planned to have all working in short-term accommodations before the end of November. At press time the carrier was negotiating a solution for long-term relocation.

New Headquarters

While terms had not been finalized, Snow expressed confidence that the solution would involve 105,000 square feet in midtown Manhattan—where the new headquarters would be located—and 330,000 square feet in the Metrotech complex in Brooklyn. The latter "would be a build-from-the-ground-up project, so it would be 18 months before we could move into that building," Snow says, adding that the exploitation of excess service center capacity accounts for a smaller figure than that of office space lost.

The events of September 11 also led to a formal consideration of the telecommuting option, according to Snow. An assessment was made regarding which employees could resume work using only a PC connection, and those employees were given low priority for assignment to new office space.

"Almost immediately we earmarked about 200 people to be telecommuters," he says. Owing to cost-effectiveness of telecommuting, Snow believes Empire will further expand its use. However, he says "We're also going to make sure we provide parameters around it so that we can measure productivity." And because employees working remotely can feel detached and "disenfranchised from the business," Snow adds, "we'll have to create rules to provide for that human need."

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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