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Medical Mutual of Ohio CEO Kent Clapp Brings Efficiency to IT Spending And Operations

Kent Clapp concedes that he's not a tech guru. But his understanding of how technology relates to business processes and customer service has helped Medical Mutual of Ohio reach new heights.

When the topic of spare time comes up, Kent W. Clapp is likely to mention his boat on Lake Erie and his four children. He's less likely to mention thwacking a small white ball along a meticulously manicured fairway — "I hack around on the golf course, but I wouldn't consider that an enjoyable pursuit," Clapp says with a laugh.

But while Clapp may not be an even-par golfer, he has demonstrated the same qualities any good golfer should possess — persistence, patience and focus — in cultivating technology initiatives at Medical Mutual of Ohio ($2 billion in annual revenue). As chairman, president and CEO of the Cleveland-based health insurer, Clapp has expanded the business, spun off the data processing unit into a revenue-generating subsidiary, and impressed industry analysts with efficient tech spending and operations.

An example of that efficiency is the carrier's claims operations. About 10 years ago, Clapp relates, Medical Mutual of Ohio spent roughly $8 to process each paper claim. Today, nearly all claims are collected electronically, and for less than a dollar each, he boasts, adding that the company's technology is a competitive differentiator. "It makes us efficient from an administrative point of view, and that obviously helps us in the market," Clapp says.

Another way Medical Mutual differs from other insurers is its wholly owned subsidiary, Antares Management Solutions. Launched in 1997, Antares is a for-profit entity offering business process outsourcing to other carriers. "It opened up new revenue streams," explains Clapp, who is credited as the BPO provider's cofounder. Medical Mutual CIO Ken Sidon serves as the subsidiary's president.

Under Clapp's leadership, Medical Mutual of Ohio also has expanded into new states (including Georgia, Illinois, Indiana, Michigan, Pennsylvania and West Virginia) largely thanks to acquisitions. "We've put in our systems [at the acquired companies] — everything from e-mail to knowledge-based systems — and it's streamlined what they did and made them better," Clapp says.

The key to better technology decisions at Medical Mutual of Ohio, Clapp continues, is adhering to the process and user involvement. Veering from that strategy is a recipe for ineffective spending, he asserts. "We are able to both control the cost and come up with superior products by the methodologies we use," Clapp says.

Leave IT to the Experts

An accountant by trade, controlling costs comes naturally to Clapp, who says that if he weren't in the health insurance business, he'd be working in finance one way or another. He's certainly not a technology guru, he concedes, noting that he prefers a good, old-fashioned cell phone to a BlackBerry. But Clapp is proof that a CEO doesn't necessarily have to have an extensive IT background to be tech-savvy.

"The most important thing a CEO can do from a technology standpoint is make sure the right people are working for you. I'm not going to go in and write some kind of computer program. My skill level that would apply [to technology] is understanding the business process and making sure we're satisfying our customers and our vendors," Clapp says. "The actual programming and technology part, you leave to the experts."

When hiring those experts, Clapp continues, communication skills and multitasking abilities are as important as a strong IT background. "When you run high-tech systems, you need to be able to juggle a lot of projects at one time," he says. "You need people that can handle that multitasking and are able to communicate with users."

Clapp adds that he has tried to instill a culture of technological development at Medical Mutual, noting that all IT systems are subject to review every few years. Currently, for example, the company is in the midst of a three-year project to reprogram its major claims system. "It's everybody's job, including mine, to make sure that we have those business processes that are top-notch and that they give us a strategic advantage in the marketplace," Clapp says.

Kent W. Clapp
Medical Mutual of Ohio

Career: Medical Mutual was known as Blue Cross of Northwest Ohio when Clapp joined the company as corporate controller in 1976. The company merged with Cleveland Blue Cross & Blue Shield 10 years later, and Clapp oversaw the combined company's financial operations. He was promoted to SVP in 1989 and then to president and COO in 1992. The board of trustees named him CEO in May 1997.

"The most important thing a CEO can do from a technology standpoint is make sure the right people are working for you."

To hear more from the 2007 Tech-Savvy CEOs, visit www.insurancetech.com/podcast.

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