Q&A: BCBS of Rhode Island's CIO

William K. Wray joined Providence, R.I-based Blue Cross & Blue Shield of Rhode Island as EVP and CIO in 2009 after 16 years at Citizens Financial Group and immediately confronted challenges that some CIOs never face in their careers. Not only is BCBS of Rhode Island redefining its strategies in a period of historic regulatory and competitive change, it also was bogged down in a legacy core systems replacement project that was off course. Wray's priorities have been to get the initiative to implement Greenwood Village, Colo.-based Trizetto's Facets solution back on track, as well as to introduce new thinking in critical areas such as analytics, service delivery and customer experience. Wray spoke recently with I&T about some of the steps BCBSRI (more than 600,000 members) is taking to compete more effectively in the new era of healthcare.

How has your role in the company's core systems replacement project evolved?

Wray: I [took] over the large core systems replacement project, called Blue Transit, which the company had started a few years prior to my coming here. Like many such projects, it was started with the best of intentions -- that we would solve all the problems the company was facing with a gigantic infusion of software. I was brought in to help restructure the project and … put in some of the fundamentals of project management discipline and other things the company had not had experience with.

Our objective is only achieved if we're providing faster time to market, better unit costs and better service. [My job] was to take a project that had been conceived as an IT project … and say, "There's no shortcut -- let's set up a problem-solving apparatus; we'll use the software as part of it." That's where we are now. The company had bitten off a big piece, maybe more than it could chew at the time, but … it's now at a size we can chew, so we've started to deploy in production. We're servicing customers on it now and should be substantially complete by the end of 2012.

What did you do to regain control of the project?

Wray: The company had, somewhat naively, believed it could put this [project] in the hands of a systems integrator, [thinking] that would make up for the fact they'd never done a project of this size. But with something of this size there's no way you can do this without a whole enterprise commitment, in terms of the business being engaged, as well as folks in the program and technology teams. You can't outsource your brains and your strategy, and that's kind of what we tried to do. My job was to reset the organization so … it was a Blue Cross project, not a system integrator project. The org chart also had a lot of redundancy in it, which is one way to kind of deflect accountability. But you can't run a project like this by committee; you have to have a clear chain of command.

What is happening with BCBSRI's analytical infrastructure, and what is driving these efforts?

Wray: The core of our business is knowledge. The classic use of data at health insurance companies was to be able to analyze claims and to price new business. In the future that's going to have to change radically, so the information we share with the provider community … and, ultimately, with consumers and patients, [can] influence the way they behave and thus their health. That's a wholly different way of looking at data and the use thereof, versus the way plans have used data up to now.

The problem is, data projects are like mud holes. When I was an Army engineer, they'd say, "If you have a mud hole in the road, how do you fix it?" Nine out of 10 people say, "Throw dirt into it." There's an equation that says dirt plus mud equals more mud. That is exactly true with data. The way most people think about data problems is, "Let's have more data." They keep throwing dirt into this mud hole, and it never solves the core problem.

What we need to focus on is, what's the information that will make somebody take their medicine on time? If you start with those end-user scenarios, and you back into it, that provides a lot more focus on the data investments you could be making. Otherwise, people keep throwing more and more data into the process but never get the results they want. We need to enhance our analytical infrastructure so we can drive to the business objectives of better health at lower cost.

What are some of the ways healthcare reform is influencing your priorities and focus at BCBSRI?

Wray: What's happening in this industry is what happened in other industries: There's going to be a lot of consolidation. It will be driven by scale and cost. So to the extent that you are not operationally excellent -- which means you're faster, better, cheaper; you've got excellent risk management, excellent customer management skills -- you're not going to survive the next five years. Companies in our industry have been generally shielded from competitive pressures … [and] that's going to change rapidly.

We have to react to specific elements of healthcare reform. For example, … there are going to be exchanges -- we have to figure out, how does Blue Cross of Rhode Island sell on an exchange? We've tended to be the strongest brand in the market, [and] we've also tended to be slightly more expensive because we have richer benefits plans. Is that going to play on an exchange when effectively it's like Expedia or Lending Tree? We don't know yet.

How does your experience in the banking industry help you guide BCBSRI through these kinds of changes and disruptions?

Wray: During the time I was at Citizens we grew by a factor of 40. We were constantly in change mode -- you get used to it. [It] is something you can get used to and thrive on, especially if the alternative is being out of business.

A lot of the ways banks, and before them retail and manufacturing, have learned to be frugal and nimble with technology and operations investments -- for example, using lean Six Sigma and continuous improvement to drive change -- this industry is ripe for it. We're off to a very good start deploying those methodologies to drive operational excellence.

The health insurance business has been largely focused on groups as its customers. I came from a retail bank, where the retail customer was the heart and soul of the place. I came here, [and] we didn't think of them as customers, but as members, which was appropriate, but we didn't see them as customers making a choice for Blue Cross. The people making choices for Blue Cross were HR and others. So what this company is learning, and trying to shift toward, is the same kind of fanatic retail orientation -- out to delight the customer -- as good banks have, as good airlines have and as good stores have.

Are there specific things in terms of channel and delivery you focused on at Citizens that might be applicable in health insurance?

Wray: What customers want is someone they can trust, who's just extraordinarily easy to deal with because things are simple and they work all the time. That was the focus of the branch work we did -- having an experience that when we opened an account, instead of taking 45 minutes and nine pieces of paper, we got it down to eight minutes and one piece of paper. You want the customer to think, "Wow, why was that so easy? I want to keep coming back to you guys." You don't even want them to think about going somewhere else because you're so friendly and so easy to work with.

Frankly, this is a very complex industry, and much of that is self-inflicted -- most cost controls come from complexity. If we get back to where individuals make most decisions on their own, it's going to have to be a lot simpler for them to compare a plan and understand why they're choosing it. Plus, an awful lot of this will be delivered through the web and through mobile. I don't get excited about mobile because it's a cool new technology, but I do know I routinely use an iPhone or iPad to do important transactions in my life, and a lot of other people do, too. So if we're not out there with a great brand and a great experience in the channels the customers choose, customers aren't going to choose us. That's a different mind-set because we're not used to customers choosing us; we're used to companies choosing us.

What about the privacy and security issues related to mobile solutions?

Wray: To me what matters on mobile is [if] I can actually do something with it. If I'm flying on Southwest and I can check in with an iPad and get closer to the front of the line, I'm going to do it. If I … just saw a couple of videos educating me about how their airplanes fly, I'm not going to use it.

Most health insurance companies have focused on videos about diabetes on mobile; I'm being somewhat facetious, but that's not moving the needle on anything. But if someone can buy something online, or if in a doctor's office they can pop something up online and maybe get a coupon to get their blood done that way -- if we get mobile to that level, we'll figure out the privacy stuff, because that's the kind of thing that will sell insurance and make people healthier.

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio