Redefining what’s possible in healthcare: An interview with John E. Gallina
John E. Gallina, EVP and CFO at Anthem shares his perspective on the changing healthcare landscape and opportunities to reduce cost, reinvent care delivery, personalize the consumer experience, and engage with partners to create change.
DISCLAIMER: The views and opinions expressed are those of the interviewee(s) and are not necessarily those of McKinsey and Company.
Following is an edited transcript:
This is Shubham Singhal and I'm here with John Gallina, chief financial officer of Anthem. Welcome, John. Why don’t we start with your view on what you see as the most significant trends in healthcare?
As you know, there are many difficult challenges in the healthcare industry today. In addition to the rapid pace of change, affordability and access to quality care are significant issues, and they're significant for employers, consumers, the government, and society.
John, you’ve spoken a bit about affordability. What are some of the big areas that you see [which need] to [be] addressed?
Health insurance obviously is a function of the price of healthcare, and whether it's the increase in cost structure associated with specialty pharmacies, new medications [and] inpatient procedures, that are helping extend people's lives, they do cost money. These things help push the affordability issue to the forefront within the healthcare industry.
You also mentioned technology and consumer behavior. [How] do you see that helping with affordability?
Technology will help provide better data and better insights [which will] provide a more educated consumer base and better information to physicians who [can make] evidence-based medical decisions in treating the patient.
From the insurance company perspective, we have access to the most recent data, and we can package that information and provide it to providers so [they] can make the best evidence-based medicine decisions and help improve the health outcomes of patients.
There are a lot of new entrants into the market, and everyone is trying to accumulate data. Everyone is trying to have access to this information. Where we see it's beneficial is the collaboration that we're doing with the providers. Given that we have the leading market share in most markets [where] we operate, we have more information than anyone else within those markets. And then we take that data and provide information back to the providers.
When they're in their office [and] they look at our integrated healthcare data set, where they can look at a [member’s] health information, [their] pharmacy information, their behavioral health information, their dental information, their vision information, [the provider] can make the best decisions and provide the best care to members. It's really the collaboration with the providers that makes a huge difference.
What is the impact of some of these changes in healthcare to your business?
Given the complexity of the healthcare ecosystem, there are no simple answers, yet at Anthem, we have the power to lead and shape the conversation by partnering and innovating across [the] system to create real value for our stakeholders.
This means leading the transition from fee-for-service to value-based care by collaborating with providers to provide flexible payment models, enhance data sharing, and reduce administrative burdens.
We've been very successful. As of today, 64 percent of our total medical spend is tied to payment innovation programs including payment-based contracts, [which] lead the entire industry. We need to demonstrate our value to employers, to states, and to [the] federal government, and that means providing affordable products with an array of price points and features while simplifying and improving the healthcare experience for their employees and their families.
[I’d like] to switch now to your role in this industry [as it] is changing—what does it mean for your role as chief financial officer?
My traditional role is CFO of Anthem [where] I have oversight for the finance functions. And I also oversee all the actuarial functions, including underwriting and pricing, product development, forecasting, and valuation.
In addition to all that, I was honored and privileged to take over the oversight of our healthcare management organization, which encompasses [our] healthcare, clinical, and network operations with a focus on delivery of high-quality and cost-effective care for consumers, while achieving strong medical cost performance.
The rapidly climbing cost of healthcare is one of the biggest challenges facing our industry, and our consumers have witnessed our company undergo significant changes in transformation. We’ve gone from a single-state mutual insurance company to one that serves over 41 million Americans, or approximately 13 percent of America.
The one thing that I really need to ensure [is] that we have the right culture. To effectively establish our new mission, vision, [and] values in culture, we can't just go through the motions. We [need] to live our culture every day. We must ensure our desired culture is integrated into every fiber of the company, including the hearts and souls of the associates. [We believe that] shaping our culture is also tied to our bottom line.
What are the lessons learned? What can your peers across the industry take away?
One lesson learned is to make sure that information is consistent across different functions.
In the cost-of-care world, for instance, are you doing things that are appropriate for members, that benefit members [through] affordability and the cost structure? Can you tie those back through financial performance?
Another lesson learned, [is] ensuring the entire team is on the same page. It [goes] back to the culture issue that I spoke about before, of having the proper messaging, the proper tone, really setting the appropriate expectations, and getting everyone aligned. When everyone's aligned at the outset, the journey is much easier than when you're trying to pull people along down the road.
We have in excess of 65,000 associates—and it really is quite an initiative and challenge to get all 65,000 people aligned. But I believe that we're going to be very successful for a very long time.
In any large organization, the alignment of the team [is] quite the challenge. As you're driving these changes, are there any pieces of advice that you have?
The thing that helps capture hearts and minds is to really paint the vision, and to really describe where we're trying to go and why. Provide the information to folks in the way they like to receive it, in the way they can understand it, and help [connect] the dots for each and every associate [that] what they are doing is important, [that it] adds value to the member, and [that it] helps achieve the overall mission and vision of the company.
That's terrific. This has been a great conversation and you've painted an inspirational vision of where healthcare might head [and] many of the things you have been leading and driving. [Do you have any] parting thoughts for listeners?
The biggest lesson is that there's always room to redefine what's possible in healthcare by reducing cost, reinventing care delivery, really personalizing the consumer experience, and engaging with partners to create change.
A vision for the better tomorrow is thinking about the entire set of needs for each individual, leveraging digital capabilities, data insights, personalized solutions, and just never being satisfied with the status quo. There's always going to be opportunities for improvement.
I'm very excited about Anthem's future and think that with our size, our scale, our collaboration, our data, our partnerships, [and] all the other assets and attributes that we have, we are very well positioned to help be an industry leader for a long, long time.
Thank you, John.