Influential: Industry In Transition

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November/December 2015 Issue

Karen Raley has spent more than 20 years in the state’s
health insurance industry, including leading
marketing for Arkansas Blue Cross Blue Shield.
When she retires in January, she leaves an industry in flux.

Photography by Sara Edwards Neal

 

T he Affordable Care Act. The rise of technology. The shifting focus on the consumer. These are just some of the changes that Karen Raley has experienced in her more than 20 years with Arkansas Blue Cross Blue Shield.

For the past 10 years, she has served as vice president of corporate marketing, where her focus has been on brand management and advertising. She admits her job can sometimes be difficult, with ever-changing regulations and laws — both federal and state.

“Thank heavens, we have a legal department, and thank heavens, we have an actuarial department, and we have a strategy office,” Raley said. “Those people are engaged in helping us understand all the new regulations and, probably more importantly, what it means to the people we serve.”

On Jan. 8, 2016, Raley will retire, leaving an industry that she describes as “in transition.”

She and her husband will move from their home in Pine Bluff to Hot Springs, where they will live on Lake Hamilton. Raley said she’s looking forward to finding new passions to pursue and being a “full-time grandma.”

“It’s an exciting time,” she said. “It’s the right time for me, and it’s the right time for the company to be able to bring in someone whose focus is technology and data. And, I think it’s the right thing to do for our customers as well.”

Raley is spending the last few months in her post helping her successor, Eric Paczewitz, transition into her role.

AMP had the chance to chat with Raley in her office in downtown Little Rock in September 2015 about Arkansas’ insurance and health care industries, including how they’ve changed over the years and what lies ahead.

AMP: What did you do at Arkansas Blue Cross Blue Shield before leading the corporate marketing department?

Raley: I started in our Pine Bluff office as a sales rep selling to employer groups in south Arkansas. Shortly after I came, we established regional offices around the state. So, I ran the office in Pine Bluff for many years and had responsibility for sales and service, and case management. About 10 years ago, I started commuting [to Little Rock] and took over what was then the advertising and communications department. It is now the corporate marketing department.

AMP: Commuting from Pine Bluff to Little Rock every day is quite a drive. What has made you want to stay and live in Pine Bluff?

Raley: I love Pine Bluff. It gets a really bad rap around the state, but it is a place like no other in terms of the people there being very inclusive and always being there for you. I laugh and say that if you lose a family member in Pine Bluff, the very first thing that happens is that there’s a guy that delivers the refrigerator and puts it up in your garage because so many people will come and bring food. There’s no better place to be than that. We’ve stayed because we are so crazy about the people there. When we retire, we’ll live on [Lake Hamilton] in Hot Springs. It’s not because we don’t love Pine Bluff, but because that’s always been our plan.

AMP: What are your responsibilities as vice president of marketing at Arkansas Blue Cross Blue Shield?

Raley: My division has responsibility for brand advertising and brand management, for providing the marketing collateral that we need to sell and service both our consumer customers — our individuals that buy insurance on their own — and our employer group customers. We have responsibility for soliciting and maintaining director response programs, to ask individuals to buy Blue Cross products, whether they’re over 65 and buy our senior product line or under 65 and buy through the exchange or have a Medicaid private option plan or an individual plan.

We are also responsible for corporate communications and all of our member communications. We have a new area that’s just really emerged in recent years that I’m very excited about, called consumer experience. As an association of Blue plans, we’ve funded a tremendous amount of research to help us understand the pain points for people who buy our products and help us understand how they would like to see pain points improved. [A pain point refers to a problem that is real or perceived.] That area is going to be responsible for fixing that in ways that make people happy.

AMP: How did the passage of the Affordable Care Act affect Arkansas’ insurance industry, and what do you anticipate for the future?

Raley: That was an unbelievable period and continues to be. There are a lot of things that are very exciting about being in an industry that is in the early stages of a very rapid transition. That’s true not only for health care financing but also health care delivery. It is many days frustrating, and often must appear discombobulated to people, but I think there are tremendous opportunities there as well.

I think the next five years is going to be a very exciting time. I think we’ll see the delivery system and the payers come together in ways that improve the quality of care that people receive. We have vast amounts of data around how health care is delivered and how much it costs and even to some extent how effective it is. If you’re a doctor or a hospital, you know what’s going on in your area, but you may not see the broader picture. Working together, we can provide that data. Then doctors and hospitals can decide how they need to work to improve care and to lower the cost. You may hear that referred to as a transformation from volume to value. In other words, we want to pay for care that works, not just pay for care. I think that the health care delivery system — the physicians  — are very engaged in those discussions. From our perspective, as a health plan, there are many things that are confusing to people that were driven in part by the technology that was available at the time. Technology has just exploded, and although it will be hard, I believe we have the opportunity to work with doctors and hospitals to take patients out of the middle of the “What’s covered, what’s not covered, how much is it going to cost?” — all of the things that make people go crazy.

AMP: How does Arkansas’ Medicaid private option fit into all of this?

Raley: Regardless of your politics, regardless of whether you were pro or against [the Affordable Care Act] and the private option in particular, it has become hard to argue that the private option has not been good for the taxpayers of the state of Arkansas, aside from what it’s done for the health of people who needed it. And, based upon the projections of the consulting group that the state has hired through the [Legislative Task Force on Healthcare Reform], it will continue to be an economic plus for the state through the next five, six years. That’s exciting because it allows the health care delivery system to do some things the money wouldn’t be there for otherwise. It allows us as a state to elevate where we’ve been in terms of the health of our citizens, and that impacts our economy in big ways.

It’s a great time to be in this business. I think there is a lot ahead. In hiring my replacement, the skill set that was required of me 10 years ago when I took this job is so very different from what we were looking for when we hired [Eric Paczewitz] who will replace me. It’s very much more about the data and how you use that data to help people understand what they purchased on a one-to-one kind of basis and the technology to let people know how you take them out of the middle so they’re not dealing with, “Is that going to be covered?” That’s a conversation we’re having with the health care delivery system. That technology and data focus, for a marketing person, is certainly a new competency.

AMP: What is it like explaining something as complicated as insurance to the general public?

Raley: We all know insurance is terribly complicated. It’s not so much that insurance is complicated; it’s that health care is very complicated. The way we know how to pay your bill is because the provider sends us a code, and there are tens of thousands of codes. And so it is the complexity of health care delivery that makes explaining insurance very, very hard, and makes it difficult for people to understand. For instance, we struggled with the word “deductible” for years. That’s just a complex concept. It’s not intuitive to understand why you would want me to pay so much out of my pocket first before you start paying as an insurance company, and it’s not intuitive to understand why, in the end, that means you pay us less. So, it’s hard to do that, but there are ways to do that.

The law requires that we send an explanation of benefits. We reworked ours, and we’re about to need to look at it again. We did a lot of research and had a lot of consumer input and we won a lot of awards for that document because it does help somewhat in explaining, but that’s just the first little tip of the iceberg. Every little single thing that we put out there needs to be simple and easy to understand, and we laugh at ourselves sometimes. Our culture is that we tend to overexplain — we want to leave no stone unturned — sometimes people don’t want to know how we made the clock; they just want to know what time it is. We have had to catch ourselves.

AMP: What are your plans going to be for retirement?

Raley: I won’t be able to be as full time [a grandma] as I’d like to be, but I’m going to spend a lot more time with my family. My daughter and her family live nine hours away [in Knoxville, Tennessee]. I’ve missed all the soccer games and dance recitals that I’m interested in missing. I’m fortunate to still have my dad, and my husband still has his mom. They’re in their 80s now, and I’d like to be able to help them some to the extent that they need it. I’ve never been able to be as engaged with my church as I’d like to be. You always have some passions that you’d like to spend more time figuring out how to get engaged in. My particular one is childhood hunger, and I’d like to see if there’s some way I can contribute to feeding kids in our state.

AMP: How would you characterize your role in the state’s overall insurance industry?

Raley: Mine has been very small. It is a big, complex behemoth of an industry, even in the state. I’m proud of the role that Arkansas Blue Cross plays. I’m not sure that people are always aware of the extent to which Arkansas Blue Cross has been engaged in building the health care infrastructure in the state, in making certain that there are people practicing medicine in rural areas of the state and that our citizens have the ability to access the latest and greatest technology. We really have some world-class medical facilities in Arkansas. We’ve at least had a small role in contributing to that. I’m proud of that. It’s frequently said in our industry that ZIP code is just as important as genetic code, and I think that we are uniquely positioned in a rural state with a poor overall health status to use our donor dollars in ways to improve those social determinates of health, to put programs in place that help people live healthier, more productive lives.

I’m proud of that. I’m also humbled every day by the intellect of the people that I work with. I’m always kind of afraid of being found out, that I’m not where they are. I think we have some of the best minds in the country focused on improving things in Arkansas. And, Arkansas has really received a lot of national attention for a number of the creative programs that we’ve put in place here to improve health care. The jury is still out on a lot of them, and most of them are very long-term investments. They are structural changes, where payoff is five and 10 years down the road. It’s been great to be here during the period when those initiatives were launched. It’ll be fun as a retiree to read about them.

AMP: If you look back on your career, what are some of the highlights?

Raley: The No. 1 is the shift in focus by our company and the entire industry to the consumer. We’ve always been very concerned about the fact that as health care costs go up, premiums go up, and so we used to sell primarily to employer groups. When I was in sales, we’d go out every year with a renewal that I knew was taking away someone’s raise or a big part of it. Even though you understood the underlying economics of that, you hate to see that happen. Now, there is a tremendous amount of focus — both from the federal government on down — to helping people make good decisions about the health care they consume, helping them understand what the cost implications of that are and helping them play a more active role in their health. That’s an intensity of focus that I really think is a good one.

About five years ago, even before the [Affordable Care Act], we were already talking, as an industry, about the rise of consumerism. As deductibles went up, most people didn’t spend a tremendous amount on health care in a given year, so people had more skin in the game and more out of pocket. I think that’s what really drove it. For many years, your employer paid your entire premium, and you didn’t have many out-of-pocket costs. It just wasn’t an issue. Once it became us that paid for a lot of health care as prices continued to rise, focus began to shift and, of course, the [Affordable Care Act] dramatically accelerated that.

Technological changes have driven two things. First, we can use technology now in ways we couldn’t years ago to make how we pay for health care more transparent to people. So there were times when, years ago, the system wouldn’t process a claim that way. Now, we can get those things and make the system work for people. The second is what it’s done for our industry in terms of helping us understand cost across the system. Twenty years ago, we might not have known that there are unwarranted variations in cost. Hearts in Little Rock are pretty much the same as hearts in Jonesboro or Fayetteville or wherever that person might be. If there’s a big difference in the cost of the same procedure to treat a heart, you have the ability now to identify that and to begin looking at why that is.