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CIO Leadership: Dean's Karl Richards would rather walk the walk

Editor's Note: Also in healthcare, WTN Media is producing the Digital Healthcare Conference 2008 this May 7-8.

Karl Richards
Madison, Wis. - If you want to sum up the approach that Karl Richards takes to his role as vice president of technology at Dean Health Insurance, a little history lesson is in order.

As Richards grapples with the constant (and welcome) changes in healthcare information technology, he has a number of technological balls in the air. They range from the organization's key initiative - the installation of a new claims system - to adding another needed layer (a new “hot site”) to an already strong disaster-recovery program.

For a motivational reminder at this intersection of need and technological accommodation, he needs only to refer to one of his favorite quotes from The Autobiography of Benjamin Franklin: “Well done is better than well said.”

Staking a claim
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Given his current professional “to-do” list, talk would indeed be cheap.

Richards is in charge of technology strategy, strategic business initiatives, and technology operations and security for Dean. The organization's key initiative, the installation of a new claims system on top of new service-oriented architecture, probably would not do much to stimulate excitement outside the company's walls, but for a managed-care organization, it is much anticipated.

His 65-member staff, along with contract employees helping with integration issues, is smack in the middle of the effort to replace the existing claims system, a key application for any health insurance company. The current stand-alone mainframe system, which will be replaced with EDS MetaVance software, has served Dean well, but it does not offer the possibility of integrating a number of core systems, including Epic System's electronic medical records software.

MetaVance, which is used by some of the world's largest healthcare insurers, was chosen as part of a protracted vendor selection process because, in Richards' view, it encompasses all aspects of the claims process. The range from billing to payment to web portals for new consumer-facing functionality such as looking up claims, finding information on health coverage, and learning more about pharmacy benefits and the price of prescriptions. Most members use the portal to update their demographic information, change addresses, or print new identity cards.

In addition to the member portal, Dean will enhance an employer portal (with MetaVance), where customers can go to change their group membership.

With this customer-driven service, similar to the concept of Epic System's MyChart, Dean has found that it can reduce the volume of calls to its call center, offer 24/7 access, and use the portal to free up other staff time.

Extended benefits

Another key benefit of the new claims system will allow Dean to innovate in a product sense. The organization is interested in rolling out new consumer-directed programs, it's moving into more government programs like the new Badger Care Plus for economically disadvantaged children and families, and it believes the new system will provide the flexibility needed to extend market reach.

Dean has used the implementation process to make improvements in its project management office, including the formation of the first business-led PMO. The organization hired project management experts to run the project, and it employed more sophisticated cost analysis and benchmarking than in past projects.

Building the business case was not difficult, given the retirement of an expensive-to-maintain legacy system and because future customer benefits and opportunities for innovation were easy to project. Dean is a regional health insurer that competes with national insurers, and business sponsors were able to convince the board that it had the right platform to compete.

Helping the cause was recent enterprise-wide investments in server virtualization. To better manage demand, Dean will be running the system on high-end Windows servers.

“It was more business intensive than any other technology project I've been involved in executing,” Richards said. “We had a business team that was equal in size to the IT team, which is not always the case.”

Part of strategy behind the claims administration is a parallel implementation of SOA, which packages business processes as services and allows different applications to exchange data in order to provide IT support for the development of business processes. Richards believes the SOA implementation will enable Dean to achieve tighter, more sophisticated integration, and add more real-time capability.

“When you put in a new system, the big task is integrating it will other systems,” he explained. “As we do that integration work, we're not tying to pave over the same, old cow path, but create new paths. SOA is part of that.”

By the end of the process, he intends to demonstrate business value by having more than a new claims system, but also better ability to develop cost-benefit analysis and track claims. The provider portal is not just a provider portal, but the opportunity for physicians to interact with Dean on a real-time basis. Replacing old paper-based processes with IT enabled processes is not just a significant technology investment, but also a matter of improved workflows that set the stage for that new application.

“The big thing is value,” Richards noted. “The IT group and technology projects must deliver true business value.”

A big believer in scorecards and being a metrics-driven organization, Richards runs a scorecard to track ongoing projects - including current status juxtaposed against milestone dates and indicators of progress - so business sponsors can monitor the entire project portfolio. The scorecards are updated as necessary for each project, and after implementation the tracking focus shifts to operational parameters like web portal response time and service order fulfillment.

Business background

A graduate of Michigan Technological University who now is pursuing an MBA in healthcare management, Richards joined Dean Health Insurance in 2002 as director of information technology, and he was appointed vice president of technology in 2004. Prior to joining Dean, he served as director of the Midwest Development Competency Center for Liberty Mutual Insurance. Earlier, he held leadership posts with Nationwide Insurance and GE Medical Systems.

His experience at GE, where he spent the first half of his career, was a major influence. His exposure to innovative people and business processes helped him develop a quality focus, and he learned the value of data driven decision-making - something that will increasingly come to the healthcare space with fuller adoption of healthcare IT, and the analytics tools that already have hit the market.

The most important thing about the GE experience, however, involved IT staff. “Probably my biggest takeaway from GE was the importance of hiring and retaining high-performing employees, which is so critical to building effective IT teams,” he said.

To this day, he places a high priority on self-education and building strong business acumen, as his pursuit of an MBA would suggest. It's hard but rewarding work for Richards, an avid reader who samples a variety of books, periodicals, and web sources. But gaining business acumen is not just about the CIO, but his staff, too.

“We have a great training program at Dean and one of the programs that I have placed a large emphasis on for our IT employees is AHIP [America's Health Insurance Plans] training, which is a great program covering the business of health insurance,” he said.

Master of disaster recovery

At Dean, he is part of the senior management team and reports to the president of the company. He also sits on the Wisconsin Integrated Technology and Telemedicine Systems Board with colleagues Jerry Roberts, vice president of information services for Dean Health Systems (the clinic side), and Dave Lundal, vice president and regional CIO at SSM Healthcare of Wisconsin (the hospitals), and together they form a Joint Technology Council to develop strategy at an enterprise level.

Like other health insurers in Greater Madison, Dean is a physician-led health system, not a publicly traded health maintenance organization. As such, the organization has the luxury of being more responsive to patients and doctors than to shareholders, and other ongoing business process and technological upgrades attempt to reflect that commitment.

Dean Health Insurance is in the third and final year of a program to upgrade disaster recovery, which is aided by the organization's early adoption of server virtualization. The company has long had the ability to recover from a disaster, but lacked a “hot site” for rapid recovery in the desired time frame. Through the work of Dean's Joint Technology Council, Dean Health Insurance and SSM Wisconsin created two data centers in different parts of Madison, one run by Richards and the other run by Jerry Roberts and Dave Lundal, and the two organizations provide additional floor space for each other.

There are very specific recovery goals for each tier of disaster recovery; in tier one, for mission critical systems such as claims and financial, Dean expects to be able to recover in real time (hot “fail over” for instant transition to a backup system). For tiers two and three, with less critical systems the organization can live without for a few days, the recovery time is within 48 to 72 hours.

“Last year, we went live with all tier one systems with full hot site recovery capability,” Richards said. “This year, we'll finish the second and third tiers. The key to that is we were a very early adopter of server virtualization, and we've led that for enterprise. We found that virtualization is one of keys for us to be able to have hot site capability. It provides very rapid recovery and cost effectiveness in terms of energy savings.”

IT lessons

The best lesson he's learned from large IT implementations is that success often is predicated on the strength of business sponsorship and support. Richards said the worst projects are where IT tries to do something in a vacuum, and he tries to avoid these at all costs.

Project leadership committees must be comprised of key business leaders and IT, but it's a business-led group. “I sit on the committees but the key is that it's business led,” Richards said, “and the idea is to serve business needs and to be in control and driving priorities.”

As a purchaser of healthcare IT, he's not exactly unaware of what he likes on the consumer side. If he were to buy a laptop for your wife, child, or himself, his role at Dean comes into play with his choice of a Lenovo ThinkPad, which he has used in the office for many years.

“For my wife or child, and probably for me at home, I'd go with the new MacBook Air,” he said. “Apple's attention to design detail is second to none in my opinion.”

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