Rhode Island Treasury Strategic Plan Balanced Scorecard by sdo10780


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									                                        Officer Interview

Chief Financial Officer Inter view

                                             Russell T. Kopp
                                     Vice President, Finance & Chief Financial Officer

                                                        Network Health

  Russell T. Kopp

Network Health is a 165,000 member, $750 million, state-wide Medicaid Managed
Care Organization affiliate of the Cambridge Health Alliance.


     As CFO of Network Health, Russ is responsible for all financial aspects of the managed-care
     organization including financial strategies, rate negotiation, accounting, budgeting, medical cost
     analysis, forecasting and reporting.

     Russ is a former Senior Vice President of UnitedHealthcare where he was responsible for provider
     network management for New England including 140 hospitals and 30,000 contracted physi-
     cians. He was previously the Vice President Finance and Treasurer for the Tufts Health Plan for
     over 17 years where he led finance & accounting, underwriting & actuarial services, healthcare
     risk & contract management, treasury, corporate compliance, and real estate. Russ was the CFO
     of the HCHP Hospital, Budget Director at Beth Israel Hospital, regulator at the Massachusetts
     Rate Setting Commission, and consultant with Arthur Young & Company and Dana-Farber Cancer

     Mr. Kopp has an MBA from the Wharton Graduate School, University of Pennsylvania and an
     engineering degree from the University of Rhode Island. He holds a CPA and is a member of the
     Massachusetts Society of CPAs and Massachusetts-Rhode Island HFMA. He currently is Chair-
     man of the Board and President of the Edinburg Center, a $15 million non-profit mental health
     agency. He lives in Wayland, MA with his wife and two children.
                                                                                  (continued on page 9)
                                                                         Officer Interview

    (continued from page 8)

    Q.    Could you comment about your experience as an HFMA                                                trend of medical care in the United States is
          member? How have you been able to use your HFMA                                                   not sustainable for employers, insurers, indi-
          experience to support you in your current position?                                               viduals, states or the federal government, and
                                                                                                            meeting these three challenges will require
    A.    Having been a member of HFMA for over 30
                                                                                                            significant change to our current system of fi-
          years, HFMA has provided me with multiple
                                                                                                            nancing and delivering health care in the US.
          opportunities to attend educational meetings,
          and has provided a network of New England
                                                                                                   Q.       How are these challenges particular to your situation
          based healthcare professionals that I have
                                                                                                            as a health plan CFO? How is your current CFO role
          relied upon throughout my career. HFMA
                                                                                                            different from other similar positions you’ve held?
          continues to be an important professional as-
          sociation for me and my colleagues.                                                      A.       Network Health is 100% reliant on funding
                                                                                                            from the State for its approximately 95,000
    Q.    From your perspective, what are the 2-3 most signifi-                                             Medicaid members and 70,000 Common-
          cant challenges in today’s healthcare environment?                                                wealth Care members. We have no commer-
                                                                                                            cial business or other products. In my prior
    A.    The three most significant challenges that I
                                                                                                            experience at other health plans, we were
          see are: 1) the lack of adequate funding to
                                                                                                            able to design products with different benefit
          support healthcare demand; 2) finding ways
                                                                                                            structures, utilize underwriting techniques to
          to improve medical outcomes utilizing less
                                                                                                            improve risk-selection, and modify pricing
          medical services rather than more, and 3)
                                                                                                            to provide the health plan with adequate net
          providing basic medical care to all individu-
                                                                                                            income. Network Health has none of these
          als, regardless of work status, ability to pay,
                                                                                                            options available to it making adequate fund-
          or previous medical condition. The economic
                                                                                                                                                     (continued on page 10)

                                      The bottom line?
                               A stronger health care system.
                         Blue Cross Blue Shield of Massachusetts is proud to support
                the Massachusetts Chapter of the Healthcare Financial Management Association.

                                  Blue Cross Blue Shield of Massachusetts is an Independent Licensee of the Blue Cross and Blue Shield Association

Issue 5                                                                                                                                                                       9
                                                                   Officer Interview

     (continued from page 9)

               ing by the State and effective medical                              reporting, and actuarial expertise to analyze
               management even more critical to its                                and project medical trend.
               financial success.                                                  The third challenge was to prepare the com-
                                                                                   pany for rapid growth in membership related
     Q.        Could you pick out the top three challenges you faced               to the Commonwealth Care program.
               when you first came to your current position, or three
               issues that you’ve tackled? How did you approach               Q.   How has your health plan changed since your arrival?
               these challenges and how did you do?                                How has your focus changed? What major strides
     A.        When I started in July 2006, Network Health                         have you made or not made?
               was just preparing to bid on the newly leg-                    A.   From 78,000 members in July 2006, we have
               islated Commonwealth Care program. The                              now successfully grown to 165,000 members.
               first major challenge was preparing the bid                         In order to accommodate this growth, we
               and negotiating with the Connector Authority                        nearly doubled our staffing, moved our opera-
               on rates and other contract requirements for                        tions to new offices, and made significant
               this new program. As of March 2008, Net-                            investments in systems. Additionally, we have
               work Health successfully added nearly 70,000                        placed additional resources on our analytical/
               members.                                                            actuarial capabilities to appropriately identify
               The second major challenge was building a                           emerging trends and forecast future medical
               more robust finance department to accom-                            costs. As a result of this growth, my role has
               modate increased financial accounting and                           changed from current financial reporting to
                                                                                   focusing on the financial future of the plan
                                                                                   and addressing our need to build adequate
                                                                                   financial reserves as required by the State.
          Financial Protection
          for Health Care Professionals                                       Q.   How do you view the challenges of a health plan like
                                                                                   yours in comparison to larger plans? How does your
                                                                                   Plan differ from other Plans in Massachusetts and
          Insurance                                                                Rhode Island?
           • Medical Malpractice                                              A.   Network Health is the only Medicaid Man-
           • Business & Workers Compensation                                       aged Care Plan that is part of a public safety
           • Health Insurance Programs                                             net system. Other than our MassHealth and
                                                                                   Commonwealth Care business, we have no
          Financial Services                                                       additional sources of revenue or lines of
           • Discounted Group Disability & Life                                    business. Commercial plans have the abil-
           • New Physicians Retirement Program                                     ity to establish new benefit structures, revise
           • Deferred Compensation                                                 pricing on an account renewal date basis,
                                                                                   target marketing, and have other practices not
          Medical Services
                                                                                   allowed by Medicaid or the Connector Au-
           •   Office Supplies
           •   Laundry Services
           •   Commercial Lending                                             Q.   How has Massachusetts Health Reform affected your
           •   EHR Financing                                                       business? What do you see as the major challenges
                                                                                   for health reform over the coming year, in addition to
          800.522.7426                                a subsidiary of the
                                                                                   the more obvious challenge of affordability?
          www.piam.com                     Massachusetts Medical Society
                                                                                                                    (continued on page 11)

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                                                        Officer Interview

    (continued from page 10)

    A.    Health Reform has been the most significant              A.   In some counties, Network Health has been
          driver of change to Network Health. The ma-                   unable to negotiate with providers for the
          jor challenge to health reform will be afford-                Commonwealth Care program. Some provid-
          ability, both for the consumer and the State.                 ers have refused on price, others have refused
          One alternative that the State could consider                 because they feel no need to contract with
          is legislation to establish a maximum payment                 Network Health. This is an exclusionary
          to providers for the Commonwealth Care                        practice that really isn’t seen in the commer-
          products. Currently, providers can demand                     cial market and an unfortunate reality of the
          and receive payment rates that greatly exceed                 current marketplace.
          equivalent Medicaid rates. Making provider
          payments for MassHealth and Commonwealth                 Q.   What’s your sense of the Massachusetts environment
          Care products more equivalent to rates that                   in terms of the provider community? How receptive
          hospitals get directly from the State would                   have providers been to your Plan and others that offer
          greatly improve the affordability of health                   products for the uninsured and underinsured?
          reform to the State and members.
                                                                   A.   In general, providers have been willing to
                                                                        participate in health care reform products and
    Q.    How are your Plan’s members affected by the provider          have recognized their unique role in making
          environment? What challenges have they faced under            health reform a success. “To whom much is
          Health Care Reform, such as availability of primary
                                                                        given, much is expected” should be a guiding
          care or specialist providers to care for them?
                                                                                                       (continued on page 12)

Issue 5                                                                                                                          11
                                                                         Officer Interview

     (continued from page 11)
             principle for providers when negotiating for                           Q.   Are there operational challenges your health plan
             the uninsured and underinsured.                                             faces as you continue to grow in membership and
                                                                                         expand your geographic reach?
     Q.      What are the advantages/disadvantages of being in
                                                                                    A.   Rapid growth necessitates increasing staff, in-
             the type of health plan you’re part of ?
                                                                                         creasing space, and investments in systems to
     A.      Network Health is an organization that is                                   accommodate the growth and manage medical
             highly motivated to provide the best possible                               care. One challenge unique to the Medicaid
             health care to the uninsured and underinsured.                              and Commonwealth Care managed care plans
             It has outstanding leadership and I am proud                                is that medical management is frequently
             to be a part of its team.                                                   challenged by an inability to contact members
             However, Medicaid Managed Care Organiza-                                    that are homeless and without phone service.
             tions are by nature highly dependant on the
             State for financial success, highly regulated,                         Q.   What are the key performance indicators that you rely
             and have little ability to market. Another                                  upon to keep yourself, your leadership, and your staff
             disadvantage inherent in MMCO’s are that                                    informed of your progress towards goals?
             members have very short duration of member-                            A.   Network Health uses a well developed 3 year
             ship because of changes in eligibility, making                              Strategic Map, using Balanced Scorecard
             medical management of chronic conditions                                    techniques, to establish and measure our
             particularly challenging.                                                   performance on key strategic initiatives. We
                                                                                         use a wide variety of financial and non-finan-
                                                                                         cial internal reports, competitive reports, and
                                                                                         other indicators to keep leadership informed.

                                                                                    Q.   Are there misconceptions about your health plan that
                                                                                         you’d like to correct?
     You know health care.
                                                                                    A.   Some still think that Network Health’s exclu-
     We know health care law.                                                            sive service area is Cambridge and Somer-
                                                                                         ville. Network Health operates throughout
                                                                                         Massachusetts with over 15,000 physicians
                                                                                         and 200 hospitals. Less than 10% of Network
     With more than 50 professionals                                                     Health’s services are provided by CHA affili-
     dedicated to health care,                                                           ated providers.
     Ropes & Gray helps health care
                                                                                    Q.   Do you have any lessons learned from the first year
     organizations navigate complex
                                                                                         of Health Reform that you can share with us? With
     regulatory, organizational and                                                      hindsight being 20/20, would you have done anything
     competitive challenges.                                                             differently?
                                                                                    A.   I think that the first year of Health Reform
                                                                                         has been enormously successful. My con-
                                                                                         gratulations to the Connector Authority and
     About Ropes & Gray
     Ropes & Gray LLP provides comprehensive legal services to                           to everyone that made this success possible.
     leading businesses around the world. Our clients benefit from our
     expertise combined with unwavering standards for integrity,
                                                                                         However, my fear is that in this first year we
     service and responsiveness. With offices in preeminent centers of                   didn’t pay enough attention to making sure
     finance, technology and government, we are ideally positioned to
     address today’s most pressing legal and business issues.                            that that program would be adequately funded
     BOSTON       NEW YORK        PALO ALTO       SAN FRANCISCO                          for future years.      ❑
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