Episode 24 with Dr. Jim Wallace, President, AmeriPlus Select Services and Senior Researcher at Harvard University – How the Health Care Industry Is Embracing Innovation

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Beyond the Challenge is a podcast where executives in the insurance and financial services industry share their insights and experiences. Hosts Kevin and Sandy Dougherty talk with today’s top business leaders about what keeps them up at night and the biggest opportunity organizations can capitalize on today. We encourage you to listen, share, and subscribe to our program.

Kevin and Sandy Dougherty each have over 20 years of experience in insurance and financial services, corporate leadership, and executive search. They’re the owners of Global Corporate Solutions and Global Corporate Leaders. Global Corporate Solutions partners with organizations to gain efficiencies and contain costs. Global Corporate Leaders partners with organizations to enhance and evaluate talent.

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Welcome to Beyond the Challenge. Here are your hosts, Kevin and Sandy.

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Kevin: Today, we’re talking with Dr. Jim Wallace, President, AmeriPlus Select Services, an operating unit of AmeriLife, and senior researcher at Harvard University, about the trends, challenges, and opportunities he sees for organizations over the next three to five years. Jim, can you tell us a little bit about yourself and AmeriPlus Select Services?

Jim: Sure. AmeriPlus Select Services is the provider network operation, it’s a unit of AmeriLife, which is the nation’s leading distributor of senior market products. So, we actually create and manage the provider networks behind our health insurer’s products. 

Sandy: Jim, while many organizations seem to be struggling to stay relevant, others are embracing new technology, reimagining distribution channels, and developing strategic partnerships. Based on your experience, how has the new standard of working from home changed the way organizations look at sales and marketing? 

Jim: Well, that’s a great question, Sandy. I think the pandemic has changed a lot about the sales of insurance products and, especially in my end of the business, delivery of services. I think that the biggest change has probably been in the interest of the consumer, driven by the pandemic, to learn more about their personal situation, which in turn makes more demands of the sales professional. To accommodate those, deep into the pandemic, a lot of folks had to actually conduct appointments and do fact finding, do all of those things remotely, either virtually or on the phone. We see that trend actually continuing. As the pandemic has kind of worked its way through though, we do see a return to over-the-table sales of insurance products, but interestingly augmented by the tools that they learned to use during the strict lockdown and stay-at-home stage. 

Sandy: Thanks, Jim. What do you see as the main barriers to growth and innovation for carriers? 

Jim: Wow, that’s a tough one. I think, historically, it has been regulation, fast changing in many cases in response to new product innovation. I mean, the introduction of Medicare Advantage products and prescription drug coverage in 2005, 2006 changed things, created a lot of innovation and sales very quickly. By the same token, that regulation continues to constrain and refine innovation, depending on your perspective. In a lot of cases, it’s necessary just to make sure that good wholesome sales practices are being implemented, but, in other instances, it really does act as a brake on otherwise very innovative things that could improve healthcare. And I think the late coming of value-based health care to the insurance community, the health insurance community, is an example of an innovation that’s probably long overdue and frustrated by regulation. 

Sandy: From your experience, how can organizations embrace innovation and transformation to improve and drive their long-term growth? 

Jim: Wow, it’s interesting because my experience in that doesn’t come from health insurance interestingly. I took a hiatus from health care and health insurance and did several years at SpaceX, the space exploration company, rocket launch company. And what I observed there working with Elon Musk and the others was sometimes you just have to challenge the status quo. You have to embrace the problem and not be afraid of it. Sometimes, what you’re doing is just not in the best interest of any stakeholder in the health care or the insurance community and you just have to embrace that. Shying away from that and being afraid of innovation outside of regulation is often the biggest inhibitor and those people that embrace it as a challenge to be solved really win at the end of the day, like SpaceX has won in the space exploration industry.

Kevin: Jim, how has AmeriPlus changed their marketing or product offering because of COVID-19?

Jim: Good question. I’m not sure that the product offering has changed so much as producers and consumers ‘reaction or response to it or necessity for it. The pandemic clearly focused insurance consumers on gaps in their coverage. We moved very rapidly from a health consumer society to a health care avoidance society. Claim medical loss ratios and claims ratios declined precipitously during the pandemic, because people were frankly afraid to go to the doctor and, even worse, to the hospital. And so, that’s really accelerated consumer interest in, “Hey, what is my coverage?” At the same time, it’s accelerated the requirement for agents to be very smart and responsive to what those gaps in coverage are. So, if anything, I’d say the pandemic accelerated the value of insurance coverages and financial planning instruments just across the spectrum.

Kevin: What is AmeriPlus doing to stay relevant?

Jim: A lot of things. I think AmeriPlus as a provider organization is essential in any event. In the health insurance industry, you have fee for service still, then at the other end of the spectrum, you have HMOs and PPOs. In the middle are organizations of providers like ours that really aren’t managed care in the sense of an HMO but they’re better than fee for service because they actually do take extra steps to deliver better care and more cost effectively. So, consistent with the trend of higher consumer needs and interest in health insurance, that’s driven us to become a lot more consultative to our health care providers and help them understand where they fit in that insurance and health plan coverage value chain. How can they participate in a way that creates not only better health but better financial commitment and value to the consumer? 

Sandy: Jim, I think that kind of leads us into the next question about what type of strategic partnerships you see working best for healthcare organizations. 

Jim: The strategic partnership environment or strategic partnership terrain is very interesting because, in healthcare, comprising 1/6th of the US economy, it touches large swaths of other segments of the economy. And so you can really choose to establish strategic partnerships everywhere from underwriting to care delivery and claims administration. And we actually see strategic partnerships occurring along that spectrum. Current one of note would be the impact of Humana’s strategic focus and healthcare providers. The jury’s still out on that. Do consumers really want a vertically integrated healthcare delivery system from insurance coverage all the way to doctor selection? Do they want more choice along the way? And we see different carriers making different bets, whether they’re provider acquisition or platform development, which we’d see more with United Health Care, or just good customer service, which we’d see with other carriers. So there’s a lot of strategic partnerships that are very active out there and I think it’s still pretty much the Wild West. There’s a lot of different directions that can go and we’re seeing different performance among the carriers as a result. 

Sandy: Along with that, we also have things like outsourcing where instead of doing it in house, pick anything that’s customer service wise or claims wise, some of those things that you mentioned, do you see more organizations outsourcing some of those functions to other people or keeping more of that in house? 

Jim: I see trends in both directions. I think they tend to balance each other out. The most successful organizations are those that are defining what’s a core competency and really tending to bring that in house or establish very strong strategic partnerships to make sure that they’re not losing their core competency. The mistakes or the hiccups that we’ve seen in the industry is where organizations might be taking core competencies and outsourcing those as a means of keeping up with growth. It almost never does. And so I think the relevant discriminator there is, yes, we’re seeing more outsourcing on things that are kind of on the periphery of the value proposition for care but if it’s central to what you’re selling, you need to maintain that in house.

Kevin: Jim, what do you see as the biggest opportunity for the health insurance industry over the next three to five years?

Jim: That’s the $64,000 question and I guess a lot of it relates to the time horizon. If I look just at the health insurance industry, so much of that is driven by what Medicare does. We’re seeing some really big and interesting and good changes coming to the Medicare environment. Two of them are value-based care initiatives, which focus on not the cost so much as the long-term outcome of the care, which benefits the consumer directly as well as indirectly in terms of lower costs of care and better outcomes. But alongside of that, we’re seeing the ascendancy of accountable care organizations whose success is prompting Medicare to directly embed that in care delivery through what’s called direct contracting. And so I think the biggest changes we’re gonna see in healthcare in the three- to five-year term is really gonna be along those lines, the continuation of value-based care implementation and then the engagement, through ACOs and direct contracting, of providers in a more tangible way to the outcomes. I might add to that too, the pandemic really accelerated telemedicine and locus of care that’s closer to the customer. I think we’re gonna see that as a continuing development and ramp up over the next 5 to 10 years. As consumers become increasingly more comfortable with doing telemedicine visits, we’re gonna see costs come down, access to care improve, that’s gonna be an undercurrent that’s really gonna drive care in really interesting ways over the next 10 years.

Kevin: Jim, what is the best decision you made that had a positive impact on your career?

Jim: That’s interesting. It’s probably two things. One is never be afraid to take a challenge. I mean, so much of our performance and our reward mechanisms inside business and healthcare are really oriented on certainty and sticking to, you know, your primary goals and objectives to get your bonus, but that’s not really where the innovation occurs, is it? It really occurs when you see something that needs to be done that nobody’s thought of and you kind of step outside of that box. So almost every significant advance in my career has come against my willing participation. It’s where somebody said, “I need you to do this,” and I didn’t see why but then it caused me to grow in a way that really advanced my value to the organization. That would be one thing. The second is just education. I recently completed my doctorate and I’m fairly far along in my career. The learning process that I had to engage in and that educational opportunity just redefined, you know, ways that I look at the world. It reintroduced me to things that I wasn’t exposed to in my original educational experiences and really introduced me to new things that aren’t even in industry or in practice yet. And so I would say always take the challenge and then never stop learning. That’s what I’ve done that really propelled me in my career.

Kevin: Jim, what advice would you give to someone looking to get into the insurance industry?

Jim: That’s easy but probably not a popular answer: sell. I started selling insurance actually as an agent fairly late in my career. I came into the industry through the home office route as the head of strategy for Anthem and then ran the Health Division at Conseco for a short while before coming to AmeriPlus and I didn’t really understand what we were selling until I sold it. And once I got out onto the street selling things over a table with a consumer, it resonated with me in ways that you can never get in the home office. And I say that that might be unpopular because that’s a pretty fundamental and rudimentary way to get exposed to the industry but, at the end of the day, it’s all about the consumer and it’s all about meeting their needs and I really didn’t appreciate that as much until I was selling over the table. So, by all means, get out there and interact with the consumers in whatever form you can and sales seems to be the most direct shot to that. 

Sandy: Jim, thank you for your time today. It’s been great to hear your insights on how organizations can stay relevant and the opportunities you see for the industry over the next few years. 

Jim: Thank you, guys. It’s been a pleasure being with you today.

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