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Drive Innovation December 07, 2021

Transformation of Health Rests on Innovation

Head of Healthworx and Senior Vice President, Corporate Development, CareFirst BlueCross BlueShield
Partner, Health and Life Sciences, Oliver Wyman
Principal, Health and Life Sciences, Oliver Wyman
Key Takeaway
Leaders need to be 'honest when things are going to fail, honest when they’re succeeding but you don’t know why.' @CareFirst #OWHealth #Leadership #healthcare #innovation

Health plans all over the country are looking for ways to serve their member populations better, reduce the overall cost of care for their communities and diversify their revenues. For CareFirst BlueCross BlueShield, part of its strategy for achieving these goals is through Healthworx, the insurer’s innovation and investment arm. Strategic investment in innovation through Healthworx serves as a means of bolstering the healthcare ecosystem, while also providing CareFirst with access to new, member-centric and relevant solutions. To understand how CareFirst realized this vision and see what lessons other plans trying to launch a similar initiative can potentially learn, we spoke with Ricardo Johnson, Senior Vice President of Corporate Development at CareFirst and Head of Healthworx.

A Q&A on Impact, Strategies, and Lessons Learned

Rahul: Tell me about the genesis of Healthworx. How was it started, what was the intent, and how has Healthworx driven impact for CareFirst over the years?

Ricardo: We started Healthworx in 2017. The genesis came from a desire to help startups drive their products to get commercial coverage. Originally, the focus was diagnostic med-tech spaces, where we were trying to find solutions that had proven scientific validity but hadn’t improved clinical utility. The idea was if you put the solution in a doctor's office, they’d use it, resulting in quality and cost improvements, just as the entrepreneurs had envisioned.

It was impactful for our members – and we saw great results for the populations that these solutions applied to. However, the impact any one diagnostic can make is limiting in its impact across a population and we needed to broaden our perspective a bit and have a range of approaches that allow us to work on solving healthcare’s most challenging problems that have larger impact potential.

Parie: Tell us a bit about the work you do and how you focus on healthcare’s most challenging problems.

Ricardo: As we've evolved Healthworx and its role within CareFirst, we saw the need to align our focus on solving challenges in the broader healthcare system to enable a more equitable, accessible and impactful healthcare experience, particularly in our region where we serve CareFirst members. We invest and partner with early and later-stage companies, respectively, who are improving healthcare and where we find gaps in the market, we build solutions. We also have a dedicated team that explores innovation opportunities closely aligned with CareFirst’s strategic priorities. Our team likes to bring an outside-in perspective to the work we do — it helps us have a pulse on the trends that could determine the future of healthcare and what comes next in an ever-changing industry.

Rahul: That’s a big agenda. Can you tell us a bit about how you prioritize your efforts? 

Our approach is top-down, bottom-up, outside-in, and inside-out. 

Ricardo: Our approach is top-down, bottom-up, outside-in, and inside-out. The outside-in is our look at what our customers are asking for in the market. This might be where our members or clients have unmet needs or have barriers to the healthcare they want and deserve. We’re also looking from the inside the organization, at all levels, to understand what barriers may exist to achieving our strategic goals. Taking this input from all directions, allows us to see trends, themes and opportunities that are then put into a framework and helps us to decide which are the highest priority for innovation.

Once we’ve prioritized our top opportunities, we’ll bring them in front of our investment committee. This set of executives will provide feedback or approve the areas where we want to focus.

Parie: Tell us a bit about your venture capital strategy – how do you decide what to invest in?

Ricardo: We typically invest in series A or B companies with at least $1 million dollars in revenue. When we’re looking at companies to invest in, there are a few factors we consider. We certainly want to make sure that our investments are wise and will perform well financially, but it’s also equally important to invest in companies that align with our mission of improving healthcare affordability, access, quality, and equity. It is not going to be one person or one company that transforms healthcare — it’s going to take a collective. At the end of the day, we want healthcare to work better and be better for the people we serve – sound investments is one of the ways we’re making that happen.

If nothing's in the market, we think about partnering with others or building the solution ourselves. The collective effort gives us the best opportunity to make an impact on healthcare.

Rahul: What’s the intent, overall? To gradually bring people from all different organizations together, through an aligned partnership?

Ricardo: That's right – though I wouldn’t say gradually – there is an urgency to this. As I said, we don’t think that we alone are going to solve healthcare’s biggest challenges. But if we can build some bridges, connect industry leaders and convene people who are equally as passionate and committed to a better healthcare future, we believe we’ll start to see the industry shift to a better place. One of the recent partnerships we’ve shared is our incubator, 1501 Health, built in partnership with a hospital system in the Mid-Atlantic region. We've built out about 15,000 square feet of space in our Maryland headquarters and are dedicating some of the space to a program that brings together payer and provider experts, with investment dollars, to help them grow and scale their products into the healthcare system.  We just finished the selection of the inaugural cohort and we’re excited about creating some energy and momentum in the industry in this space.

Parie: Sounds like you are driving great impact for the CareFirst team. One of the things we hear from other plans trying to launch something similar is how to set up the team appropriately – maintain a connection with the parent but still keep independence. Can you talk a bit about how you set up your team?

Ricardo: In the industry, there’s no real coordination or collective effort around how we solve problems and innovate together – as regulators, venture capitalists and entrepreneurs. Our goal is to be a convener and a catalyst that puts us at the center of healthcare innovation where meaningful changes really happen.

Our team has a several different functions that range from strategy to investing, building to acquiring. Each of these teams was assembled to focus on a different approach to solving healthcare needs but by having them under the same strategic umbrella it allows us to innovate faster, learn from one another and convene the right partners more efficiently.

We also have an area of the team called the Healthworx Hub, and this team is focused on being a catalyst and convener of the earliest stage innovators. Our 1501 Health program sits under that umbrella, and we’re excited to see the impact this team brings to our work and the greater industry.

Be honest when things are going to fail.

Rahul: I want to sneak in one more question. Regarding your guidance to other leaders trying to start something like this in their organization – especially in the traditional payer plan world, when things move differently – how can they move fast with innovation, versus failing with innovation?

Ricardo: Have buy-in among your executive team, not just your CEO, and make sure you know your peers are willing to commit to an iterative process. It’s also important to know your company’s appetite to reach for something farther than its core business or just make the core better.  Clarity helps with buy-in. Know that the rapid pace with which you will need to test, analyze, pivot and kill projects can be exhausting, and sometimes oppositional for people focused on operating the fundamental business – prepare them for it, be courteous and empathetic, but keep pushing.   

I’d also add, be honest, radically so.  Be honest when things are going to fail, honest when they’re succeeding but you don’t know why, honest with yourself on the limits of the team’s capacity, and honest with them on the limits of your current understanding. So much of this work is built on trust and faith – and it is important from the start.

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