Straight from the CEO: Collaborating with the Future

• By:  David Holmberg
• Posted:  July 31, 2023
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When we reported our 2022 year-end financial results, we acknowledged the impact of headwinds across our industry and the broader economy, including staffing and supply chain challenges, inflation, and equity portfolio performance. As we proved during the pandemic, we are built to withstand such headwinds. Highmark Health’s business model gives us the strength and flexibility to overcome emerging challenges and continue doing what’s best for the people and communities we serve.

We reported encouraging financial results for first quarter 2023, but I’ll emphasize again that our model is not driven by the ups and downs of one quarter or year. Those numbers matter, but focusing too much on short-term results can create a bias away from innovation, investment, and strategic decisions that are vital to building a better future. In the health industry specifically, we have decades-old challenges that require a shift toward prioritizing long-term value and taking on foundational changes even when that’s not the easiest path in the short term.

As a purpose-driven nonprofit, we are built for that, too.

“Can you really do this?”

This year, we marked the 10th anniversary of forming Allegheny Health Network (AHN) and creating Highmark Health as a blended health organization. Early on, some people questioned that move. Why would a successful health insurer risk acquiring a financially struggling provider system in a market that already had a dominant competitor? Since almost all previous integrated systems had started as providers that launched insurance products, that was another question we heard: “Can you really do this from the insurance side?”

Well, we did it and continue doing it. But our blended approach is not from a “side” — it is from the perspective of what individuals and care teams need in order to engage in and improve health. That’s the Living Health model: a blended systemic approach that’s consumer-centric with health engagement and outcomes as the North Star.

Our industry has seen many acquisitions and partnerships in recent years, but few match the level of integration our blended system has achieved in western Pennsylvania. And we’re taking that blended approach even further — that’s one reason we created a new market president position, filled by Dr. Bruce Meyer, that oversees both coverage and care in the region.

From the start, we have made choices — and done — what other businesses would not. Some of that is related to being a nonprofit. As a nonprofit, we’re accountable to our customers, communities, and employees, including thousands of clinicians and health professionals. Our decisions are driven by what’s best for these stakeholders, now and into the future. By contrast, if you think about publicly traded companies, for example, their decision-making must put more weight on the short-term results that matter to investors and analysts.

The financial strength and stability of our diversified business model is also critical to what we’ve been able to do and what we intend to accomplish in the decade ahead. We can invest in growth and expansion, take the risks necessary for innovation, and endure tighter margins in a given area of our enterprise, because we are confident that other areas will help maintain overall strength and stability.

I’ll highlight one more factor that differentiates Highmark Health. In every part of our organization, at every level, you will find people with a remarkably strong sense of purpose and a commitment to improving the lives of others. That’s the “why” behind decisions we’ve made that other organizations wouldn’t — and it’s the fuel that has enabled us to execute on those decisions successfully.

Purposeful growth

Purposeful growth has been essential to what we achieved during our first decade, and it will be just as essential as we continue our ambitious transformation journey. But growing from roughly $15 billion in revenue in 2013 to $26 billion last year is the start of our story, not the end of it. Whether it’s finances, investing in new facilities, making organizational changes, or forming strategic partnerships with other health systems, tech innovators, and community organizations, the measure of success always comes back to how well we continue improving people’s health choices, abilities, and supports — how well we do our part to create a remarkable health experience that frees them to be their best.

As president and CEO of Highmark Health for nine of its 10 years, I’m proud of our revenue growth and expansion into new markets, but I’m even more proud of how that growth has been tied to meeting people’s needs.

With AHN, for example, it’s not just that we stepped up with desperately needed capital investment for hospitals that were struggling. We saw the opportunity to stand up a new system and make long-term strategic investments in a thoughtful, clinician-led, consumer-driven approach that better met the region’s needs. People wanted choices, they wanted care closer to where they lived, and they wanted world-class facilities and programs that also delivered a world-class personal experience.

That’s what we prioritized — and 10 years later, our region has six new multispecialty Health + Wellness Pavilions, four new neighborhood hospitals, a new full-service hospital, six new cancer centers and a new Cancer Institute hub, two new obstetrical units, and the list goes on and on. AHN has grown to more than $4 billion in revenue, but more importantly, it has grown in ways that mean millions of people have better resources and support in living their best lives.

You see the same focus on meeting people’s needs in our strategic partnerships with other provider systems, including Penn State Health, ChristianaCare, and Lehigh Valley Health Network.

Another area of purposeful growth and expansion is the investments we’ve made to address social determinants of health, including an enterprise-level strategy and team led by Nebeyou Abebe. Here again, this isn’t just adding a program — in fact, it has been many programs that respond to diverse needs in different communities, and in some cases even involve going door to door to figure out what people need.

In our core insurance business, the past decade’s growth has likewise focused on markets and segments where we saw opportunities to meet needs, provide better choices, and scale up the impact of our transformational model. That has included affiliations in northeastern Pennsylvania, western and northeastern New York, broader Medicare Advantage and Medicaid offerings, and, starting in 2024, expansion in the Philadelphia and southeastern Pennsylvania market. We’ve also grown our Affordable Care Act membership — I would even argue that our ability to stabilize ACA markets in Pennsylvania, Delaware, and West Virginia, was pivotal in getting the program through significant initial difficulties. People argued, and continue to argue, about the ACA from political perspectives, but once the program existed, we saw it as our responsibility to make it actually serve people well and become sustainable economically. That was a purposeful choice we made — and that’s what we did.

Collaborating with the future

Lots of people point to the frustrations and obstacles impacting people’s health or the unmet needs in a community, and say, “someone should do something about that.” Our mindset at Highmark Health is that we should step up and be that “someone” wherever we can. That goes for one-on-one interactions with people we serve, longer-term programs and technologies we invest in, and everything in between.

As I wrote earlier this year, the My Highmark app and growing platform of Living Health solutions are tangible examples of how we are evolving a consumer-focused, digitally empowering ecosystem of health, coverage and care. We are building the infrastructure necessary to unleash the power of health-related data, give it back to individuals and their care teams, and connect them to more choices and better, more proactive, personalized support.

That’s not a project with a final “mission accomplished” point — any more than personal health has a final “mission accomplished” point. Some of the big challenges around unsustainable health care costs, uneven quality, and lack of equitable access, are partly due to short-term thinking and definitions of value. With each step over the past decade, we’ve put our organization in a unique position to play the long game and take on challenges that require a longer horizon.

One example is shifting from volume-based, transactional models to value-based care. Our blended health model in western Pennsylvania represents important progress, and we're proud of our industry leadership in value-based care. But we also understand the complexity of the challenge and what value-based care is asking of people and organizations. It’s a big change to move from fee-for-service thinking, where we wait for a health issue or problem and then bill for a procedure or treatment, to a more proactive, holistic approach that addresses all drivers of health and aligns stakeholders on defining, measuring and paying for value and quality. It requires a restructuring of the economic model, with insurance companies and providers being accountable to each other in managing risk and achieving outcomes. And it requires individuals to want to engage in their day-to-day health. There’s no way to flip a switch and make all that happen. It will require a shift in mindset and education as well as the kinds of value-based business models that organizations like ours are developing.

In a CEO Forum interview this year, I described our model as, in part, an incubator for the future of health, coverage and care. Continuing to test and learn and make real progress toward a better future will require ongoing capital investments, innovative new programs, new partnerships, and more. To achieve that, we’re willing to sharpen our pencils and make short-term sacrifices that most organizations haven’t.

If we get it right, the bold, long-term transformation journey we began a decade ago will continue for many years, and even decades. What we have done so far, and the investments we will make in the years ahead, is a balance of near-term improvements and collaborating with the future — putting the pieces in place that will enable a future generation of leaders and clinicians to make choices and achieve improvements that aren’t even possible today.

That next generation won’t care one way or another about anyone’s quarterly financial results back in 2023 or how margins matched up among the industry’s largest players in a given year. And that’s not what matters most to the millions of consumers we serve right now. What matters, now and for the future, is that we are removing barriers and creating a better systemic approach to health, coverage and care that makes it simpler and more affordable for people and their clinicians to engage in and improve health.