How to Stay Focused on the Business Results of IT

Humana CIO Bruce Goodman learned how to reap financial results from IT by understanding in detail the ways his company makes money.

By Bruce J. Goodman
Thu, February 21, 2008

CIO — When I started in IT at MetLife in 1970, my background was as far away from insurance as you could possibly imagine. I was an engineer and studied toward a doctorate in solid-state physics. I decided that to succeed, I had to understand what made the business go and what contributed to the top and bottom lines. So I took the same courses that somebody who sells the product needed to take, and I passed 10 different exams to become a chartered life underwriter. Once I understood how we created and sold insurance products, I knew I could use technology to influence business results.

This orientation toward business results—driving new sales and productivity, increasing customer retention, reducing administrative costs and increasing profit—became my success formula for creating value with IT. MetLife was the first large life insurance company to automate its sales offices, and it gave us a competitive advantage. At the time, a lot of people were skeptical of the initiative, but because of my knowledge of how agents made sales, I was able to make the case to the executive vice president of individual insurance operations how different the world would be if we took advantage of then-emerging minicomputers to move systems out to the sales offices.

It's All About the Numbers

By far, the largest expense in the insurance business is paying claims. The obvious question becomes, How can IT help the business drive that cost down? When we do so, we drive those savings right to the bottom line. The impact can be measured in the millions of dollars.

For a health plan like Humana, we accomplish this by providing integrated tools that offer transparency to patients about their healthcare utilization, its costs and options they can discuss with their doctor (such as the potential to switch to a lower-cost, generic drug). We implemented an IT-enabled program called Maximize Your Benefits that creates value both for our members and the company.

We use outbound automated calling, personalized monthly statements and pop-up customer care screen alerts to advise our members of opportunities to switch from a brand-name medication to a lower-cost generic. We also let members know that they could save money using our mail-order facility to fill recurring prescriptions instead of going to a pharmacy. We then use analytics to measure the results—for example, by tracking whether individual members took our recommendations. We can see which type of message is most effective in changing behavior, and we can calculate the savings. The results have been significant and are directly attributable to IT.

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