Inside Blue Shield of California’s IT operating model overhaul

When Lisa Davis joined Blue Shield of California in February 2020, she was not immediately thinking about digital transformation; she was working to move the organization’s 6,800 employees—the majority of whom had never worked remotely—to a remote work environment. But once she and her team had accomplished that feat of strength, she was ready to focus on the future.

“One silver lining of the pandemic is that it brought to the forefront the importance of digital technology, data, and analytics in transforming our healthcare system,” she says. “At Blue Shield of California, we see an urgent need to create a digital health ecosystem in the U.S. The time is now.”

Davis and her colleagues call this transformation “Health Reimagined,” which has three prongs: holistic health, which addresses all the key drivers of health including social, environmental, clinical, genetic, and behavioral; personalized care, a data-driven, evidence-based, patient-centered strategy that rewards physicians for better quality outcomes; and the high-tech, high-touch support, which uses technology to remove inefficiencies in providing care that is safe and effective.

Data is the key

“At the heart of Health Reimagined is data,” says Davis. “If we are to transform a broken healthcare system into end-to-end care, we need to understand all of the factors that impact a patient’s health.”

To deliver on the challenge of a holistic, personalized, and high-touch patient experience, Davis and her team have developed the concept of an experience cube. “Imagine a scenario where the member, provider, and payer have data interoperability and transparency, so that they are all looking through the same pane of glass to drive better health outcomes and improve the experience for other providers and members,” she says.

As one example, Davis cites real-time claims settlement, where instead of a fragmented process of pre-authorizations and mailed-out benefit statements, the claim is settled by the time the patient leaves the doctor’s office. “It should be as easy as checking out at the grocery store,” she says. “But we cannot deliver on this vision in an on-prem environment. We have to be in the cloud.”

Creating big change

In addition to shifting to a cloud-first architecture, Davis and her team have moved to a new IT operating model.

Way back in 2012, nearly all of IT at Blue Shield of California was outsourced. Since then, the team brought IT back inside, but “we were still seen as a traditional IT service provider, with a traditional plan-deliver-run structure. We had little trust from the business,” says Davis. “We were not positioned for a future state of digital health, so we needed to pivot the organizational model. We needed to create big change,” she adds.

Davis drove big change by defining a portfolio product model, with seven portfolios aligned to key functions and lines of business: Medi-Cal, healthcare quality and affordability (HCQA), operations, commercial markets, consumer markets, marketing/digital/customer service, and corporate services. Each portfolio has an IT and business leader who are peers and who lead a team of business architects, solution architects, and delivery and security people. Data and analytics experts sit in the portfolios, as well. All of the IT portfolio leaders report to Davis’s head of applications, and the business portfolio leaders report up to executives in the LOBs and business functions.

“As a company, we used to be very project-focused,” says Davis.  “In shifting to this new model, we’ve reframed our applications as products that sit under a portfolio, all managed by a team of business and IT portfolio managers.”

Building trust with business partners

Davis reports that her business partners love the new model because they now have support from IT teams that have better business acumen. Conversely, IT’s business partners have a better understanding of the challenges and opportunities in automation. “At the most fundamental level, we are creating trust between IT and the business. It’s not just a seismic shift for IT; it is a seismic shift in how our business partners work with us,” says Davis.

Critical to the success of the portfolio model is the integration with the data and analytics team. “Many enterprises struggle with where to put data and analytics,” says Davis. “At Blue Shield of California, we’ve moved it into IT because decisions about data have dependencies on architecture and platforms. The integration between data with technology has to be very tight.”

Davis and her team have also introduced agile development into the broader organization. “We cannot create a digital healthcare system with waterfall methods,” says Davis, who has been introducing agile in two ways: top-down, by shifting the executive leadership mindset, and bottom up, by integrating scrum masters into each portfolio. “My team is now asking, ‘Which products are the best candidates to move to an agile methodology?’ We know that it’s not a one-size-fits-all.”

Davis estimates that the organization is about 75% through the journey to the new portfolio operating model, but she is already seeing positive results. “In our project-based model, solution requests were disconnected, with each business unit driving its own digital strategy,” says Davis. “The portfolio model removes the silos and allows us to prioritize better. It promotes a continual dialogue among IT and the rest of the business, and changes the conversation from fielding requests to prioritizing which products to bring to market.”

An opportunity for professional growth

Davis also sees a leadership development benefit in the new model, since the portfolio leader roles provide a new growth opportunity for up-and-comers, both in IT and across the business. “The portfolio leader has to have a collaborative mindset and fantastic communication skills,” she says. “They have to understand technology, business drivers, processes, and our customer and be ready to ready to roll up their sleeves and problem-solve.” With every business relying more and more on digital technologies, that combined skillset will only become more in-demand. The portfolio model provides a vehicle for developing that critical skillset in-house.

Davis offers advice for CIOs planning a shift to a portfolio IT operating model: “Start with an organizational vision, which for Blue Shield of California is “Health Reimagined,” and then establish goals for your IT and data teams to align to that vision,” she says. “But you can’t do that in a vacuum; this has to happen across the business, because all of the goals must be connected; they all need to ladder up to a shared vision. Remember, this is not an IT transformation; this is a transformation of the entire business.”