'Turnaround' CIO led charge as Hallmark adapted to U.S. health reform

Ben Cole, Site Editor

Our SearchCIO-Midmarket 2013 IT Leadership Awards recognize the contributions and innovations of IT professionals within midmarket companies. We sent out a call for nominations of individuals who have excelled in the following categories: cultural innovation, technological advancement, business value, green IT, IT engagement and customer experience.

Neal KaderabekNeal Kaderabek

Finalist Neal Kaderabek, formerly CIO at Hallmark Services Corporation and currently vice president of IT at Perkin Insurance, was integral to Hallmark's continual efforts to enhance, and in some cases completely replace, core functions and systems as it braces for changes stemming from U.S. health reform. During a nearly year-long effort, Hallmark defined the scope of its activities, developed customer-driven design requirements and identified dependencies to help the organization meet deadlines defined under U.S. health reform. Kaderabek expected this preparation would allow Hallmark to at least double its membership between Oct. 1, 2013, and March 1, 2014 -- the period all uninsured U.S. citizens will be able to enroll and acquire health insurance under the health reform laws. In addition, these efforts would incorporate efficiencies that ultimately reduce operating expenses, Kaderabek said.

Kaderabek defines himself as a "turnaround CIO" who delivers quick wins for his organization while meeting business demands and overcoming its numerous health reform obstacles. Learn more about Kaderabek in this Q&A, where he further discusses the challenges faced by the retail healthcare market under U.S. health reform, and how Hallmark is managing tools, people and processes to adapt to these challenges.

Number of years in IT: 28 years

Company: Hallmark Services Corporation, a subsidiary of Health Care Service Corporation (HCSC). HCSC is the amalgamation of BCBS-IL, BCBS-TX, BCBS-NM and BCBS-OK.

Revenue: $1.4 billion annually

Number of employees in the company: 1,050

Number of employees in IT: 150 FTEs, 200 contracted

Educational background: Bachelor of science degree in business administration

First job: First job: Caddie at a golf course. First IT job: Programmer on IBM SYS38 for manufacturing company. Shockingly, the first system they put me in charge of was payroll!

LinkedIn: Neal Kaderabek

What's the best advice you've ever received? Partners complain; it's their job. Learn to be ready for the good news and the bad news. Don't be defensive; just listen and respond to legitimate criticism and note the rest. Vocal partners will typically complain more than compliment; do not get overwhelmed by the negative comments.

In the movie of your life, who would play your character? George Clooney, because of his role in Michael Clayton as a law firm's "fixer" to remedy difficult situations. The most success and pleasure I've had in my career is as a "fixer" and "turnaround" leader." I am a risk taker that is first and foremost an agent of change. I have deep experience in IT and have the ability to come into a chaotic situation, ascertain what the business needs most, recharge a beaten-down staff and start piling up wins -- quickly.

If you could have just one superpower, what would it be and why? Time traveler. I would like to travel to the future to see the outcome of what my IT teams did, or the outcomes of my decisions … and then go back in time to see if any changes can be made to improve the future results.

What's your favorite app on your smartphone or tablet device? Todo for iPad. It is a work planner that I use to keep on top of all my projects and plans.

Where do you fall in the iPhone versus Android debate? I steer clear of this debate. When I am asked for advice, I usually offer the following: If you are looking for an easy-to-use phone with many polished apps that you do not mind paying a little extra for, then the iPhone is probably for you. If you use Google services primarily, you will probably want to steer toward an Android-powered phone.

Describe the best technology decision you ever made: The most recent decision that comes to mind is contracting with LionBridge last year to validate that our core business system could scale to +2X of throughput. I did so in anticipation that key business leaders would be concerned with scalability when they determined the increased volume of transactions that ObamaCare would deliver to the company. Needless to say, the concern of scalability was presented to me a month after the assessment was completed. However, I was able to quickly ease the business anxiety with the positive results of the scalability testing.

Was there ever a technology that you thought was a gimmick but now couldn't live without? VMWare

What's the biggest challenge you face in IT today?

ObamaCare is dominating my IT climate. Three important dates are looming that will turn the retail health industry upside down:

October 2013. At this point, health insurance exchanges are supposed to go live, letting residents browse through the approved options and sign up for retail health plans. As envisioned, shopping for health insurance should be as easy as shopping for plane tickets or rental cars online. Of course, buying health insurance is a lot more difficult than purchasing a plane ticket on Expedia. I have the proposed health insurance selection application on my desk -- it is 25 pages! Hence, we are planning for three times the usual traffic on our phone system and Web channels beginning as soon as summer 2013.

Late 2013. The Supreme Court recently opened the door to a second high-court challenge to ObamaCare. In this case, the challenge involves the employer mandate: Companies with 50 or more employees will have to provide health coverage or pay a $2,000 fine for every worker past number 30. If the law holds (and we expect it will), then our analysis predicts that our retail health plan membership will grow by 300,000 former group insured members (from the states of Illinois, New Mexico, Oklahoma, and Texas). 

January 1, 2014. The major parts of the ObamaCare law take effect, including the individual mandate and the employer mandate, and the ban on insurers excluding people based on pre-existing medical conditions. Under the individual mandate, everyone will be required to have health insurance, with federal subsidies for everyone earning up to 400 percent of the federal poverty level (currently $11,170 for individuals, $23,050 for a family of four). Our analysis predicts our membership will grow by one million members on January 1, 2014 --jumping from 1.4 million retail members to 2.4 million retail members.

Obviously, Hallmark's IT needs to be proactive to such a dramatic pending membership increase. We've taken steps to best prepare and position IT for this large membership growth and regulatory complexity.

Excerpt from judges' comments:

Reducing expenses by double-digit percentages while still preparing for the onslaught of ObamaCare is an impressive piece of work.

The first step is to have horsepower to meet the challenge. The volume and complexity of the expected IT work exceeded the human resource capacity of Hallmark's IT organization. Therefore, I recommended to Hallmark/HCSC executive leadership the amalgamation of Hallmark IT and HCSC IT as appropriate and necessary. Bottom line, the recommendation expanded the IT workforce capacity for retail health insurance from 300 IT professionals to 3,000 IT professionals. The recommendation was approved and the transition is underway. My support of the recommendation has not waivered, regardless of the potential implications the amalgamation has on my CIO career. Another example of my mantra: Do the right things and do things right!

The second step is to have an IT Roadmap that guides IT activities and decisions to meet the demands of ObamaCare (as defined by our business colleagues). IT work that cannot be traced directly to imperatives of the IT Roadmap are not funded and considered distractions to meeting ObamaCare's aggressive timelines.

The third step in meeting the ObamaCare challenge is to have an active PMO providing project management and program governance. In addition, an intimate and engaged leadership team from across the organization has been put in place to resolve issues impeding the projects that constitute the ObamaCare program. Key issues that are blocking the progress on projects are discussed twice a week. Participants debate the issues and offer resolutions. If issues cannot be resolved within the leadership committee, the key stakeholders meet offline to formulate alternatives for the committee to consider at a subsequent leadership meeting.

Which role and/or internal partner do you rely upon the most? Keeping in touch with my fellow business peers as my internal partners is critical. Satisfying the needs of internal partners is fairly straightforward. Simply stated, I need to know what they want and expect. Simply executed, the best way to know is to ask, then deliver in a timely way at price/value that is justified. I have found ways to keep in touch through a broad spectrum of approaches: face-to-face, surveys, steering committees, informal lunches and dinners, etc.

What's your prediction for the next big technology? Medical instrumentation (portable for doctor and patient use) will be available as applications and attachments to mobile devices. With ObamaCare putting scrutiny on cost of medical care, a virtual rather than physical approach to diagnosis and health monitoring will be a key factor in driving down health care costs.

What's your favorite nonmonetary benefit or perk of your job? Deep down, I am a teacher. With that said, a perk in my job is watching young IT professionals learn and grow from their experiences and my coaching. I feel like a proud parent and teacher when an IT professional states they have reached (or are on track to reach) their professional and career goals.

From the nomination

With the little time we had, we could not afford to fail with new or experimental systems and technologies. Thus, we are relying on the best and most proven technologies that can meet the business demand, solve our ObamaCare requirements quickly, and have it supported by the IT staff and appropriate consulting/outsourcing partners.

What is the biggest problem you see with corporate cultures today? Too often, corporate managers do not allow for employee autonomy. Employees need more what and why, and less how. I try to be crystal clear on what and when, and more open on how. I tell my team what and when and for how long, and let them figure out the how. IT professionals are more motivated when they can determine the how for themselves, thereby forging a strong, empowered and energized IT staff.

What are "rookie mistakes" that you see in up-and-coming IT leaders? A rookie mistake is not creating a positive climate. The rookies need to share information about the larger business landscape. By doing so, the IT professionals will be cognizant that the IT work they are performing is not a goal unto itself. Rather, IT professionals generally want to be involved in something larger than themselves. In addition, the rookie IT leaders need to create an environment that fosters personal development and personal autonomy. We need IT professionals that want to be masters of their profession and not stifled by micromanagement.

Describe your leadership style: Over the past five-plus years, my broad range of CIO skills have provided me the opportunity to make a real impact because I was not just "running IT" for Hallmark. I was optimizing core business processes (i.e., applications, fulfillment, enrollment, document management), as well as optimizing and building systems. More and more, I became a change agent through innovation because I had the perspective of Hallmark's end-to-end core business processes. As a result, Hallmark's overall performance and capabilities marched forward steadily and successfully with each year.

Lastly, innovation is not the outcome of the efforts of one person. That is why I have valued creating and maintaining a climate of innovation and experimentation in Hallmark's IT organization. When "how to do" something is too rigidly specified, motivation and creativity decrease. "How things are done" should be as open as possible. Studies show that people work harder and are more efficient when they have a sense of choice and ownership. I advocate quick, short-cycle experiments by the IT staff. Many experiments will fail, so I communicate a learning attitude towards mistakes and failures.

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