The AI Paradigm Shift Impacting Health Plans, ft. Michael Pacolay

Speaker 1 (00:03):
Consumer demands, disruptive technologies and AI are shaping healthcare for years to come. On Hello Healthcare we dive deep on these issues with leaders who are driving change. We hope that these stories will inspire you to create and demand a better future in healthcare. Please welcome, your host Alan Tam, chief marketing officer at Actium Health.

Speaker 2 (00:26):
Our first two seasons of Hello Healthcare are available on Apple, Spotify, Google, or wherever you listen to podcasts. Check out our conversations with some of healthcare’s most well-respected leaders in marketing, business strategy, data science, and much more. If you like what you hear, please share with your friends and leave us a review. Thanks for tuning in.

Alan Tam (00:47):
Hello Healthcare, as a healthcare consumer, customer experience is not really the first thing that comes to my mind when I think about healthcare organizations, let alone health plans. If I’m being completely honest, it’s not even on the list of things that would come to my mind. Yet, there’s a tremendous effort underway across the industry to change this. Health plans are investing significantly to meet today’s consumer expectations and ever-changing behaviors. I’m fortunate enough to be joined here today with Mike Pacolay. Mike is the manager of customer experience analytics and outcomes at Highmark Health. Mike, welcome to Hello Healthcare.

Michael Pacolay (01:22):
Thanks, Alan. Nice to be here.

Alan Tam (01:23):
I’m really excited about our conversation today and just learning more about your role and more specifically, how health plans are starting to focus on the customer experience. Why don’t we start with a little bit about Highmark and what your role is there?

Michael Pacolay (01:38):
Yeah, so my role is kind of new. The CX org in Highmark itself is kind of new. It’s about five years old and it’s just been growing. My role at Highmark actually, and this is probably going to be surprising to a lot of the listeners, I’m an actuary by trade. So most of my time has been in traditional actuarial roles, whether it be large group pricing, trend analysis, value-based reimbursement, all those different kind of gamuts. But through that I’ve learned a lot of all those financial aspects behind the scenes that to me, consumers don’t understand them. It’s highly complex. A lot of people, even within the industry don’t understand them. So once I started feeling like the consumer was left out in the dust all the time, I was just like, “Oh, well we’re doing some cool stuff from the customer experience side at Highmark.” Maybe I could bridge that gap between a lot of the financial and analytics perspectives that I had throughout my career with the actual human-centered nature of talking and interacting with the consumer.

Alan Tam (02:34):
That’s awesome. I think you have a very unique perspective as well, being an actuary by trade and looking at it from a numbers driven perspective. I think that’s really important. How would you define and measure customer experience in your role?

Michael Pacolay (02:51):
It’s a tricky question. I think defining it alone is something that means that you have to get collective buy-in on what that definition is. From a health plan perspective, there’s a lot of different incentives in place with individuals who serve different masters. So when you talk about customer experience, the first thing that comes to people’s mind isn’t always the end patient or the member. Sometimes it’s the broker, sometimes it’s the client, sometimes it’s someone who’s dealing directly with the providers and the clinicians and that’s their customer. So I think just defining what we mean by customer is always a challenge in and of itself, let alone trying to then measure the customer experience becomes a whole nother beast to actually get people on the same page with that.

Alan Tam (03:36):
Right. So what’s your approach? If we said the healthcare consumer is the customer, what are my right metrics there that you and your team take a look at?

Michael Pacolay (03:48):
If I told you there was one specific right metric, I think you should instantly challenge my credibility there. So I don’t have one silver bullet metric. I think that a lot of what comes to people’s minds are things like net promoter score, CSAT, those high level metrics. I think that those are good to have from a very north star level perspective. But the issue with those is that they can be pretty noisy. You don’t necessarily know exactly what’s impacting them. To nerd out a little bit, net promoter score especially, is a difference between two numbers. So you need really high end sizes.
(04:21):
It’s just mathematically more variable than a single metric. So I feel like a lot of the times when we talk to the business around customer experience metrics, you need to make sure that you’re able to tie it to how do business outcomes get impacted by these things? Because the metrics themselves, like NPS, doesn’t mean anything if you can’t take action from it. So I think that’s what my role is trying to do is to build that bridge to say, “Okay, here’s what NPS looks like, here’s some of the drivers behind it. How can we then tie that all the way to how the things that drive NPS also drive business outcomes?”

Alan Tam (04:54):
Fascinating. I think as you’re talking to business leaders, what are some of the challenges that you see in terms of helping them better understand that? Obviously, you brought up some points in terms of are you measuring the right things? How does this translate to a conversion or an activation? What would your recommendation be to others who are trying to tackle the same problem in helping their leadership understand what those metrics mean and what the right metrics are for that matter?

Michael Pacolay (05:23):
Yeah, rightfully so. There’s some leaders that are saying it’s a highly business to business driven nature for a lot of the leaders that deal directly with large clients, even small clients. So if the members themselves aren’t making those decisions, they feel like, well, I’m in service of the client. But really to me, that’s like a short term kind of myopic view of it. Whereas yes, they might want to cut costs in the short term or they might want to do something specific because they’re trying to change utilization from previous years or something that they heard in the news or whatever it is. But really it’s just like they also, what they’re trying to do is impact their employees, which again is what I’m saying the customer is. So if you do things that service them, they will eventually have good outcomes for those higher level customers of the clients.
(06:10):
So it’s like how can you make sure they have good experiences to get the information that they need, to simplify things to make sure that that they’re able to get the care that they need, that they have the answers to know how much something’s going to cost or the best site of service? So all these things that go into what the customer experience is will have outcomes for those higher level clients and customers. I think just being able to connect that and trying to draw that red thread between them is something that is challenging, but doable. I think as much as we can do that, the better.

Alan Tam (06:41):
Who do you think is doing it right? I’m sure you’re looking at the broad landscape and competitive research and a lot of discovery going on. Who’s in the right track? Who’s moving towards the right direction?

Michael Pacolay (06:54):
Everyone’s trying something. I don’t know if there’s necessarily just a black and white, right or wrong approach to this. I think it’s something that’s tricky in our industry because we’re not like a Disney where everything is self-contained, you can control the whole experience from end to end. In our industry, you get the person as a member, but then they can go to tons of different care journeys. They can go on to different hospitals, different geographies. They come from different segments. There’s just a lot that can be done. So the saying that someone does it right or wrong, I think would be a disservice to anyone that’s trying.
(07:30):
But I think that payers in general need to take more of that customer-centric lens. I think that providers and clinicians often have a leg up as it relates to trying to focus on the patient. They say patient experience, I feel like they’re a lot more focused on the patient because they are at the bedside. They’re direct to those consumers when they engage with them. But from the health insurance perspective, a lot of times it’s a service that we sell that a lot of people just don’t want to ever have to use. So it can be tricky for sure.

Alan Tam (07:58):
Let’s change gears a little bit because I want to dive deeper into the technology aspect and how that impacts your everyday work. We’re seeing an influx of technology, adoption of technology. Some people are talking about AI, some people are talking about machine learning. What role does technology have in what you’re doing every day?

Michael Pacolay (08:21):
Data is the heart of everything from making decisions. Everyone wants to make data driven decisions. I’ve said this before to others is do you know what the worst thing is from making decisions with no data?

Michael Pacolay (08:32):
Making decisions with bad data. If you say that we have all this good data, we have tons and tons of it, and then you try to make decisions off of it because you have voluminous data, that’s just kind of technology for technology’s sake. Not actually saying, “We have clean data, we have what we need. We have the knowledge and the connection points to say that we trust this data, it’s quality.” So to me, just making sure that we’re able to set up those processes, have the data infrastructure behind the scenes to feel like we have what we need and that we trust in the data to use it to make good decisions and to help the business to feel confident in those decisions.

Alan Tam (09:05):
Absolutely. There’s nothing worse than bad data. But in healthcare, what I’ve also have come to learn and see is just a lot of data silos.

Michael Pacolay (09:14):
That’s true for sure.

Alan Tam (09:15):
How do you guys go about connecting all those data silos and making sure that the data is clean and the data is correct?

Michael Pacolay (09:21):
Well not all in one bite, that’s for sure. So I’m not saying that we do it perfectly, and I think anyone that says that they have that nut cracked is lying to you. There are so many different data silos. You need to figure out and prioritize what matters most, what do you feel like you’ll get the most value from? Then start there, build a precedent and then figure out how you can slowly add things on from there. So I think that from the payer perspective, there’s a lot of different touch points that you can aggregate, but then, like I said before, if it’s not end to end, there’s still a lot of going to be missing pieces that you’re just going to have to accept.
(09:54):
You’re not going to get every single piece of data in terms of what’s happening to that member outside of your ecosystem. So if they go to a hospital, you’re not going to have that information until you’re lagging on the back end with claims. If providers are reaching out to them directly for some reasons, that’s data that you’re not going to have. So you just have to know what you don’t know. That can be a struggle, but I think that, again, for the sake of data overload, you need to be wary of those things.

Alan Tam (10:18):
I’ve had the opportunity to actually speak with a number of health plans recently, and one of the things that I’m curious about, and I think the audience members are curious about is whether or not AI has a role within health plans and helping with a lot of the work that you’re doing on the customer experience side. It’s definitely the talk of the town the past few weeks and the past few months with Chat GPT and various other types of AI driven technology. Does AI have a role for health plans, and if so, what’s the future of it?

Michael Pacolay (10:56):
I certainly think it’s a hot topic, and I don’t pretend to be an expert in all things AI, but I think that there is certainly a time and place for it. But at the same time, going back to talking about customer experience, I think a lot of what can differentiate the customer experience in the healthcare world is the human interaction. People, if they’re going to see a clinician or they’re trying to find an answer for something that they feel is deeply personal and deeply sensitive to them, or they can have dramatic impacts on their life, they might not just throw that to say an AI chatbot can help them.
(11:29):
Or that they can type something in and expect a good answer for their specific case. So I feel like there’s definitely room for it, but at the same time, I think that the people that lean into that human interaction versus just chasing AI. Again, from before, tech for tech’s sake, just to say, “Well, look, we’re doing blah, blah, blah with AI, or we have these chatbots that will help you do whatever it is.” That might push the consumer away a little bit more because they expect our industry to be very human centered.

Alan Tam (12:00):
Absolutely. I think nowhere is more apparent than in healthcare. But what about on the backend side in terms of helping you process the data that you’re working on, not necessarily from the interface side with the healthcare consumer, but perhaps the data models that are being run to identify folks who are most at risk or likely to engage or likely to sign up for a new health plan. Is there a role for AI there you think?

Michael Pacolay (12:25):
Yeah. I think that predictive modeling and techniques have been in use for a while. So to the extent of what kind of AI can be useful, you also need to make sure around things with bias of how those AI models are trained, the large language models to make sure that you’re not introducing some bias or prejudice in terms of how those were built and trained. So I just think in general that AI has a long way to go from the healthcare world because of how slow things often move and how sensitive it can be with all the data and PHI behind the scenes.

Alan Tam (13:00):
Absolutely. Definitely a challenge when it comes to compliance and regulations within the healthcare industry. Do you think that’s played a role in terms of how and why health plans have struggled with customer experience, or are those independent?

Michael Pacolay (13:17):
No, I definitely think that because of the mix of private sector with the regulation that exists in the healthcare industry, that causes a lot of strange permutations of things and weird perverse incentives that can go on. So a lot of times we have ideas and we’re like, “We could do this for the customer.” Then someone in legal is just like, “Well, there’s this legislation that says that we have to do X, Y, or Z, so we won’t be able to do that.” Or a good example that this probably will resonate with a lot of people is qualified high deductible health plans.
(13:50):
In order to be considered a qualified high deductible health plan, basically everything aside from the preventive services that the preventive task force lays out, must be subject to the deductible. So if we want to do something that we said, “Well, let’s remove this barrier, let’s make this free for members.” You almost take HDHPs off the table from that, and that’s becoming a growing product line for a lot of employees and members across the country. So if you want to try to innovate or do something special with that, sometimes the legislation just instantly puts the kibosh on it because of how it’s structured. So, for sure.

Alan Tam (14:22):
Is that changing on the regulation and compliance side? Do you see them letting up? Do you see things becoming more flexible given where the state of healthcare consumers are and where the industry is going?

Michael Pacolay (14:36):
I think that there’s more consumer centric legislation being pushed out. I know that the past few years with the No Surprises Act, I feel like that has a lot of human-centered, consumer-centric things at its heart. But again, it’s how it’s executed. So that one, for an example, there’s a lot that can be done as it relates to revealing the complexities behind the scenes for financial transparency. But to me that’s like saying, “Hey, I want to go buy a new laptop.” The tech opens up the back panel and starts showing you all the circuitry versus showing you the user interface.
(15:09):
So revealing all the craziness of the codes, the CPTs, the DRGs, all the different contracts, that’s all well and good, but from the consumer’s perspective, all that data, it’s huge. It needs basically now new third parties to come in and wrangle that data and make it digestible for the consumer. So again, it goes back to how does the legislation that gets pushed out, how can they make it in a way off the bat that is intended to really do something directly for their customers and not just try to solve a specific problem that they’re itching to push?

Speaker 5 (15:43):
Hello Healthcare is brought to you by Actium Health. Healthcare leaders use Actium’s CRM intelligence to identify their highest risk patients and drive them to care. Increase your patient volumes revenue growth, and improve your quality scores today. Learn more at Actiumhealth.com. And now back to the show.

Alan Tam (16:04):
How can what you’re working on and what you’re doing specifically help with this? What are some of the projects and things that you’re looking into that can help at Highmark?

Michael Pacolay (16:16):
Well, I think that what I just described around benefits simplicity and price transparency, those are two things that we feel are big drivers in terms of the customer experience. We know that our industry is highly complex and we’ve kind of made it that way. So rather than just perpetuating things and saying that’s just how it always has been or how it must be, we need to try to step in and figure out, okay, well what specifically can we do to address the complexity? How can we make things more simple? Even if it’s complex on the backend like you said, AI things and the stuff that goes on behind the scenes between payer and provider, maybe that needs to exist still, but do we need to drag the member through the mud for everything? I think the answer is no.
(16:58):
So I think us figuring out ways to do that kind of work and push those ideas forward, get them funded, get the business to buy into those things, test ideas out in a small, more controlled environment where you’re not risking as much in terms of the financials, then proving them out and then scaling them. So I think that Highmark is in a good place to try those things out. We have good reputations with our regulators and our markets. Whenever we have these ideas pushing it forward, bringing them in from the beginning and making sure that both they and the stakeholders within the business realizes that we’re doing these things from a human-centered perspective that’s best for the customer and not necessarily just some profit driven motive.

Alan Tam (17:39):
Absolutely. I think that to me, that sounds like near utopia. Let’s just say, if you had to use an industry for reference, what’s a good industry that you think is a good model for healthcare and health plans to look like? I can think of a bunch off the top of my head as a consumer in terms of I wish healthcare was more commerce, retail, travel, FinTech, you name it. What would be your inspiration and model as you’re looking at this?

Michael Pacolay (18:10):
Yeah, I think that we’ve kind of came up with how might we statement of how might we make price and payment everything else people buy? So that to me, like you said, commerce, people have become so used to having such ease and convenience and high expectations as it relates to those types of things. I feel like the healthcare world is just so far behind as it relates to how we’ve progressed everywhere else. So I think definitely the ease at which you can shop for things. You can have them delivered right to your door, you can return them, you can compare things.
(18:42):
Just the amount of flexibility and options that are provided in that space. I think that if that could translate over to the healthcare world, that could have some dramatic change. But I think that a lot of that is intended currently to be hidden from patients and customers, there’s a lot of profit to be had by hiding that stuff. If that could be the utopia, there would be a lot of paradigm shifting within the industry and I think more of a shift to have the power more in the control of the patients and the consumers versus all the other players.

Alan Tam (19:13):
What are some of the trends in innovations that you are seeing today as health plans try to figure out how to better engage and retain members?

Michael Pacolay (19:23):
Well innovation, I feel like the term innovation is an interesting one in the healthcare world because I feel like a lot of times we move at such a slow pace. Incremental change is often viewed as dramatic in innovation. So I think just even focusing on this discussion we’re having right now, like payers talking about customer experience and investing in it and not just trying to promote the status quo. Realizing that these different things and legislation that comes out, if you treat things like those legislations as jumping off points to be differentiated, rather than just saying, “Oh, this is another mandate or another annoying fly we need to swat away by just doing the minimum effort.” That’s where you’ll start to see people diverge. Having a payer that takes that as an opportunity to really set the bar and go above it versus just doing something off the side of the desk kind of thing. To me, that’s where the innovation and trend would be going for payers.

Alan Tam (20:22):
Besides regulation and compliance, what are some of the other biggest barriers to achieving success or are those the biggest barriers?

Michael Pacolay (20:32):
They’re definitely barriers. There’s a lot of barriers. We talked earlier about the fact that there’s a lot of business to business, so if the members aren’t the ones making the decisions, well, that’s a barrier, right? Because we’re kind of going on the needs and the whims of the employers that are making those decisions. Just the inertia. It’s a huge mucky industry to see change with all those different players who have a stake in the game, they dig their feet in and resist intentionally. To me, that’s a huge barrier because there might be some great ideas out there.
(21:04):
There might be some even in the case of pharmaceuticals. If there’s a cancer drug that actually cures cancer, that can often be a detriment to someone’s profit line. They could take entire industries out of business. When you start talking about those types of things that really, they’re way better for the end patient and the consumer. But from all the different profit seeking motives that exist throughout the industry, that to me, that’s a barrier because everyone is fighting to keep that inertia and to stick up for their turf. That can be a big stymie point for innovation.

Alan Tam (21:40):
Absolutely, it makes sense. I think there’s definitely a lot of intricacies there in just culture and structure that has been set up. If you had a crystal ball, what will the health plan landscape look like in the next two, three years?

Michael Pacolay (21:57):
Well, despite what people might think about actuaries, I don’t have one of those. I wish I did, but I don’t. Honestly, I’m not a betting person, but if I were to have to bet, I would say that not much would change in the next two or three years in healthcare, at least not dramatically. Again, I feel like the change that we’ve seen in the healthcare space often comes from CMS, from legislation, and then that sets the new standard and then people build off of that. I think that you’ve heard the GDP numbers.
(22:26):
I wouldn’t be surprised if we hit close to 20% in the next three years. So I’d say that some of the work that we’re doing at Highmark, hopefully will shine a light on the fact that you can be consumer-centric and human-centered have success. But across the whole industry, I think that if we had the same conversation in two or three years, unfortunately, I don’t think there’s going to be… Remember when we talked about this? It’s crazy that that’s gone. A lot of the same problems that we talked about today, I think are still going to be just as prevalent in two or three years.

Alan Tam (22:56):
I hope not. I think fundamentally, healthcare has changed quite a bit since the pandemic, for example. I think the pandemic has definitely been a huge catalyst for not only plans, but also for healthcare providers as well. So I’m hoping that type of transformation continues to accelerate the work that Highmark and others are doing for healthcare consumers. If you take a look at within, say end of next year, the next 18 to 24 months, how would you say who the winners are and who are the ones that are going to succeed? What type of characteristics or proper execution are these folks going to be focused on in doing?

Michael Pacolay (23:44):
Yeah, I’d love to say that the winners would be all of us. The patients should always be the winners, patients and members. But I think that when you talk about the winners and losers in this regard, it’s basically looking where to follow the money. So depending on the new players that come out, are there new health plans entirely? Maybe there’s some brand new health plans. I think it’s incredibly difficult for new health plans to spin up and disrupt some of those massive players. But I think there’s a lot of vendors and startups that pop up to try to disrupt certain niches of the healthcare industry. I think that’s great that they have a specific mission and passion for that particular problem but the problem is that there’s so many of those problems.
(24:29):
So like you said before on the data, things become very disjointed and siloed. So the more one-off solutions that there are where things aren’t being integrated, that can be, I feel like an issue. So I think that the people who are able to figure out how to wrangle all those together to make them seem as seamless as possible, make it so that customers do not have a disjointed experience and they feel like things are much more seamless and easy, will be the winners. The people that just keep trying to play status quo, like I said, stick their feet in and refuse to change, refuse to move, those will be the losers in the future.

Alan Tam (25:04):
Mike, thank you so much for all the fascinating insights that you’ve shared. I think you’ve really put a spotlight on not only some of the challenges that health plans are dealing with, but how we can potentially overcome them so that we as healthcare consumers, and hopefully all the health plans are winners as well. For folks that are in the audience and would like to continue the conversation with you, what’s the best way for them to get ahold of you or to reach you, Mike?

Michael Pacolay (25:34):
Oh, they could email me directly at my Highmark email address. It is michael.pacolay@highmarkhealth.org, or they could contact me via LinkedIn.

Alan Tam (25:43):
Wonderful. So for those of you in the audience, Mike is doing some amazing work at Highmark. Definitely some incredible insights. Please give him a ping, especially if you want to continue with this conversation in terms of transforming how health plans can impact and make the customer experience that much better for consumers all around. With that, thank you again, Mike. And until next time, hello.

Speaker 1 (26:12):
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