Blue Cross and Blue Shield of North Carolina is teaming up with its counterpart in Kansas City, Mo., to cut costs and revamp its technology.
The state's largest health insurer has formed a joint venture, Topaz Shared Services, with Blue Cross and Blue Shield of Kansas City. Claims processing, enrollment and billing for the two insurers' individual and small-group customers - which accounts for about 650,000 of the North Carolina insurer's more than 3.7 million members - will be among the services initially provided by Topaz. The long-term goal is for administrative services for the North Carolina insurer's large-group customers to be shifted to Topaz as well.
At least at the outset, the joint venture won't produce job cuts at the North Carolina insurer. Blue Cross has about 4,000 workers, most of whom are based in Chapel Hill and Durham.
Forming Topaz means sharing the costs of updating its 10-year-old software system as well as enabling it to interact with the state-run health insurance exchange - essentially online marketplaces for health insurance - that will begin operating in 2014. That will include enabling individual and small-group customers in North Carolina to purchase Blue Cross insurance directly from the exchange.
"What we intuitively know is that scale will mean efficiency" and therefore will lower costs, said Brad Wilson, CEO of Blue Cross and Blue Shield of North Carolina. But he couldn't specify what the cost savings will be.
Wilson said the joint venture will "position us to be nimble and flexible and provide better customer service."
Right now, Blue Cross is recruiting 20 employees who will immediately be assigned to Topaz, with another 20 expected to be added over the next several months, spokeswoman Michelle Douglas said.
"At least in the near term, it's a change in work and not a reduction in work," she said.
Blue Cross of Kansas City is making an identical personnel commitment to Topaz.
"It's an extremely important strategic initiative as we move into this new consumer-oriented marketplace," said Sue Johnson, spokeswoman for the Kansas City insurer.
Additional employees will shift to Topaz as needed over time, with the long-term impact on jobs unclear. But Wilson said it would be a mistake to conclude that cost efficiency will translate into future job cuts.
"If you are seeing market growth simultaneously with greater efficiency, there will be plenty of room for lots of competent people to continue to help serve our customers," he said.
In 2010, Blue Cross responded to the slumping economy and health care reform by setting a goal of cutting its administrative costs by roughly 20 percent, or $200 million, by 2014. That initiative has triggered job cuts and other efforts to streamline operations.
Wilson said Topaz grew out of talks he had about the future of health care with the chief executive of Blue Cross of Kansas City, David Gentile. About eight months ago, those talks expanded to include the CEO of Trizetto Group, a health care information technology firm with about 2,500 employees based in Denver.
Trizetto has been hired to provide and host the software for Topaz and to provide consulting services.
Although Topaz initially will serve just the two insurers, it hopes to recruit other Blue Cross and Blue Shield plans - which don't compete with each other - to sign up for the venture.
"We feel it would be attractive to other Blues," Trizetto spokesman Loren Finkelstein said.
