How Blue Shield of California implements finance technology in...

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How Blue Shield of California implements finance technology in accordance with its mission and values Facing a 100% remote work environment, the 4.4 million-member nonprofit health plan also took a new approach to internal controls

By Sandra Clarke, CFO, Blue Shield of California

Sandra Clarke, CFO, Blue Shield of California

The last year has reinforced the delicate balance between investing in cutting edge technology and reining in health care costs. This balance is a top priority at Blue Shield of California, where our mission is to ensure access to high-quality, affordable healthcare for all Californians. A prime pillar for achieving this is through financial oversight of every business decision and process, to ultimately support the needs of our members.

To further this goal, we formed a Finance Transformation team tasked with advancing our adoption of the Oracle Fusion Cloud ERP through simplification, standardization, and automation. Leveraging the unified Oracle platform has reduced the overhead required to support the business and forced our processes to align to best practices inherent in the platform. After following this approach to shaving four days off our month-end close cycle in 2019, this year we executed initiatives to enhance a variety of key planning systems and processes. Within the Actuarial function, we enabled analyst self-service and greater “what-if” analysis by bringing pricing methodology into our centralized enterprise performance management (EPM) tool, replacing an offline process. Our Administrative Expense teams worked to enhance traceability of Allocations down to the product-level through a reduction of customized scripting of over 60%. By modernizing our Allocations drivers, we can provide more insights geared towards increasing operating margin in key lines of businesses and thus keep our commitment to minimizing premium increases our members face.

"We formed a Finance Transformation team tasked with advancing our adoption of the Oracle Fusion Cloud ERP through simplification, standardization, and automation"

Leveraging our technology stack to make monthly financials available to the enterprise as expediently as possible remains a key focus as well. As we round out the realm of process improvements to the close, we must turn to Big Data and emerging tooling to meet our goal of shortening the close by another two days in 2021. For example, we are relying on more data from our Claims data lakes than ever and applying advanced statistical methods to enhance the incurred but not reported (IBNR) Reserves model. This enables smarter and faster decision making around strategically spending dollars while maintaining core financial stability month over month. We continue to develop more robust ERP integrations to reduce hand-offs and put data in the hands of our analytics community as fast as possible. And, by enlisting a new Investment Accounting partner, we will shorten the close cycle time while gaining expanded reporting and compliance capabilities for our portfolio. With each accounting system upgrade, our goal of achieving a “touchless close” becomes more of a reality.

Excelling as disciplined financial stewards allow us to reinvest in what matters–member experience. To this end, Blue Shield’s IT portfolio has been committed to delivering stability and security in new and existing applications. In 2020, the IT Security Risk project was launched in support of expanding on IT security capabilities and installing new IT security appliances and software.

In response to a 100%remote working environment, Blue Shield of California strengthened our approach to internal controls and compliance to reflect our values of Human, Honest, and Courageous. It starts with tone at the top, so senior management consistently reinforces internal controls, ethical conduct, and compliance. At the onset of the Covid-19 outbreak, we executed against strong crisis management, business continuity, and disaster recovery processes. This allowed us to transition our workforce to work from home environment in a matter of days. These processes provided the guidance to enhance physical and cybersecurity measures, automate functionality required in the expanded virtual environment, and provide increased oversight for evolving third-party risks.

In alignment with our values, it is human to make mistakes, but we emphasize accountability and course-correct when things go wrong. To increase awareness and ownership for internal controls in the new environment, business unit management and process owners received training on an expanded Internal Control Policy. At the heart of this is increased focus on ownership and maintaining, monitoring, and responding to the key internal controls that protect our members and position us for success. To quickly respond to the rapidly evolving circumstances in the new environment, when internal control gaps are identified, management must provide short-term corrective action plans to mitigate risk within five business days.

We also celebrate when things go well.

Internal Audit began to spotlight teams/processes where virtually all desired internal controls necessary to ensure the risk of loss is minimized, and company objectives are met, are in place, documented, and performing as designed.

Internal control and compliance activities keep us Honest, another pillar that demonstrates our values and is our “license to operate”. To be disciplined financial stewards, we acknowledged that Covid-19 and other external stressors could increase work errors and internal control gaps due to the lapse of judgment and focus. Strong Compliance and Ethics, Enterprise and Independent Risk Management, and Internal Audit programs are working together to effectively create a safety-net for business management and process owner internal controls and compliance work. We have implemented a Governance Risk and Compliance program and tool to identify key internal controls and owners, track control gaps and corrective actions, and store current policies and procedures.

Lastly, we are Courageous in what we are trying to accomplish and that means keeping in mind internal controls. As transformation projects are piloted, Internal Audit provides advisory services to business management to ensure key internal controls are included in the process design and automated wherever possible. Once projects are rolled out industrial-strength, the controls are tested to ensure they are effective.

Achieving a sustainably affordable health care model worthy of our family and friends has never been more important. I am proud of how Blue Shield of California’s Finance organization supports the needs of our members, protects assets of the enterprise, achieves compliance with all policies and regulations, and keeps our commitment to employees and the community.

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