Outsourcing Helps Insurer Cut Costs, Keep Quality

Blue Shield of California's customer service strategy uses offshore and onshore outsourcing as well as an automated response system to complement an internal call center, reducing cost per call 35 percent, the insurer said last week.

In 2001, Blue Shield began a pilot with teleservices provider TeleTech, Englewood, CO, to outsource inbound calls from healthcare providers — those who serve the members of Blue Shield's health plans — to a call center in Enfield, CT. TeleTech takes only provider calls because California law requires health insurers to handle calls from insurance plan members internally, said Rob Geyer, vice president of customer service for Blue Shield.

Since the launch, the project has handled more than 5 million calls and has expanded with the addition of a call center in Manila, the Philippines. Blue Shield is a not-for-profit health insurance company, providing health plans to 3.6 million consumers and generating annual revenue of $6 billion.

In the more than three years that TeleTech has handled calls, Blue Shield has maintained an internal contact center work force of 400 while creating 100 call center jobs at the facility in Enfield and 150 jobs at the center in Manila.

“Outsourcing has some bad connotations,” Geyer said. “But when you get involved with it, you realize you're creating jobs for a lot of people.”

Enfield is in the middle of a corridor of health insurance companies that stretches from Hartford, CT, to Springfield, MA. As such, a ready-made labor pool exists from which to draw candidates for the call center familiar with health insurance issues, said Chris Varrone, vice president of healthcare for TeleTech.

A similar situation existed in Manila, which is home to numerous medical training facilities that provide healthcare workers such as nurses worldwide, Varrone said. Manila's strong medical industry helped make the launch of the Blue Shield program in the city quicker and easier.

The Enfield center began taking calls in November 2001 with about 60 customer service representatives handling calls from healthcare providers regarding eligibility, a relatively simple issue, Varrone said. The staff at Enfield working for Blue Shield later expanded to 100.

By January 2003, TeleTech CSRs handled 185,000 provider calls monthly, and TeleTech thought the volume was getting too high. A customer survey revealed that healthcare providers wanted automated service so they could obtain routine information quickly, Varrone said.

After introducing an interactive voice response system, call volume dropped 20 percent overnight, Varrone said. Rather than cut workers, TeleTech and Blue Shield tested a project in which TeleTech handled calls about insurance claims, a more complicated type of call.

With the pilot's success and the Enfield center shifting to handling claims calls exclusively, TeleTech and Blue Shield selected Manila as a location to take the simple eligibility calls originally handled in Enfield. The Manila center launched in September 2003, and by December its call-quality standards had reached the level of Blue Shield U.S. centers, TeleTech said.

Since then, TeleTech has taken on even more complicated work for Blue Shield, such as service for its Blue Card program for nationwide health coverage. Some work on these complicated service issues is now handled in Manila, which is unusual for an offshore center, Varrone said.

The healthcare industry normally has low levels of outsourcing, Geyer said. In Blue Shield's case, the insurer is continuing to migrate service to TeleTech, as it has done gradually during the past three-plus years.

“We've treated this like a partnership,” Geyer said. “We've brought the management team that works with us into our fold.”

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