Managed Care Leader Interview

Erhardt Preitauer

President and CEO, CareSource


  • The Interview
  • Bio

This interview has been edited for length and clarity.

Q1: Looking back on the last 90 days, what issues have you been focused on the most? Do you think your peers (leaders in other MCOs) have been focused on similar issues?

I think most of the MCOs are dealing with the recent contraction in the Medicaid space. Keep in mind the national Medicaid market hasn’t contracted in 13 or 14 years. So these recent trends are a little different for most people to deal with. With Medicaid rolls shrinking, its forcing people to make sure their value proposition is focused on driving cost, quality and access.

There are some differences for CareSource given where we are in our story. In some ways, its easier to run an organization when you are just growing. As part of that, we have been focused on making sure we have the right strategic capabilities, that they are honed and real and able to drive stakeholder value. Year 1 for me was really about getting the right team and building the right capabilities. Now we are starting to shift back into growth.

Q2: Looking ahead for the next 90 days, what do you think the most pressing issues will be?

Everyone has invested a lot in data- whether that investment is in aggregation, or machine learning or social determinants data, behavioral health data, or pharmacy data. I think making that investment live up to its promise is at the front of most MCO leaders’ minds these days. Its something everyone is thinking about. How do we turn these significant data investments into real value for members? For other key stakeholders?

Besides ROI on data investments, a few other things come to mind. There’s always the political element you have to be thinking about. And there is the ongoing assessment of core capabilities and related investments. For those, I tend to think in terms of systems and people. I may not want to own the care management system, for example. That’s an opportunity to hand off to a vendor. But the care managers themselves – that’s the type of scope I prefer to keep in house. Other core capabilities – like legal, government affairs and communications – are evolving. Nowadays with social media there are new ways to communicate, and we have to consider how we invest in those messaging options. We have to be asking ourselves – “How do we to get our message out in new and different means?”

For any of these core capabilities, we are focused on assessing whether we are getting the true benefit from our current approach. If not, we consider how we shut them down and try something else.

Q3: What advice would you give to your peers about managing vendor partner relationships?

As you think about vendors, one of the things that I find challenging is multiple vendors offering additional services that usually end up getting duplicated. Say I have a care management vendor, or a cloud platform provider. In addition to their core scope, they also do reporting, or analytics or workflow. If we are not paying attention and we just hire vendors to solve our problems – we have all this duplication of services and it then creates fragmentation all over the organization. The question is – do we have a clear understanding of where should we be doing these different capability elements and are we building a roadmap to getting there? Vendors who can help us understand where the organization should be doing a specific function (as opposed to doing that same function in multiple places)- we are more open to listening to those vendors.

My biggest advice for vendors is they should hire someone or get help understanding how they frame their value proposition. Lot of vendors come in and say pay us $X and we will avoid cost… but what is their skin in the game? What kind of assurance does the MCO have that the vendor is motivated to succeed? We look for vendors that believe in their own model so much that they will put skin in the game. People asking for our business have to understand that element. Keep in mind, you need to sell to multiple people in most MCOs. You have to sell your solution to the CFO, to the clinical or functional owner and may have to come and sell it to me, too (the CEO). Those 3 conversations are going to be different.


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