Cover Story
Healthy returns
How Michael Blackwood seized an opportunity to grow Gateway Health Plan’s revenue by 25 percent in two years
By Brian Horn
Smart Business Pittsburgh | March 2008
Opportunity pounded on Michael Blackwood’s door back in
early 2005. The only problem was he couldn’t answer it by himself
On his doorstep was an opportunity to grow his company’s revenue and diversify its business through a new Medicare product.
But, for Blackwood, the president and CEO of Gateway Health
Plan L.P., the project wasn’t simply filling out some paperwork
and then watching the money accumulate.
He needed the help of all his employees and his management
team to get the product in place by January 2006.
The only way to do it was to get buy-in from all company
employees on why they should go through the process to make
the new product a reality.
“We had to create the sense of urgency and create the capacity
simultaneously,” he says.
Here’s how Blackwood sold his staff on the initiative and held
them accountable for results.
Communicate to get buy-in
Blackwood needed complete buy-in from the organization in order
to take on such a monumental task in a short period.
He started by discussing the change with his senior management
team, and then brought the rest of the managers into the discussion in
early 2005.
He explained why the product was so attractive, filled them in on
how much work it would take as well as the systems that the company had to create to make the change a success. He knew no other
activity the company could undertake would lead to growing the company’s revenue line like the new Medicare product would.
“You had to make a case to the organization for why you needed to
do this as an organization and do it so rapidly,” Blackwood says.
To get the point across, he showed them the projected $300 million
revenue increase that the new product would provide.
“We also have a philosophy around here: You are either growing or
you are dying,” Blackwood says. “So, they knew that this was going to
create major growth for the company as very few things could have.
Nothing motivates a company, in my opinion, more than growth.
When they see growth is possible, and particularly of this magnitude,
it’s sort of self-motivating.”
Blackwood also pointed out the number of members they would be
able to retain, which has a lot to do with retaining positions and
responsibilities in the $1.21 billion company.
“So, we made the business case for why we should do it and add this
new line of business in a rapid period of time because it was in the
direct interest of the company as well as in the direct interest of our
employees and certainly in the direct interest of our owners,”
Blackwood says. “So, it was not that hard of a case to make, frankly.”
After he made his case to all levels of management, Blackwood
allowed the senior management team to be the communicators of the
change because there was no way he could do it all himself.
“Make sure you communicate throughout the company the same
things you communicate to your senior management team,” he says.
“Sometimes you do it directly as a CEO; sometimes you rely on your
senior staff to be ambassadors and proponents of the change so that
they can help sell it through the company.”
He met with the team more frequently during the process in order
to stay in the loop and to monitor the communication of the message.
“It took an intense amount of oversight,” Blackwood says. “Then,
those people in the organization brought it to individual departments,
the individual workers, through company meetings, through department meetings, even through sectional meetings, and made sure that
we tested our efforts. ... Then we created a plan in each department to
roll it out, which we sequentially followed. So it was a very complex
undertaking.”
Blackwood says you should state the business case upfront in order
to get the buy-in from the beginning.
“People will no longer just do it because someone tells them to do
it,” Blackwood says. “I don’t believe that is the way things work in this
marketplace anymore. You have to make the business case as to why
it is critical, why it makes financial sense, why it makes business sense
for the company, and that is half the battle right there.”
Though it was fairly easy to make the business case for the change,
employees still had questions because they had other strategic efforts
going on, and they were concerned about the allocation of resources.
Employees also questioned whether the company could pull off the
change successfully in the timeline suggested and if Blackwood
would support budgetary changes to allow them to add new people
or to modify the systems.
“We didn’t know this opportunity was going to exist until it was
almost upon us,” he says. “Our managers and the global management
team had to believe that we weren’t going to ask them to do it with the
same number of people or with the same resources.
“As soon as they understood that we were going to put the money
and resources and the systems behind them to build the capability —
once they knew we were going to give them all the tools that they
would need to have in order to do it — that created enormous buyin.”
Measure your progress
Blackwood compares implementing the new product to swallowing
an elephant — you have to do it one small piece at a time. He says you
need some type of management tool you can use to track the progress
of all the efforts you are making to bring the product to the market,
and what worked best for him was a Gantt chart.
Gantt charts are a type of bar chart used to measure a project’s
progress, keep track of how an employee was doing and break down
the work into components.
“It’s a way of visually seeing your progress of those elements of the
total plan for which you are responsible — you being a department
and you being an individual,” he says. “It’s a way of tracking progress
toward completion of a very large project, which was the elephant I
was talking about.”
You also need to break the set of tasks into components so everyone
involved can take bite-size pieces of that elephant and digest it.
“We carve it up in a way that each person has a role, each person has
a reference team as well as a Gantt chart and a business completion
effort to get it done,” Blackwood says. “They can have milestones and
deadlines and accomplishments, which they can convey electronically throughout the company using all types of communication tools
like e-mail, fax and Gantt charts, and all of the tools at our disposal to
get the word out to the people who need to know.”
Because just looking at the chart wasn’t enough proof the job was
progressing, Blackwood met weekly with his management team for
updates.
“The weekly meetings took those Gantt charts and gave me verbal
reports,” Blackwood says. “We gave them to each other as well as to
me personally. That gave us the confidence level that we were progressing at the rate that we needed to in order to have this product on
line for the deadline, which was (Jan. 1, 2006). So, there was documentation. There was action being taken.”
As far as personnel goes, Blackwood says the people implementing the change need to be experts in the company who can
execute the plan.
When it came down to assigning people to Gateway’s project,
Blackwood turned to the best of the best in the organization.
“People who we knew were stars, people who we knew could do it,
people who knew the company, knew the resources, knew how to
make things happen in the company who could actually execute on
this plan,” Blackwood says. “They were given the authority and the
resources to do it, and they knew they could come to me at any point
if they needed to ask for more resources or to modify the plan based
on their requirements. They had complete access to me throughout
the process, and I was very visible and very much a part of the planning itself.”
Although Blackwood knew the people working on the project could
pull it off, he still needed to be kept in the loop. He tracked to make
sure the execution of the plan was documented and could be
expressed to him verbally during the weekly meetings.
“They were empowered and had the authority and the organization
to make it happen,” he says. “So, I had high confidence they could, but
I needed to hear — as well as the senior management team needed to
hear — that the speed of progress was matching the deadlines that
were approaching.”
Blackwood also referred to the Gantt chart to decide when he
needed to get involved if something was heading in the wrong
direction.
“That’s why we created a barriers section within that Gantt chart,”
Blackwood says. “If I hear them run up against a barrier, I know I need
to get involved. I have to define what that barrier is, or they do.
Whenever I see a barrier, I know I have to personally get involved and
help define the problem, and then perhaps engage other people to
help knock those barriers down. I will not stop the process on things
that are working. I tend to insert myself selectively on problems that
emerge during the process.
“It could be based on reports that I get, feedback from individual
people from members of my senior management team. I could bump
into an employee, however, and they could give me a curbside consultation, which might be something from the ground level, which
raises a question in my mind, and I may elevate it to a much higher status. So, I try to listen to all our employees. We try to combine the intelligence of all our employees and treat them as a major resource and
give them a voice.”
After testing out the systems and fixing any glitches, the product
went live in January 2006 and resulted in a 25 percent increase in revenue between 2005 and 2007.
“It has been, I would say, a resounding success because we have
been able to make it work both programmatically and financially,” he
says. “It has been a major diversification of the company in terms of
product line and in terms of revenue stream, and it’s helped contribute
to the financial performance of the company. It is a central part of our
company.”
While the implementation wasn’t easy, not taking on the new product would have hurt the company’s potential.
“It would not have allowed us to diversify our revenue streams nearly as much as we were able to with this product,” Blackwood says.
“And it created additional capabilities to serve our members. So, there
was a programmatic addition as well as a financial positive for the
company. So, I think we would have really missed an opportunity that
may not come along again in my lifetime.”
HOW TO REACH: Gateway Health Plan L.P., (412) 255-4640 or www.gatewayhealthplan.com
