Ep. 69: Sandra Clarke - Finance & Innovation -- The Perfect Partnership

June 01, 2020 | 15 Minutes

Sandra Clarke, Senior Vice President & Chief Financial Officer at Blue Shield of California, is a proponent of finance innovation. At Blue Shield of California, she oversees the company's financial strategy, actuarial functions, and financial operations in addition to lading Enterprise Process Transformation. Most recently, under Sandra’s leadership, Blue Shield of California has made $200M in financing and support available to struggling physicians and hospitals affected by the COVID-19 crisis. The entire concept was an example of innovative thinking to ensure California can have a robust provider network after this crisis, and there is also an innovative technology element to the program as well. In this episode of Count Me In, Sandra talks about the value of crossing finance and innovation and balancing both to effectively lead your firm. Download and listen now!

Sandra Clarke and Blue Shield of California in the news:
  1. Blue Shield of California Updates Details on Financial Support Options to Healthcare Providers in Response to COVID-19 Crisis
  2. In the News: Blue Shield of California Offering Financial Support to Providers, Sandra Clarke Tells The Wall Street Journal
Mitch: (00:05)
Hi everyone. Thanks for coming back for another episode of Count Me In. I'm your host Mitch Roshong and this is episode 69 of IMA's podcast. Today's conversation is between my cohost Adam and Sandra Clarke, the CFO of Blue Shield of California. Sandra talked to Adam about the value of crossing finance and innovation for the organization and finding the proper balance as a leader of the firm. Keep listening for more insight into how to bring innovation to your company. 

Adam: (00:39)
So to start off, what would you say are your guiding principles when it comes to finance and innovation? 

Sandra: (00:46)
I'd say my guiding principles are that it has to be a partnership that you have to, as a finance person, find the balance between the business strategy and the financial discipline and how you can help innovation weave into those things in a balanced way. So that, that's a very key thing for me. We have to be drivers in unleashing that, that slice of genius that exists in everybody. We always have to do it in support of business objectives and execution still matters. You, you have to be able to execute on this idea of dreaming up lots of cool ideas on a whiteboard is a lot of fun, but you have to be able to turn them into something that's useful for the company. And, finally, I would say an underwriting guiding principle at all times as you cannot assume that what you are continuing to do or you're currently doing is riskless. If you are staying in your same way of doing things and not paying attention to what's going on around you, that can be just as dangerous as going and trying something innovative. So the better answer is to be bold and to strike that balance. 

Speaker 1: (02:07)
I think that's some great advice to be bold. So then what counts as innovation in your organization and how do you define it, and what does innovation mean for your employees? 

Speaker 2: (02:19)
Innovation is a real buzz word at the moment. If you were to do an internet search, I actually did this at one point. Google has over 2 billion results for the word innovation. So I'd say that it means a lot of different things to different people, and you have to be careful that you define it in a way for your organization that's meaningful because a lot of employees hear that word innovation and think “uh oh” this means job cuts coming. And it may mean that jobs change, it doesn't necessarily mean that the jobs go away. I define innovation as something that is novel and useful. So it could be a new way to work. It could be a new way to save money, or it could be a reinvention of something that you're currently doing, but it has to be useful as well as new. And new can be defined as, completely never seen before, or it could just be a significant and enhancement to something that you're currently doing. But the key is that in addition to being a breakthrough, it has to be a useful breakthrough. Innovation just for the sake of coming up with a cool new toy isn't beneficial to your organization, and a lot of times that's the balance that you have to strike that I was referring to before. 

Adam: (03:42)
So we live in very uncertain times, and so what should leaders be thinking about when it comes to innovating in the face of things like recession or just not even sure what the economy is going to look like on the other side of this pandemic that we're in? 

Sandra: (03:56)
Well, you still have to do innovation. In fact, I would say right now, especially in the current environment, innovation is even more important, because we're all finding that we need to rethink how we do our jobs, how we go to market in an environment where you can't do as many things in person. And so it's important for companies not to completely pull back on innovation in this type of an environment, but you might have to refine your priorities and pare them down. So you might've had 10 projects out there for innovative ideas, new initiatives, and maybe you scale that back to three or five and you do more frequent check ins, give them a little bit less time to evolve before you make a decision on what to move forward, modify, or stop the investment. So that I think your, your level of rigor around what you consider acceptable parameters might change a little bit. And again, and again and again, I will say it still has to fit with the business strategy and your company's objectives, and that's even more crucial now because you're going to be refining what those objectives are potentially, as I said, to address the new ways of going to market or the new ways of working, and you need to make sure that you don't continue with the project just because it's somebody, darling and you make sure that it's still going to sit. And so that's where that re-prioritization comes in to make sure that you are using your innovation energy, and I mean that from a people resource perspective as much as a money perspective that you're using it wisely. 

Adam: (05:46)
Definitely. Are there some examples that you can give about, ways that you've been able to innovate? 

Sandra: (05:53)
Well, within my finance team we rethought how we do our close process and shaved about a third of the time out and we're going to try and get another 25% out by the end of the year. And so I think that's one example of, I'll call it in place innovation where you're taking a process that by and large has to exist and finding ways to do it differently so that you can make it better. And that's allowing people a lot more time for analysis and a lot less time on transactional work that's not meaningful to them or to the business. That's one way. And then we, within Blue Shield have a big process transformation initiative that has a number of different pieces in it to try and improve the digital interface that our, our members and our customers and our providers all see, as well as improving the, the way that people do their jobs so that they have more transparency, more automated tools available to them so that they can provide real time information back to people out of one source of the truth. Some of this has been in the works and evolving over the last couple of years and we have a big push to make significant breakthroughs over the next two to three years in a few of these areas, and so that's innovation that we will continue regardless of what's going on with COVID or the economy. 

Adam: (07:25)
I think that's great. I think the biggest thing that the COVID is probably teaching a lot of peoples that, that human to human, that people are important that we should, we should value a person or maybe even over commerce at times. Have you seen that as well in your organization? 

Sandra: (07:41)
Absolutely. We are trying to make sure that we are, are, we remain fiscally prudent, but we are doing it in a, what I would call a thoughtful manner. So my CEO has committed that we will not do layoffs, as, as he has said, we can't promise that forever, but, while we are in the midst of this event, we do not want people worrying about their jobs. We've implemented things like an additional public health leave option. So if you have someone, a loved one in your home or a near family member who becomes ill and you have to care for them, you can take time off with pay. We moved a significant number of people to telework who had never teleworked before, and in addition to providing them with the hardware that they needed to do that job, we are also providing them with a subsidy to cover the, phone and the internet charges that they may be incurring as a result of this change. So I feel that we've done a number of things to support our employees by giving them tools, giving them financial support, giving them financial stability in order to make them feel as secure as possible. And I would say that it has been very effective because our productivity is higher than it's ever been. Our customer satisfaction surveys are showing much higher results. They've been steadily climbing, and you would have expected potentially a dip in service level and in customer satisfaction over the last couple of months with what has been happening, and instead it's continued to climb. And I think that speaks to the confidence and security of our people and the pride that they feel in working for an organization that's continuing to do these things to support the, overall community out there. One of the things I like about doing innovation within Blue Shield is that it's a mission driven organization, and so when you are working in some companies, and I talked before multiple times about how the innovation has to sit with the business objectives, we have a really clear mission around how we want to change the healthcare delivery system, and it makes for a very bright line when people are talking about innovation projects. Does this hit that bar? Does it help us accomplish that? And that type of, clear, well understood, long-term vision is really important for the entire employee base, not just when it comes to proposing innovative initiatives, but in terms of how they do their job and focus their priorities every day. And it's nice because it's a reinforcing mechanism on both sides. 

Adam: (10:39)
Now, you've already touched on this, but how would you approach the balance between fiscal prudence and the risks involved in driving toward innovation? 

Sandra: (10:49)
Well, as I said, doing something the same way, continuing to do the same process over and over is not riskless. So you have to have on some structure around your innovation. It's not, oh, let's go, as I said before, you can't just go draw things on the whiteboard and say, oh, this looks really cool, let's go do that. You have to have defined innovation pillars. You have to have defined priorities around categories. What size are you willing to take on, timelines. You need tracking mechanisms for internal initiatives and external initiatives, and those mechanisms are likely different. You also have to distinguish between experiments and pilots. And experiment is something that you give a very small amount of seed money to see if it's even possible. A pilot is something that you are more confident in the technology and now you want to test it out with more than maybe one or two samples, but it's not ready for full scale prime time. And you have to have decision rights, a RACI, in place. And those are the kinds of things that enable you to have enough discipline and enough fiscal responsibility around innovation to make it a repeatable process and still be able to continue driving the change in that direction that you're seeking to go. 

Adam: (12:14)
Sandra, what are some ways that Blue Shield is innovating during the COVID-19 crisis? 

Sandra: (12:21)
There is one other innovative initiative that we've put in place recently in response to  COVID that I do want to brag just a little bit about because it was a real partnership between finance and the business and that's our provider, financial assistance program that you may have seen because it's gotten a bit of press. And the idea behind this is that we are, offering four different programs to help providers who have been negatively impacted in the financial sense from the COVID shelter in place restrictions. So we came up with a way to offer, as I said, the idea behind these four programs is that this can't be one size fits all. Different providers have different needs and their practices are structured in different ways. And so we took those things and we looked at what's good for healthcare in the long run, and one of those things is a satisfied and viable provider base and created these four different options for providers and put a process in place around how we could execute this in less than a week's time. The whole idea germinated in a 30 minute conversation between our CEO and me one Sunday afternoon, and we were ready to put it into place by the end of that week. So that's where when you're really focused on something, you can come up with new ideas to respond to a need in your environment, and the fact that we've done this and we've now been able to help a number of providers out there feels really good. 

Closing: (14:12)
This has been, Count Me In IMA's podcast, providing you with the latest perspectives of thought leaders from the accounting and finance profession. If you like what you heard and you'd like to be counted in for more relevant accounting and finance education, visit IMA's website at www.imanet.org.