Premera's H.R. Brereton ‘Gubby’ Barlow
Although Gubby Barlow’s family had lived in South Africa for several generations, Barlow felt uncomfortable with his country’s apartheid policy. So, in 1987, he asked his employer, Deloitte Touche, to transfer him to the United States. From accounting, he went to various management positions in health-care companies before joining Mountlake Terrace–based Premera Blue Cross in 1997. First as COO and later as CEO, Barlow has led a drive to strengthen Premera’s balance sheet. Now he wants to help drive down health-care costs.
Childhood in South Africa: Team sports are a very important part of your school experience through middle school. You were expected to participate, and that promoted teamwork. When I became CEO of Premera nearly 12 years ago, I introduced our 12 leadership values. Teamwork is one of those values. Every company says that, but the emphasis on teamwork here is pretty strong. People are assessed against that by people who report to them and by those they report to.
Nonprofit status: In the early 2000s, we were very capital constrained. We filed to go public in 2002 to raise capital [to invest in information technology and other needs]. If that had worked out, we might have also made some acquisitions. It didn’t work out, but we’ve found a different way to be successful. We made the necessary IT investments and our balance sheet is much stronger now.
Efficiency: Even though we don’t have the scale we would have had with acquisitions, our administrative cost as a percentage of premiums (if you include our business with customers who are self-insured) has dropped to 7 percent in 2010 from 9.4 percent in 2004. We have adopted the Toyota lean production system to take cost out of the system. We’ve focused particularly on our claims and customer service area, improving the way we answer phones and cutting waste by reducing errors. The number of people involved has fallen to 720 from 920. Since those people are dealing with a lot more transactions, the cuts represented a 30 percent decline in cost.
Health-care costs: The wrong incentives are in place. Physicians and hospitals are rewarded for volume as opposed to outcome. We now have a pilot project with Swedish [Medical Center] for the popular medical home idea [where we pay the hospital a set fee for primary-care needs]. And we’re working with “accountable
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