Twenty months after Chris Kay was named Chief Innovation Officer at Humana, and five months after Aetna announced its plans to acquire Humana for $34 billion, we sat down with Kay to talk about how his team is working to deliver value for the health insurance giant, which chalked up $48 billion in 2014 revenue. (The Aetna-Humana deal is being reviewed by regulators, and would potentially close in the second half of 2016.)
Kay says he’s focused on new ways of collaborating with startups, understanding consumer desires, and scaling what works best. He’s also helping Humana adapt to what he calls the industry’s “tremendous transformation” in the wake of the Affordable Care Act of 2010, elements of which are still being phased in. While declining to talk about the size of his innovation team, Kay says members are located in Louisville, Ky., where Humana is headquartered; New York; and Palo Alto, California. The team includes experts from mobile, banking, and other “consumer-oriented” industries.
Kay joined Humana after running global venture investing and incubation at Citi, the financial services firm.
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InnoLead: What is the role of your team at Humana?
Chris Kay: The reason we want to emphasize innovation within our organization is because healthcare is undergoing this tremendous transformation, and healthcare’s hard and it’s unique. Healthcare has grown up in silos – the IT world, the provider world, the payor world.
Somewhere, the customer has been missing in that. What has happened is the locus of control has shifted to the customer, which is a really important insight into how the healthcare system has evolved and will continue to evolve.
So the emphasis we are placing on innovation here at Humana is, how do we start to really innovate around customer needs and really simplify the healthcare experience and create new ways to support the company transformation to a health company? That’s been the charge and charter of the innovation team.
‘Working at the Edge While Supporting the Core’
InnoLead: What is the makeup of the innovation team, and how many people does it include?
Kay: I don’t want to share [how many people.] We’re a relatively small team; we rely on internal and external partnerships to punch above our weight. This is not about building an empire, this is about bringing the right focus and driving the right innovation portfolio in partnership with the business and external partners.
We’ve grown the team with a mix of wonderful internal and external talent. We’ve brought in people from different industries – mobile, banking, consumer-oriented industries. We have a rich and vibrant set of entrepreneurs who have joined the team, and we blend that with a high-quality group of folks internally. The premise of the design of our organization is not to be a pillar on the side, it’s to be an enabler of transformation in the organization…both from the inside out and more importantly from the outside in.
That is a balance every Chief Innovation Officer deals with: How do you find the ability to work at the edge and support the core? That is fundamental corporate innovation.
InnoLead: Describe your Silicon Valley model.
Kay: We have Humana Health Ventures in the Valley, and they’re a small team but they’re planting a flag in this hub of entrepreneurship, working with venture capitalists and entrepreneurs. A handful of people are out there.
I came from having built Citi Ventures, moved here from the Valley. You start to understand that being a partner is hard with entrepreneurs. It means being able to articulate a mutual value and a strategic relationship. It means being able to work at the speed and cadence of an entrepreneur. And we take a strategic investment in a company in order to help them scale and grow.
Proving the Return-on-Health
InnoLead: What are some insights from the research you’ve done into consumer expectations and needs?
Kay: When you look across a person’s health journey, you get a pretty quick understanding that some of the determinants of health may be social, economic, access oriented. …For a person with diabetes, that right away is a set of bricks on their shoulders. So how do we as an organization partner and work to provide the right set of solutions for them based on their underlying needs?
We are building a model to prove the return-on-health, because if we can help our customers at moments that matter in their health journey, and create a more dynamic care model for them, if we can understand more contexts around what they need, we can start to deliver solutions that matter to them at that time.
What we’re trying to do is build a portfolio of innovation to support these folks and over time, we’re helping people live healthier lives, slowing the progression of disease. That is fundamentally good for people and for the business.
InnoLead: Do you have any examples of initiatives you’ve worked on so far that fits this objective?
Kay: I can tell you, in the context of our members with diabetes, we started to look at some barriers to this huge health issue. We looked at the folks on the cusp of getting diabetes and how we can help them manage their health in a way that they can make changes, because diabetes is largely preventable.
We did a lot of ethnography and got a lot of insights into the role of social interactions, the types of tools people want to have to slow down that path toward diabetes. Then, as opposed to thinking we need to build this as a company, [we said] why don’t we look for partners working in this space. Through our relationships in Silicon Valley, we built a relationship with Omada Health, a mobile health technology company.
Partnering with Startups
InnoLead: What does that relationship entail?
Kay: Omada is a very smart team of smart entrepreneurs, and we wanted to co-create a diabetes prevention program not for 30 year olds, but for folks on Medicare. We had to bust through some orthodoxies to create a digital, social platform [for that age group], and we came up with a 16-week program with eight to 10 of your senior peers, facilitated by a coach digitally. Can that work? Based on our insights and our ability to target, we demonstrated that this can absolutely work. (The graphic at right comes from Omada’s website; click to enlarge it.)
InnoLead: You didn’t have any roadblocks using digital with an older age group?
Kay: The world is digital. The Baby Boomers, as they come up into Medicare, have a completely different set of expectations and facility now. The question is how to bring the right solution at the right time that is simple and easy. Simplicity and ease is a fundamental problem in healthcare.
InnoLead: What kind of results have you seen from this partnership so far?
Kay: Since we launched a series of initiatives with Omada, we’re seeing over 60 percent of members have lost 8 percent or more of their body weight. What does that mean? In human terms, the risk of progressing to diabetes goes down 60 percent.
Measuring Impact
InnoLead: How do you measure the impact of your initiatives?
Kay: We are doing work in our communities to improve the health of our members by 20 percent by 2020. This is a declared external goal, and we measure that through Healthy Days, a long-standing CDC metric.
Healthy Days is an important stake in the ground for us to look for a meaningful and credible way to help us measure progress. It’s a metric that is driven based on one’s self perception of mental and physical health. It’s a real metric.
When we look at progress against those [numbers], they show in part how our customers interact with the healthcare system, and if we are delivering the quality and type of care at the right time.
Healthcare companies like Humana have an incredible amount of insight. We have opportunities to continue to use data and analytics to become stronger at deploying the right solution to the right person at the right time.
InnoLead: Because your partnership with Omada has been an early success, is this a model you’ll use for future programs?
Kay: Co-creation is the new way. If we look at the amount of investment from venture into healthcare, and you look at innovation that’s coming out in the healthcare sector, our ability to partner will be a differentiator as we look at our ability to [spur] a more customer-friendly transformation of the system. We can’t do it alone.
InnoLead: Is such partnering hard, or is there a risk in partnership with startups?
Kay: It’s not that partnering is hard; it’s that when you pick a partner, you have to be super-focused on what you want to accomplish, and you have to have a view that you’re creating shared value.
We have a partnership in market with Livongo, which is a cloud-based technology company. (See the video below.) What we’re trying to learn is how could we continue to evolve into a company offering real-time feedback on health? Livongo is an interesting model that provides a monitor [for diabetics], which looks like an iPod. You put in your blood reading and it goes into the cloud, analyzes your blood using an algorithm, and the next action you should take comes back to you in real-time. It provides real-time feedback, supported by coaches and care when needed. It can read that you’re going hypo[glycemic] and tell you that you need to drink 10 ounces of juice.
This idea is interesting. They’re innovating around real-time care, and supporting people keeping themselves in range. If you’re diabetic and you keep yourself in range, you ultimately live a healthier life.
One of the ways for us to de-risk innovation is to place multiple bets, in order to learn and understand a new space. This is about strategic alignment, and partner models to help us accelerate.
Start with Desirability
InnoLead: What is your process for going from ideation to market?
Kay: There’s a lot of discipline that underlies innovation. We use a gated innovation model that allows us to invest just to the next gate, to make sure we’re clear on what we need to learn and that we’re managing the speed and impact of portfolio.
At a high level, there are three things we think about:
1. Desirability. We always have to start around the human-centered design. If we understand the need, is [the proposed solution] desirable?
2. Feasibility. How feasible is it to integrate or extend our capabilities to do that?
3. Scalability. We call it viability.
So you have to have an eye toward scale, but you have to start with desirability. [That is] really important, because the traditional model for large companies, and I’ve worked in many, is “we have an idea, let’s build it and see if they come.” Our model is, “Let’s root our potential solution in an unmet need of a consumer and insight. Let’s then work rapidly and iterate with consumers in order to create a solution they’re involved in designing.” When you do that, you’re also de-risking investment, because when you do that you get to scalability. You’re scaling something customers want.
InnoLead: How do you keep up with what consumers want?
Kay: Consumers’ expectations are absolutely changing ,and they’re really dramatically changing in healthcare with this shift of control to consumer. A couple things: We always need to be mindful of where the world is headed, and interestingly you don’t get that from a magazine, you get that from consumers. And you get that when you understand super-users and where they are headed…
We also gather a lot of foresight and insight from our partners, [the] entrepreneurs. We have deep relationships with venture capitalists. You can sort of get a sense of where the waves are forming by looking at what’s happening in the entrepreneurial ecosystem.
The thing about entrepreneurs is they need partners in order to scale these things. So we have a unique ability to translate that foresight/insight and align that with specific companies and strategies and go.
And then you learn. You have to have a culture of learning, because we’re always going to be pointing to where the puck is headed, but we also have to have an innovation portfolio that creates value today.
We believe over time, while we’re focused as an organization on helping people suffering from severe chronic conditions, we know that the learnings we get from that will help us innovate…and start to move into preventing those conditions in the first instance. So, that learning mentality becomes really, really important. This is a very curious organization across all the businesses.
