Blue Cross Blue Shield board promises changes
FARGO - Revelations including a $250,000 reward trip to the Caribbean and a $2.2 million "golden parachute" for its ousted top executive have prompted some to ask, Where was the Blue Cross Blue Shield of North Dakota board?
A 13-member board of directors oversees Blue Cross Blue Shield, including seven who represent the more than 350,000 North Dakotans who get their health insurance from the company.
In light of the recent developments, board members say they'll be asking a lot more questions and steps already are being taken to discard "the old way of business."
That old way of business inspired public outcry recently when it was revealed that Blue Cross Blue Shield employees attended a $250,000 reward trip to the Grand Cayman Islands during a time when the insurance company is asking for rate increases.
The fallout included the Wednesday dismissal of Mike Unhjem, the organization's former president and chief executive officer. On his way out, Unhjem was given a $2.2 million severance package.
Blue Cross Blue Shield of North Dakota board members are each paid about $30,000, except for the chairman, who is paid $38,000. They usually meet monthly, either as a full board or in committees, and also have periodic telephone conferences and an annual strategic planning session.
Those who apply to be board members are asked if they are willing to commit to the estimated 15 to 18 days for scheduled meetings and committee meetings.
"There's a lot of behind-the-scenes stuff that we do," said Laura Carley of Fargo, one of the consumer representatives on the board. "I think all 13 of us take it very seriously."
Directors get fat briefing books to study before each meeting, she said, and take part in online training, besides their time in meetings.
Carley, who has been a Fargo school board member since 1994, was elected to the Blue Cross Blue Shield board in 2000. She didn't at first realize the position was paid, which she said was not her motivation to join.
The job description for board members gives them the responsibility of selecting and evaluating the top executive, as well as approving corporate philosophy and strategies, financial standards, policies and plans.
"As a board member, you hire good talent and let 'em fly," Carley said. Members rely on the information managers provide them with, she added, but will become more assertive in the future.
"I don't blindly follow, but I do have to trust somebody with information," she said. Carley said she didn't know about the recent reward trip for sales leaders at a resort in the Grand Cayman Islands until it made the news, although it was budgeted and a longstanding incentive that now has been scrapped.
Board members will be asking a lot more questions, and steps already are being taken to discard "the old way of doing business," she said. "I do believe that is what you're going to see going forward."
Dennis Elbert of Grand Forks, a consumer representative and the board's chairman, also pledged that the board has adopted a more activist approach and is working to improve public accountability.
He disagrees with suggestions that the board has been too hands-off, but described the board's governance philosophy as "arms around, fingers out."
Blue Cross Blue Shield adopted a paid board after it reorganized as a mutual insurance company, owned by policyholders, in the late 1990s.
Before then, the Blues had a 21-member board of volunteers, but wasn't always getting the commitment and participation it sought, so went to a smaller, paid board, said company spokeswoman Denise Kolpack.
"In a nutshell, they really formalized the expectation of the directors at the same time," she said. The pay figures were devised after consulting guidelines from the National Association of Corporate Directors and the Blue Cross Blue Shield Association, of which it is a member.
By comparison, MeritCare Health System, governed by an 18-member board, including its CEO and five executives as well as 12 community members, pays its trustees only for their expenses.
"For a short time, MeritCare paid trustees a nominal fee per meeting but discontinued this practice five years ago," MeritCare said in a statement. The lack of compensation is a consideration for trustees.
"Even so," the MeritCare statement said, "recruiting board members has not been a challenge for MeritCare."
Don Morrison, executive director of NDPeople.org, an advocacy group for "social and economic justice," said the Blue Cross Blue Shield board, which nominates its own members, is self-perpetuating and unlikely to embrace outsiders with a different point of view.
"It's a status quo machine," he said. "We need to get serious about fixing health care. If we want this fixed, what we are asking for is public accountability of a public system. We need to start making health care a public good," Morrison said. He advocates a Medicare-style option in addition to health insurance coverage provided by the private sector.
Despite the recent controversies, Carley said, Blue Cross Blue Shield is a very well-run organization with dedicated employees who provide good health coverage at a comparatively low cost.
Still, change is called for, and on the way, she added. "I can tell you there are many initiatives under way that are significant. We're really trying to move forward now, make significant changes, and do it even more efficiently."
The board's next meeting is scheduled for April 24, but Carley said directors might meet sooner. And, she said, board compensation might be among the policies that are revisited as the company re-evaluates.