Dr. Relly Nadler: Each week, we bring on somebody else who will have some interesting, fascinating, hopefully very practical, information for us. On this show, we interview Ben Lytle Leadership in Healthcare – Challenges for the Future.

Ben is an industry expert and the former chairman and CEO of Axia Health Management, Blue Cross/Blue Shield of Indiana and Anthem Health Care, now known as one of the largest mergers in healthcare under the name of WellPoint, which you may be familiar with.

Mr. Lytle has been an advocate for healthy lifestyles and market-based health care reform for his entire career. An industry leader, he has provided testimony to Congress, chaired Indiana’s healthcare commission, served on President Clinton’s Commission on Consumer Protection and Healthcare Quality.

He also fostered free market solutions as the chairman of the Foundation for Better Health.

Cathy, Welcome to the show also.

Dr. Cathy Greenberg: Thank you! We are so excited today, to have Mr. Ben Lytle talking about leadership and healthcare challenges for the future.

I met Ben, oh gosh, almost a decade ago when I was working with Anthem on their merger. I know Ben is going to talk about that. Ben is a particularly interesting leader and I’m so glad we have him on the program today. Ben Lytle was chairman and the chief executive officer of Axia Health Management LLC. until it’s sale in Healthways Inc. in December for 2006.

Ben continues as a consultant and a board member of Healthways. Ben and his son Hugh, founded Axia in 2004 which became the nation’s largest provider of prevention and wellness services, by acquiring and integrating fitness, alternative medicine, health coaching, and smoke cessation providers.

Ben and Hugh are presently launching a new venture to assist seniors to age independently.

Previously Ben Lytle was chairman and CEO of Anthem Inc. and that was acquired in a merger with WellPoint and in 2004 assumed the WellPoint name, it became the nation’s largest health plan with revenue of thirty-four billion dollars.

In 1976, Ben Lytle joined Blue Cross and Blue Shield and Blue Shield of Indiana, with revenues under one billion, he rose through the executive ranks to become COO in 1982 and CEO in 1989, and under his leadership Blue Cross/Blue Shield of Indiana was transformed through a series of mergers and acquisitions to form Anthem, a sixteen-billion-dollar revenue, Fortune 500 company.

During the same period, Ben created Took Public and sold Acordia Inc. a New York stock exchange company as an Anthem subsidiary, which became the world’s seventh largest insurance broker.

Ben retired as CEO of Anthem in 1999, continued as chairman until 2003 and chaired the strategic planning committee in 2004 through 2006 until he retired from the Anthem-WellPoint Board, and he continues as chairman emeritus.

Ben Lytle’s entrepreneurial leadership and innovative strategies have been cited by Tom Peters in his book, Liberation Management, and in my book, What Happy Companies Know.

He is an author and a frequent guest lecturer on health and strategic planning.

Ben has been an advocate for healthy lifestyles and market-based health care reform his entire career.

He has provided testimony to Congress, he’s chaired Indiana’s healthcare commission, as stated he served on the President’s Commission on Consumer Protection and Health Care Quality during the Clinton Era.

He has fostered free market solutions as chairman of the Foundation for Better Health, as Relly already said.

Mr. Lytle serves on the boards of directors of several Fortune 500 and venture capital companies.

He’s an adjunct fellow and member of the board of trustees of the American Enterprise Institute of Washington D.C. and an executive in residence at the University of Arizona School of Business.

I’m also honored to say he was the recipient of the University of Arizona’s 2004 executive of the year award.

I am so fortunate to have worked with Ben and, on occasion, I will hopefully get to work with him again.

We are honored to have you as a guest on the show today, Ben, how are you?

Ben Lytle: I’m doing well, thank you.

Dr. Relly Nadler: So, Ben, we have a couple questions that we’d love to pick your brain about that we know that our listeners are very interested in.

So, we like knowing a little bit more about your terrific track record in health care. Tell us a little bit more about who has influenced you as a leader.

Ben Lytle: Really, I have had three mentors. I was really fortunate in my career to have mentors all along the way. They were people who taught me, first, how to just manage and then secondly, how to develop which was probably an innate leadership skill, how to hone that and put it into a business context.

It was really three people, a fellow named Larry Sweet, who I worked with twice in my career.

Then a fellow named Jean Hinkle at Blue Cross of Indiana, who was my boss when I was first there.

Then, probably the most influential of any, was a fellow named Lloyd J. Banks, who was the CEO of Blue Cross and Blue Shield of Indiana, before me. He was my boss while I was chief operating officer and he was CEO for seven years and then he stayed on the board as a non-executive chairman of the board for five more years. He was just a marvelous teacher and was really inspirational and I think brought out the best of whatever I had, innate, he brought it out. He helped teach me a lot about leadership and the responsibilities you have as a leader in the community and to your employees and to your industry.

Dr. Cathy Greenberg: Ben, I would love for you to tell the story of how you came through these three organizational transformations that have remarkably transformed healthcare. Can you talk about the inception of your leadership role in the mergers from Anthem, Acordia, Axia and just bring us up to where we are today?

Ben Lytle: Sure, sure.

I started while I was still in high school as an information technology guy, back then they called it data processing but while I was still in high school, I got into that and it was very good to me because I had a good job, worked full time and got my undergraduate degree in four years.

I worked full time in information technology. So, when I came out of college that became my career and I spent a total of sixteen years in information technology.

The last four years from 1976 to 1982, actually the last six years, I was with Blue Cross/Blue Shield of Indiana and based out on Indianapolis and I was playing the role that today you would call a Chief Information Officer.

In that role, I was continually given more and more responsibility and in 1982 I was promoted to chief operating officer.

Blue Cross/Blue Shield of Indiana, at the time, in 1982, was one of about a hundred and thirty-five Blue Cross and Blue Shield companies in the United States. Now, these are sort of like franchises, they are not exactly franchises but they are independent companies which share a trade name, the Blue Cross and Blue Shield trade name. In order to get to use that trade name they have to agree to follow certain standards and certain behavior in the marketplace, all for certain kinds of products, all of them are in health insurance, obviously.

It was actually 1982 was when I was Chief Operating Officer.

The company at the time was under a billion in revenue and operated in only Indiana. My first job was really to make sure the company was running well and doing its job in the marketplace and so we had some work to do there.

By 1987, the company was operating well and we were financially strong but we had a series of strategic challenges. We were basically land-locked. We were only in the state of Indiana, the state of Indiana’s population was not growing very rapidly.

A company, the health insurance business is employer-based, and so, our growth depended on having headquartered companies to sell to and the number of companies headquartered in Indiana was not growing and in fact, was shrinking to some degree.

So, I was asked to put together a strategic plan for the company. We were at one other vulnerability, fifty percent of our business came by being a subcontractor to other Blue Cross and Blue Shield companies, where the headquarter of the company was in their state, not in Indiana and then we subcontracted to serve their membership that lived in the state of Indiana.

This was particularly true of the automotive companies, which were headquartered, of course, in Detroit. We split the bill on a lot of the employees and their manufacturing plants in Indiana.

So, our challenge, I was challenged to develop a strategic plan for the company and at the same time this one 1987, I was named to be the CEO succeeding the new CEO when he retired in 1989.

So, I had two years there to really put a strategic plan together and then to execute it once I became CEO.

Also, at that time, 1987, there was growing concern that the government was going to step in and basically take over the health insurance business.

Much like we are having discussions again now about the government expanding its role in the health insurance area.

This was very true in 1987 but the discussion at that time was much around the government completely taking over the health insurance business.

So, that was what I was faced with. That was, if you can imagine yourself, you were given those problems on a sheet of paper and then say, okay, now go develop a plan for what you can do with what you’ve got.

The company I had, Blue Cross/Blue Shield of Indiana was about a billion in revenue, we had about three-hundred-million in net worth. We had a mutual insurance company, at Blue Cross/Blue Shield of Indiana was a mutual insurance company at the time. That’s the way we judged net worth, was in its surplus.

So, that’s what I had to work with, I worked, I did a lot of research and worked with my team and over the next 2 years, we put together a plan.

And the plan essentially called for us to do two things.

First of all, to expand outside the state of Indiana, primarily by mergers or acquisitions of other Blue Cross and Blue Shield franchises.

Sounds simple enough except at the time it had never been done and there was really no precedent for what we wanted to try to do, which was to merge with other Blue Cross and Blue Shield franchises that were mutual insurance companies, to build a larger franchise.

The second was to diversify, outside of healthcare. To have fifty percent of our revenues outside of healthcare, within five years.

The reason for that was for in case the federal government did, basically, nationalize the health insurance business. That as a mutual insurance company, we could diversify into different lines of insurance, in that area, that begs the question, what type of insurance, where should we diversify.

We studied all the different forms of diversification and we learned from that, that the safest, least risky way to diversify was to stay as close to your core business as you possibly could. Also, we didn’t have endless capital to use and so, we wanted to try to find something that was not to diversify into, that could grow very rapidly but didn’t require a lot of the mutual insurance company’s capital.

The plan we hit upon was to diversify through becoming/building an insurance broker.

The insurance brokerage field, we could build a fairly large broker without a lot of the mutual insurance company’s capital by building the broker then taking it public as a subsidiary of the mutual insurance company, and then using the publicly available capital in that to continue to grow the business.

Listen to the entire interivew above.

Relly