As a philosophy instructor in the mid-1970s, Bruce Bodaken taught undergraduates about Aristotle's doctrine of the mean--a theory that locates perfection at a happy medium between extremes, such as giving and receiving.
These days, Bodaken may be a long way from those university lecture halls, but he's still imparting of a bit of the famed Greek thinker's philosophy to others--only this time it's in the corporate world of managed care.
As chairman, president and chief executive officer of Blue Shield of California, Bodaken has worked to make his company one of the state's largest and fastest-growing health insurers, but he's done it in a matter that speaks to the very essence of what healthcare is about--community responsibility.
"Running a strong business and helping the community are two sides of the same coin," the straight-talking Bodaken says. "When you have a strong business, you're better able to help the community, and by helping the community, you're ultimately strengthening your business. Lose sight of one and you lose sight of the other."
Whereas others use fuzzy terms like integrity and ethics, Bodaken, 52, talks of competitive advantage: Companies that succeed, he says, are the ones that boost productivity and profits, improve customer satisfaction and retain their best employees. To do that, they must create an environment where people get more from their work than a paycheck. Without that kind of culture, people leave their energy and creativity in the parking lot.
"I believe you get greater effectiveness when you tie people's personal mission with the corporate mission," says Bodaken, who volunteered at a shelter for battered women in Seal Beach, Calif., before joining San Francisco-based Blue Shield in 1994 as president and chief operating officer. "People need to feel that the work they do is really making a difference."
To that end, the father of two last year launched a "social investment" program that requires all of Blue Shield's senior executives to volunteer their time and expertise at a community-based healthcare organization of their choice. While this often includes board service, many executives have opted for a more hands-on approach by providing such services as accounting or Web site design.
Paul Swenson, Blue Shield's executive vice president of corporate development, for example, acts as a strategic consultant for the Ala-meda Alliance for Health, helping the health plan for low-income families find ways to expand access to healthcare in the face of state budget cuts. "Conceptually, it's a tremendous idea," Swenson says of the social investment program. "It puts our corporate mission into action. It's not just about us--it's about being a catalyst for greater change." Swenson describes Bodaken as "an incredibly stimulating person," one who sets clear and tough goals and is fair yet very demanding. "He's created a very energized environment in which to bring about change."
Bodaken himself serves on the board of Physicians for a Violence-Free Society, a group that helps healthcare providers identify and prevent domestic violence. But the no-nonsense executive is quick to add that his efforts are more than altruism: They serve the interests of business.
"Domestic violence doesn't stay at home when its victims go to work," he says. "It has a big impact on the morale and productivity of employees and their families. And it also has a big impact on healthcare in terms of treatment costs and lost workdays. ... Preventing these physical and emotional tragedies helps the entire system."
On a corporate level, Blue Shield this year contributed $30 million to its philanthropic arm, the Blue Shield of California Foundation, making it one of the state's largest healthcare grantmakers in 2004. The foundation was reorganized in 2002 to focus on three key issues--assessment of medical technology, domestic violence and the uninsured. It provided a total of $8 million in grants to more than 160 organizations last year.
Blue Shield can certainly afford to be magnanimous. Though it has yet to release specifics, the not-for-profit insurer says 2003 marked the strongest financial performance in its 65-year history. From 1999 to 2002, its net income ballooned eightfold to $142.6 million. Revenue rose 53% to $4.62 billion during the same period.
And the 2.7 million-member insurer is poised for even further growth. Last year alone, it added 365,000 enrollees after beating out Health Net and PacifiCare Health Systems to provide HMO services to the California Public Employees' Retirement System, the nation's third-largest healthcare purchaser. And it's gearing up to take on another 500,000 Tricare members in 2004 under a new multiyear contract with the U.S. Defense Department.
Bodaken doesn't blush at the not-for-profit's, well ... profits. "We don't share our earnings with shareholders, but we share them with the community," he says. "If we didn't make any money, we'd be neglecting (the constituency) we serve just as if we were an investor-owned company."
Practice what you preach
Bodaken put his proverbial money where his mouth was in December 2002 when, in front of a capacity crowd at the Commonwealth Club of California, he formally proposed a plan for universal healthcare coverage, an idea that has remained a political hot button since the implosion of the Clinton healthcare plan a decade ago.
Dubbed "Universal Coverage, Universal Responsibility," Bodaken's plan would extend coverage to the nation's 43 million uninsured residents by spreading the cost broadly among those who can afford to pay. All employers would be required to provide their workers with a basic benefits package or pay into a pool that provides coverage. Outreach strategies would be developed to enroll every eligible resident into government programs such as Medicaid. Individuals who remain uninsured would have to buy private insurance with the help of subsidies.
"Making coverage universal requires far more than a commitment to principle. It requires a commitment of significant resources. And unless that burden is shared by all segments of society, universal coverage will never happen," says Bodaken, adding that his proposal builds on the largely employer-based system that's already in place rather than substituting something more radical, such as a single-payer plan. "Everyone of us will have to participate and in some cases make a sacrifice for the good of the whole."
By becoming the first insurance CEO to publicly advocate a universal healthcare system, Bodaken has placed himself directly in the line of fire. Many employers have decried the prospect of another mandate at a time when their healthcare costs are already soaring. And consumer advocates have blasted the plan as a self-serving "money grab" by insurers, which would be guaranteed new customers without being subject to cost controls.
Bodaken is the first person to admit that Blue Shield and other leading health plans would likely benefit financially if the insurance market were expanded. But he adds that the companies would also face certain risks, because they would be obligated to accept all new members regardless of their health status. "I'm not going to begrudge the fact that Blue Shield or others may do better. ... It's my primary responsibility to ensure the company's success," Bodaken says. "But if it looked like we wouldn't be any better off down the road, or even slightly worse off, I would still recommend (the plan) to the board, because it's the right thing to do."
Bodaken grew up the younger of two brothers in Storm Lake, Iowa, a 10,000-person meatpacking town and haven for walleye fishermen about 160 miles northwest of Des Moines. His mother was a homemaker and his father was a small-business owner who sold tractors and trailers. As a teen, Bodaken spent his free time water skiing.
In his sophomore year at Colorado State University, Bodaken took an interest in philosophy, thanks largely to a small group of "great professors" who brought the cerebral subject to life. After completing his bachelor's degree in philosophy, he went on to earn a master's degree in the same subject from the University of Colorado at Boulder.
While working on his doctoral thesis in the mid- to late 1970s, Bodaken taught introductory ethics and philosophy to incoming undergraduates. He admits that it wasn't easy keeping students interested in the heady world of long-dead scholars and orators. Ultimately, he watched as student after student drifted toward the more practical--and profitable--world of business. It wasn't long before he joined them.
In 1980, Bodaken's brother, Michael, phoned him from Los Angeles and after much discussion persuaded him to move to Southern California with the promise of sunshine and greater career opportunities. Once there, Bodaken met with an executive headhunter, who encouraged him to try his hand at business, arguing that his philosophy background would give him a unique edge.
Not long afterward, Bodaken landed his first corporate job at FHP International Corp., a Fountain Valley, Calif.-based health insurer that was eventually acquired by PacifiCare in 1997. Over the next 14 years, he rose steadily through the company's ranks, holding a variety of management positions in health services administration, information systems and provider contracting. As CEO of FHP Arizona from 1988 to 1990, he more than doubled membership to 60,000 and quadrupled revenue to $120 million.
Over the next four years, Bodaken served as associate COO and senior vice president of FHP's Arizona, Colorado, Nevada, New Mexico and Texas operations. During that time, he helped orchestrate an $800 million acquisition of the TakeCare HMO, which doubled FHP's enrollment to 1.7 million members, and spearheaded the opening of a company-subsidized day-care center for children of FHP employees.
Bodaken says he still applies the knowledge he learned as a philosophy student to make day-to-day business decisions. "Philosophy teaches you critical thinking and to ask deeper questions," he says. "The ability to critically evaluate situations, strategies and people (serves as) the basis for good decisionmaking."
Philosophy has also taught the executive to look at the big picture. Like Aristotle, whom he admires for being "both profound and practical," Bodaken firmly believes that the whole is greater than the sum of its parts.
At Blue Shield, that's translated into a more holistic view of healthcare--one that emphasizes both the mind-body connection and the "health-wealth" connection, in which mental and physical wellness lead to cost savings.
In May 2000, for example, Blue Shield became the first health plan to offer free guided-imagery audiocassettes to patients scheduled for surgery. The 36-minute tapes, created by charismatic counselor Belleruth Naparstek, use calming words, soft music and visualization techniques to help patients relax before going under the knife.
At the time, Bodaken was banking on a growing body of research, which had shown that the use of guided imagery significantly reduces anxiety, blood loss, complications, muscle tension and postoperative pain. But it was only after receiving a personal letter from a surgeon whose patient had used the audiotapes before undergoing a major procedure that he became certain he was on the right track.
"The doctor said that not only were the tapes having a calming effect on his patient, they were also speeding up her recovery," Bodaken recalls. "Now that's the best of managed care--improved outcomes with shorter hospital stays and fewer treatment costs."
Blue Shield has also sponsored the creation of gardens at a number of California shelters where victims of domestic violence can heal emotionally through "horticultural therapy." And in July 2002, the company launched LifePath Advisers, an online service where members can consult with a nurse or counselor about day-to-day concerns, including everything from family-, work- and school-related issues to legal and financial matters.
"Delivering quality care goes beyond providing access to doctors and hospitals," Bodaken says. "We're treating the complete individual by helping them make good decisions ... and preventing life stresses from escalating."
Setting the pace
Blue Shield has long been a trendsetter in wellness-related e-business, an area that holds the dual promise of improving access to care and holding down costs. Last year, for example, it became the first major insurer to reimburse doctors for online office visits, paying them about $20 per "Web call." Members can now consult electronically with their physicians to schedule appointments, request prescription refills or ask questions about nonurgent medical concerns such as allergies, back pain and colds. In a nation where 66% of adults have Internet access, "Technology is going to play an increasingly important roll in meeting people's needs," Bodaken says (Jan. 26, p. 48).
This combined focus on innovation and preventive care helped Blue Shield land its all-important CalPERS contract, which is expected to bring in $1.2 billion in revenue annually. During the bidding process in mid-2002, the company won CalPERS' favor by offering LifePath Advisers and vowing to develop other wellness and disease-management programs to address chronic conditions, which the pension fund says account for the bulk of its healthcare costs. "What we found impressive about (Blue Shield) is that they're aiming for the fruit that's higher up on the tree and harder to pick," CalPERS spokesman Clark McKinley says.
These days, Bodaken, who loves tennis and tries to fit in a full workout every day, is focused on devising ways to get consumers more ac-tively involved in their own healthcare. In January, Blue Shield began offering members financial incentives to take part in a new online healthcare pilot program, called Healthy Lifestyle Rewards, which helps individuals identify and manage certain risk factors that can lead to chronic disease and high medical costs.
After completing an online assessment, participants receive a personal profile highlighting areas where they may need improvement and recommendations for achieving their health goals, including activity trackers, weight-loss meal plans, smoking-cessation tips and stress-management tools. Members can earn from $75 to $200 based on the number of weeks they visit the Web site and log their progress.
Says Bodaken of the new program: "We can't make our message much more tangible than that: It says being healthy is not only making us money, but it's making you money."
Birthplace: Storm Lake, Iowa
Family status: Divorced; sons Conor, 16, and Ian, 13
Education: Bachelor's degree in philosophy, Colorado State University, Fort Collins, 1973; master's degree in philosophy, University of Colorado, Boulder, 1976; doctoral studies in philosophy, University of Colorado, 1977
Previous jobs: Teaching associate, University of Colorado, 1975-1977; various executive positions, including senior vice president and associate chief operating officer, FHP International Corp., Fountain Valley, Calif., 1980-1994; president and COO, Blue Shield of California, San Francisco, 1994-2000