Outsource Case Study: Blue Shield of California

By Pam Greenberg

August/September 2005

With 3.2 million members, Blue Shield of California (BSC) is one of the largest nonprofit entities in the country and one of the nation's top 20 health plans.  In 2001, BSC faced a balancing act: how to reduce the cost of handling customer interactions with physicians and hospitals, while maintaining the level of quality that had always been a hallmark of its brand.  In the years since, BSC has decreased its cost per call by 35 percent, racked up quality scores consistently in the 96 to 98 percent range and kept center uptime at 99.99 percent - all of this while making the transition to an outsourced contact center solution.  So how exactly did BSC manage to make such strong transition and how did they make it look so easy?

The Decision to Outsource: More organizations than ever are turning to experts to help them manage their contact centers.  They see an opportunity to employ the most advanced technology available, without the large-scale investment that binds them to infrastructure that may be outdated in a matter of months.

In 2001, BSC chose business process outsourcing expert TeleTech to help the organization manage its relationships with healthcare providers.  A 20-plus year veteran of contact center outsourcing, TeleTech was quick to provide ideas to successfully transition the program, using a combination of onshore and offshore centers.

After assessing BSC's contact center operations and technology, TeleTech established an onshore "staging area" in Enfield, CT, in the heart of the Northeast insurance corridor.  The outsourcer also redesigned the training program for customer service reps, reducing training time from six to four weeks and boasting a graduation rate of 95 percent.

The Enfield operation went live in November 2001 with 60 customer service reps, handling 50 percent of BSC's eligibility and benefits call volume.  By early 2002, the operation had already proven itself in head-to-head competition with BSC's in-house resources.  High productivity led to an increase from 50 to 100 percent of provider eligibility and benefits calls by the end of the first year, with zero transfers back to BSC.  The operation was handling 185,000 calls per month and demonstrating success at every turn.

Further Cost Cuts With International Operations: Following 18 months of successful service, TeleTech successfully transitioned the less complicated calls to its contact center in the Philippine capital of Manila, making room for more complex interactions at the Enfield location.  Manila was selected as an optimal offshore location due to its American-accented, service-minded agents, presence of medical skills, and compelling cost savings.

There were three keys to a successful launch of high-quality operation in Manila.  The first was selective hiring, with a five-percent acceptance rate.  The second key was the appointment of an expatriate management team with extensive call center experience.  The final key to success was making a significant investment in onsite resources - BSC sent one person for three months and TeleTech sent seven people for three weeks each.

To route calls to the offshore center, BSC used dynamic call routing via a Voice over Internet Protocol (VoIP) network.  VoIP allows voice and data to traverse the same network, providing flexibility in how companies route and handle customer contacts.  Perhaps the most important trend in call center technology today, VoIP takes the place of large, costly, technology-laden customer contact sites and allows companies to easily shift their telephone traffic anywhere in the world.  Deployment of VoIP technology supported a seamless transition to the Manila center.  Another cost savings of using VoIP is that the technology reduced onshore telecommunications costs by 80 percent.  The result of shifting calls to the center was an average cost per call that was 35 percent lower than BSC's in-house centers.

Measuring a Successful Program: By January 2004, outsourced contact centers were taking 100 percent of all provider calls and meeting or exceeding all designated goals.  By late 2004, TeleTech handled the five-millionth call for BSC.

"During our three year relationship, our contact center operation has performed above expectations by delivering strategies that streamline operations, leverage technology, and decrease costs," said Ken Wood, Chief Operating Officer and Executive Vice President of Blue Shield of California.

Additional measurements of program success:

• Delivered cost per call is 20 to 25 percent lower than internal benchmarks.

• Earned quality scores are in 95 to 97 percent range, equal to or superior to internal centers.

• First call resolution is 99.9 percent.

• Average handle time was reduced 37 percent from January through September 2002.

• Number of customer service reps grew from 60 in November 2001 to 100 in January 2003.

• Interactive Voice Response (IVR) enhancements reduced provider call volume by 20 percent.

Outsourcing its contact center operation has made a dramatic impact on BSC's bottom line.  It has  given the organization the freedom to focus on what is does best - providing access to high-quality health care at a reasonable price.

Information about TeleTech is available at www.teletech.com.