Doctor, Lawyer, CEO

J.D. Hickey brings brings wealth of experience to BlueCross

J.D. Hickey
J.D. Hickey

J.D. Hickey

* Job: CEO of BlueCross BlueShield of Tennessee* Age: 44Personal: He and his wife Mandy have three sons and live in Chattanooga.* Education: He earned his bachelor’s degree from Colgate University and then completed a combined program at Duke University to earn both a medical and law degree.* Career: He practiced law at Cravath, Swaine & Moore in New York City before joining the management consulting firm McKinsey & Co. in 2001. He served as director of the Bureau of TennCare, CEO of Qualifacts in Nashville, and a partner in McKinsey before joining BlueCross BlueShield of Tennessee as chief operating officer in 2011. He was promoted to CEO in September.BlueCross BlueShield of Tennessee* Headquarters: Chattanooga* Founded: 1945* Business: A not-for-profit business, the Tennessee BlueCross plan provides health insurance to 3.3 million people. BlueCross earned $199.7 million during 2014 on revenues of $10.8 billion.* Staff: More than 5,600 employees and contractors, including more than 4,500 workers in Chattanooga.

J.D. Hickey was in the labor suite of St. Thomas Hospital in Nashville preparing for the birth of his first son when he got a call urging him to take up a new job.

Hickey, who is trained as both a medical doctor and a lawyer, was working at the time as a business consultant for McKinsey & Co., and had just moved from Washington D.C. to what his wife thought was the family's "forever home" in her adopted hometown of Nashville. Although the job was 120 miles away in Chattanooga, where neither Hickey nor his wife had ever lived, Hickey accepted the offer in April 2011.

BlueCross BlueShield of Tennessee, the state's biggest health insurer, wanted a chief operating officer to succeed Bill Gracey, another transplanted Nashvillian who was being promoted to the company's CEO.

Four years and two more sons later, Hickey and his wife Mandy have settled comfortably into Chattanooga, which Hickey calls "a great place to raise a family." On September 1, Hickey again succeeded Gracey, who retired at the end of 2015, to take the job in the corner office atop BlueCross's Cameron Hill campus in downtown Chattanooga.

Hickey, an Atlanta native who went to college in New York and North Carolina and worked in New York City, Washington D.C., and Nashville, backs away from again referring to a "forever home." But the new BlueCross CEO says he is eager to lead the health insurance giant at a time when both the way health care is delivered and how it is paid for is being reshaped by changing technologies, regulations and economics.

Hickey is the third CEO at Tennessee's BlueCross plan in the past five years, but only the eighth CEO for the company in its 70-year history. At 44 years old, Hickey is the youngest CEO at BlueCross since the not-for-profit insurance company was chartered in Chattanooga by the late Roy McDonald, publisher of the Chattanooga News-Free Press, in 1945.

Hickey is also the youngest CEO of a multi-billion-dollar company in the Chattanooga region. But with his medical and legal training and business consulting and management experience, Hickey has already taken on huge challenges at a young age. After working in New York City for a couple of years as a lawyer, Hickey began consulting for a variety of businesses at McKinsey & Co., an international management consulting firm, in Washington D.C.

Hickey came to Tennessee at the invitation of then Gov. Phil Bredesen, a former health care entrepreneur who was looking for someone to help assess and upgrade operations of Tennessee's Medicaid program, known as TennCare, which at the time insured 1.3 million Tennesseans. In its first 10 years, TennCare had nine directors and its costs were ballooning and absorbing a growing share of the state's budget.

The governor soon decided to hire Hickey, then only 33, to serve as director of the $8 billion-a-year TennCare program.

"It was a great opportunity to work directly and almost daily with Gov. Bredesen, who is an expert himself on health care issues and was eager to make needed changes in TennCare," Hickey recalled.

Hickey was tasked with curtailing the soaring costs of TennCare, which if unchecked could have absorbed more than 90 percent of the entire state budget by now.

Hickey led reforms that resulted in the closing of some eligibility categories, the dis-enrollment of thousands of adults who were not eligible in an open Medicaid category, and new benefit limits. Bredesen praised Hickey for helping to trim TennCare rolls to stave off a state budget crisis.

"Under his leadership, TennCare turned a corner to become a financially stable program focusing on making real advances in patient care," Bredesen said when Hickey left his TennCare job in 2006.

Bredesen was so impressed with Hickey that he hired him to help run his Nashville electronic medical records company, Qualifacts, from 2006 to 2008. The former governor founded Qualifacts in 2000.

While working in the Bredesen administration, Hickey met his wife, Mandy, who was working at the time for the Nashville public relations firm McNeely Pigott & Fox. Hickey's boss at the time, Finance and Administration Commissioner David Goetz is married to Kate Varney, Mandy's boss at McNeely Pigott & Fox. Goetz and Varney introduced Hickey to his wife and the two couples have remained friends since.

"They take credit for all three of our boys," Hickey quipped.

Gracey, who recruited Hickey to BlueCross and turned over the reins of the company to him in September, said Hickey brings a wealth of experience and training to the job as a business consultant, medical doctor, health care lawyer, medical records company CEO and former TennCare director.

"He's not only a nationally respected leader and health care strategist, but he also consistently brings innovative ideas to the table," Gracey says.

The Chattanooga-based company insures more than 3.3 million people, a growing share of which is coming from individuals who are picking government or privately funded plans in competitive retail markets. Traditionally, the bulk of BlueCross members in Tennessee came from employer-sponsored plans. But today, nearly one-third of BlueCross business comes from what it calls its retail book, which includes the federally run health insurance exchange, Medicare Advantage and a program that allows TennCare members to choose from three managed care organizations.

BlueCross BlueShield of Tennessee, which enrolled more than 70 percent of the 231,00 Tennesseans who signed up for health insurance exchange plans under the Affordable Care Act in its first year in 2014, lost $141 million that year and is likely to report similar losses for 2015.

To avoid further losses, BlueCross is raising its Affordable Care Act plan premiums this year by an average of more than 36 percent.

"I think that we have been able to have such a compelling product and achieved such a high share of the market shows we have been successful in attracting consumers to our plans," Hickey says. "On the pricing, we simply got it wrong and we've had to make some large changes to try to bring our rates more in line with our medical costs. We're not the only ones who are losing money on these accounts and are now requiring large rate increases to stabilize these markets."

Tennessee's health insurance cooperative, Community Health Alliance, was forced to close down its operation last year after losing too much money, forcing 27,000 enrollees to find new health insurance plans.

But BlueCross is not only raising premiums to help avoid further losses in its health care plans. The company is working to better manage health care to bring greater efficiency and cost controls to the market.

"We are fundamentally changing the way we reimburse providers for care in Medicare Advantage, where we made a big strategic push three years ago," Hickey says. "We've been very pleased with the growth of that program. We've grown faster than each of our competitors combined over the last two years. Every physician is reimbursed to quality outcomes and overall cost management. Within 18 months, hopefully that will be true of 100 percent of our commercial physician network as well."

In the broader health insurance space, many of the biggest health insurers are trying to consolidate with Anthem proposing to buy Cigna and Aetna planning to buy Humana. Other Blue Cross plans, including the plans in neighboring Georgia and North Carolina, merged with bigger, investor-owned companies years ago.

But Hickey says his board wants to keep the Tennessee BlueCross plan as a not-for-profit plan focused on the Volunteer State. The Chattanooga-based plan merged with BlueCross in Memphis in 1997, but the company has since rebuffed merger offers with other health insurers.

"There is a long, proud history of being a high-performing, single-state Blues plan (that is a) mission driven, tax paying not-for-profit," Hickey says. "We've also been one of the highest-growing and some of the most positive margins in the system as well. We're not just doing well, but we've been doing even better over the last few years. That's in the face of what we would acknowledge as increasingly formidable competition.

"I, personally, am very much wedded to our independence as a Blues plan. We are all about Tennessee," he says.

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