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Charlie Baker '86: Setting an ailing company on the road to recovery

By Amy Trang

Like most business executives, Charlie Baker '86 wakes up and puts on his suit and tie before heading to the office, which in his case is Harvard Pilgrim Health Care, a Boston-based health benefits company.

But there's an invisible second uniform that Baker jokes about, one that includes a pleated skirt, pom-poms and a megaphone.

Baker considers himself the head cheerleader for Harvard Pilgrim, a top-ranked nonprofit that serves members in Massachusetts, Maine and New Hampshire. Initially, though, Baker was rooting for what seemed to be a losing team when he assumed the roles of president and chief executive in 1999.

The Kellogg School graduate is credited with turning around Harvard Pilgrim, which went into state receivership in January 2000 after reporting a $225 million loss in 1999.  Troubled by accounting errors and inefficient computer billing systems, Harvard Pilgrim made major regional media headlines and was deemed insolvent by critics.

Faced with the task of fixing Harvard Pilgrim's problems, Baker first implemented a straightforward diagnostic process: document everything that was broken. But getting people to admit what was wrong wasn't easy.

"I've had to change the culture of a place so that it became an environment where it was OK to be upfront and direct about problems and (ensure) that there wasn't a 'shoot the messenger' mentality in the company," Baker says.

Baker and his team embarked on a 150-day campaign to bring the company to optimal performance. The organization recovered within the year; it was released from state receivership in June 2000 and counted only $10 million in losses by year-end.

Harvard Pilgrim also invested in online technology to streamline its communication with healthcare providers and plan members. In addition, it put procedures into place to keep members involved in their healthcare management — for example, calling members to explain what a deductible is.

Baker also wrote an e-mail to all employees every Friday with an update on the company's progress. Employees, in turn, sent the e-mails to healthcare providers and customers to keep them informed.

"If you deliver an error-free experience for all the various entities that you work with, the likelihood that your providers and members will have a positive experience goes up," Baker says. "Our view is we should get everything right the first time, every time."

Nearly a decade later, the company is rated the top commercial health plan by U.S. News & World Report and the National Committee for Quality Assurance — a distinction it has enjoyed for four years. It's also been ranked No. 1 in member satisfaction in a national health-insurance plan satisfaction study by J.D. Power and Associates.

Before joining Harvard Pilgrim, Baker spent eight years in Massachusetts state government, serving as secretary of administration and finance and secretary of health and human services.

"The most important thing I learned at Kellogg is that it's all about the team," Baker says. "It was drilled into your brain from the way that your classes were set up or grades were handed out. No one fails or succeeds on their own; you succeed or fail as part of a team."

Looking back on his early days at Harvard Pilgrim, Baker recalls talking with his wife, Lauren Schadt Baker '86, about the mess he had gotten himself into. Lauren would simply remind Baker of what he had once told her about his career goal: "All I really want is to be relevant and make a difference."

With Harvard Pilgrim reporting a $48.1 million net income in 2008 and its efforts to benefit more than 1 million members, Baker has done just that.

 

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