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Blue Cross/Blue Shield of South Carolina: Program for Clerical Workers Greg Geisler Prior to the Industrial Revolution, homework was common- place; it is only in recent history that we have come to expect and accept the notion of a clustered work force, better known as the factory or office. With industrialization, clustering became neces- sary to realize the economic advantages that assembly lines of- fered in factory settings and to provide the communication net- work needed to support office functions. Is this concept of clustering archaic? No, but the utility of this notion is becoming less of a factor. Continual advances in infor- mation technology are enabling individuals to be effective mem- bers of the work force at arm's length at home. This emerging technology will significantly improve the way in which we com- municate and, as a consequence, will significantly alter the orga- nization of the work force. Reorganization of the work force is not a lightweight matter. The premise that working at home is desirable and desired by many may be easily accepted by the office employee, but not so easily accepted by the manager or employer. Regardless of the type of work the telecommuter does, manage- ment is faced with new issues. How do you evaluate the perfor- Greg Geisler is president of G Geisler Group, Camden, South Carolina, and former director of the Information Center, Blue Cross/Blue Shield of South Carolina. 16

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BLUE GROSS/BLUE SHIELD OF SOUTH CAROLINA 17 mance of someone who is not in the office? How can you manage people you don't see? James Connell, of Office Research Technol- ogy in Pasadena, California, distinguishes two types of manage- ment: " Some managers fee} that an employee has to be checked all the time or the employee will goof off. The other attitude is that a valuable employee will want to do a good job and doesn't need! to have an overseer. This second philosophy has to be developed if telecommuting is to work." Management in general is struggling with the problem of incor- porating technology and at the same time accommodating em- ployees' needs and altering management's style. Many busi- nesses are dodging the issue altogether and advocating the status quo. Others are jumping in with pilot projects and funding in the belief that the opportunity lost by delaying is substantial. A third group is just plain confused and suffering from the widespread and easily contracted disease of "analysis paralysis." These symptoms are consistent with the views of Dr. Richard Byrne, who teaches business executives how to get over the fear of using computers. Actually, Byrne says, "Managers are not, per se, afraid of com- puters. it's really change that they are not in control of that is frightening. After all, an executive's responsibilities include keeping things under control. They no more inherently dislike computers than they dislike a hose] suddenly moving them from one room to another . . . even if the new room is a suite and over- looks the ocean. Unanticipated change scares most people, not just executives." Byrne also pinpoints three types of attitudes. There is the atti- tude of the person who hasn't had the technology-induced mid-life crisis. To put a number on it, let's say this attitude represents people under age 42. They know that the miter of technologies, of satellite communications, videoconferencing, personal comput- ers, and the like is going to affect them directly. They are coming to terms with this now. At the other end of the spectrum is what Byrne calls the "over- 56" executive who has a reasonable chance of escaping the new technology. That leaves the 42 to 56 group. "That's the group that's in trauma," says Byrne. "They don't want to face this prog- ress, but they know they have to. To them it's a real problem." Let me speak for our executives at Blue Cross and Blue Shield of South Carolina. They are definitely not traumatizes} by the

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18 CASE STUDIES emerging technology. Our teleprocessing efforts''were initiated in 1973, and telecommuting was introduced in 1978. It is generally agreed that the sectors of society most directly affected by the whole information age are professionals and man- agers. They are the ones who derive the most direct benefit from personal computers and other new tools of electronic communica- tion. The motivation behind this entire movement is to improve the productivity of the white-colIar worker the portion of the work force which comprises 70 percent of the average company's personnel expense. ~ believe that this purpose is well founded. This is not to say that personal computers and the rest of the technology will have no impact on our clerical workers, but the potential is not as dramatic as that for professionals. It is simple arithmetic: Which generates the greatest return, a 15 percent in- crease in productivity for a $5-an-hour employee or one who makes $20 an hour? At Blue Cross we recognize and accept that our professionals and managers are the target group for the new technologies. Be- sides, in years past, like most other companies, we have expended so much of our energy trying to improve the productivity of only our clerical and blue-collar workers that there is little room for further improvement, short of replacing them with robots. Just for the record, we do not intend to do that! THE COTTAGE KEYER PROJECT In 1973, it was decided to begin the development of a telecom- munications network that would tie all of the hospitals in South Carolina to our corporate offices in the state capital, Columbia. This network would be the vehicle through which the hospitals would submit Blue Cross claims directly to us without the need for hard-copy paper and mail service and without the inherent delays. As a result, we are now recognized as pioneers in the con- cept of "paperless" insurance claims and probably have the high- est percentage of paperless claims submission by any insurance carrier in any state. In 1978 our company attempted telecommuting for the first time. The purpose was to develop a procedure to facilitate the coding and keying of physicians' Blue Shield claims. As just noted, we had been very successful with claims submitted by hos- pitals (Blue Cross claims), but a high percentage of the claims

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BLUE CROSS/BLUE SHIEkD OF SOUTH CAROLINA 19 submitted by physicians were still being handled conventionally. The doctor was fining out a claim form and mailing it to us a week later. Upon receipt, coding and keying of the claim was necessary before it could be processed. We had no preconceived ideas of project results and did not establish any rigid goals. No formal monitoring or measuring was imposed on the original participants. We were primarily inter- ested in cleterm~ning the feasibility of expanding the project and observing the attitudes of those affected. The pilot project began with the selection of a husband and wife team. This was accidental; we did not seek this exact combina- tion, but in retrospect, this arrangement turned out very web. The husband was a manager of one of the claims departments and quite familiar with the manual claim submission process that we were trying to automate. His wife was a typist who knew nothing about the claims process and was not accustomed to sitting in front of a terminal keying for x number of hours. Each evening the husband would take home a new stack of claims that had already been screened and coded any were now ready to be keyed. In the morning he would return with any claims that she had completed keying so that the hard copy could be permanently filed. During the day, at her convenience, she would key the Blue Shield claims. The next day the cycle would repeat itself. The luxury of not having to make a daily round-trip to Blue Cross is readily appreciated, particularly when young children are in the home. The major result of this husband and wife working relationship was a close and candid scrutiny of the methodology of paperless claims submission. This constant questioning revealed some seri- ous flaws, not In the accuracy of the data, but in the ease of use of the system. The objectivity necessary to spot these flaws did not exist in the hospitals that had been using the system for the past five years, nor did it exist with the programmers who developed it. Since its inception in 197S, the "cottage keyer" project has grown to include 14 employees who are now considered a vital element in our claims submission process. The ground rules for our cottage keyers are that the keyer is responsible for paper ex- pense; the lease of the equipment, which amounts to almost $2,500 a year; and is considered a part-time employee. Blue Cross in turn is responsible for ah maintenance of the computer, contri-

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20 CASE STUDIES buttons to a pension fund, anc3 payment of 20 cents for each claim keyed. No other benefits are provided. ~ realize that it may seem incongruous for a health insurance carrier to deny health insur- ance benefits to its own cottage keyers, but this policy applies to aU part-time employees, not just those participating in the cot- tage program. We have experienced zero turnover in the five years the project has been in effect. We have even had our first retirement. In fact, had it not been for the cottage program, the retiring keyer would not have been able to continue work at Blue Cross because of a family situation that required all of her time. The requirement that keyers lease the equipment is a very di- rect way of stating that we depend on them and expect a certain level of performance from them. In other words, the keyer is ex- pected to key the claims assigned in a timely manner, and the lease of equipment serves as a constant reminder of this commit- ment. In the near future this approach will be abandoned. As we convert from the very specialized machines we are now using to general purpose personal computers, specifically the IBM PC, as our vehicle for claims submission and provisions are made for our cottage workers to purchase these machines at our cost, new rules wiB be established. Our cottage keyers and coders are generally women, in their thirties, with one young child at home. Their husbands work at Blue Cross with full benefits. The keyers are wed organized and self-disciplined. They often work odd hours. We will finct them signed on at 6 a.m. or 7 p.m. at night. Routinely, they work be- tween ~ a.m. and noon. Work Toad Statistics Sixty-five percent of all South Carolina Blue Shield claims are keyed in cottage; 30 percent of all South Carolina Blue Shield claims are coded in cottage. Thirty percent of all South Carolina Major Medical claims are keyed in cottage; 40 percent of ah South Carolina Major Medical claims are coded in cottage.

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BLUE CROSS/BLUE SHIELD OF SOUTH CAROLINA Productivity Statistics 21 Standard Hours Hours Paid Produced Productivity Tn-office 37.5 2~3.5 76% Cottage 30.~3 31.3 102~o We are quite pleased with the performance of our in-office key- ers and coders. The productivity figures stated above are based on units produced for hours paid, which means that hours not worked because of illness or holiday or annual leave have been included. This makes the comparison with cottage workers possi- ble since they are paid on a piece rate with no allowance for illness, holiday, or annual leave. The standards established at Blue Cross are based on an "opti- mum day's work," not a "fair day's work." Therefore, we do not expect performance above 90 percent. When productivity is cal- culatect as above, using hours paid whether worked or not, sub- stantially lower figures are of course acceptable. If we are pleased with our in-office productivity, we are thrilled with the cottage figures. We expected work done at home to be below standarci. In fact, at the outset we didn't expect more than 85 percent productivity. The machines used by the cottage keyers were Texas Instrument Silent 700s, which required a pedal on the floor and had limited editing capabilities compared with the main- frame-linked terminals used by the in-office keyers. The home en- vironment offered distractions, and there was no supervision. How could there be this jump in productivity? The best explanation I've come across is the oft-cited experi- ment conducted by psychologist Herbert Lefcourt. Two groups were asked to solve complex puzzles and do intricate proofreading in the presence of a loud, randomly occurring noise. One group was given a button that would switch the noise off; the other wasn't. The group with the switch solved five times the number of problems and made far fewer proofreading errors, even though not a single subject pressed the button. Thus there appears to be an incredible motivational value associated with freedom of choice. The granting of even a modicum of apparent control can increase people's productivity immensely.

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22 CASE STUDIES Error Rate Statistics The in-office keyers had an error rate of 3.0 percent, while the cottage keyers had an error rate of 0.5 percent. This statistic seems to lend further support to the above theory. Otherwise, how can performance be higher in an environment that lacks Muzak, ergonomic furniture, and scheduled coffee breaks? Earnings Comparison Average Base Lease Benefits Gross In-office $11,285 $0 $3,611 $14,896 Cottage $17,916 ($2,436) $806 $16,286 Our in-office keyers work an average of 37/ hours a week. They are paid on a hourly rate with the average take-home rate of $7.59 an hour, which includes additional benefits. This make the aver- age in-office keyer's salary $11,285 a year. Cottage keyers must pay a monthly lease of $203 for the computer, which amounts to $2,436 a year. The cottage keyers make an average of $12.18 an hour, after deducting for their terminals. Hourly in-office keyers receive at the company's expense additional benefits, which in- clude life and health insurance, sick leave, annual leave, and pen- sion. Cottage workers receive a noncontributory pension. The cottage employee is grossing on the average 9 percent more than the hourly employee. This is consistent with the increased productivity of the cottage worker. Further, the company avoids certain operating expenses such as additional floor space and of- fice equipment, expanded cafeteria functions, and enlarged park- ing facilities. It can be argued that unequalpay scales for similar job descrip- tions may be undesirable. We have found the opposite to be true. Clerical workers understandably have limited promotional oppor- tunities, but because of the cottage program, the possibility ex- ists to "advance" to a more desirable cottage position without having to absorb any new responsibilities. So, again, what could have been a negative situation has become a positive one. Another point of contention can be the decision to classify our cottage workers as part-timers. It should be remembered that our

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BLUE CROSS/BLUE SHIELD OF SOUTH CAROLINA 23 part-time cottage keyers are earning more than their full-time counterparts. Being classified as a part-time employee carries with it the privilege of variable working hours and the inclination to request and to expect this privilege. Consequently, the cottage keyers exercise this option without any stigma attached. If a keyer is going to be able to work only 20 hours one week, she contacts her in-house supervisor and her work load is adjusted ac- cordingly. Just as Dr. Lefcourt would have predicted, though, this option is not abused. In fact, it is not uncommon for one of the other keyers to volunteer to pick up the slack. Is telecommuting a Trojan horse? We think not. We at Blue Cross expect to expand our commitment to cottage keying sub- stantially to include other claims areas, and will be providing a personal computer or access to one for ah of our professional and management people. Those who are still not convinced should be in a business that technology cannot leverage, like custom cabinetmaking, or have a market absolutely cornered. Anything less, and these new tech- nologies are going to be used by your competitors against you.