How David Kaercher Balances Healthcare’s Present with its Future

David Kaercher helps Blue Cross and Blue Shield of Kansas City balance the needs of today with healthcare’s increasingly digital future

The challenges facing healthcare insurers are daunting.

In the midst of structural changes that are altering reimbursement levels and how care is provided, customers are also demanding affordable, accessible, personalized coverage that produces quality outcomes. Insurers must also find ways to accommodate their preferences, which range from traditional face-to-face exchanges with nurses and physicians to patients who prefer to do online research and get diagnoses through telehealth appointments.

David Kaercher, senior vice president and chief information officer of Blue Cross and Blue Shield of Kansas City (Blue KC), has led several significant technology initiatives to help the organization address these issues and more—all of which are helping Blue KC evolve into a primary care partner.

David Kaercher, Blue Cross and Blue Shield of Kansas City

“When I worked in banking, we had financial advisors dedicated to ensuring personal customer guidance and service,” Kaercher says.  “The IT team is establishing a foundation that enables us to bring that same kind of attention and facilitation to our Blue KC customers.”

To do that successfully, Kaercher first had to build trust within the organization. In the past, IT had not produced results commensurate with the amount of investment that had been made in the department. In the Show Me State, that left people skeptical.

To alleviate concerns, Kaercher’s first step was to cultivate a “Yes We Can” culture, which began with benchmarking the organization. The early data revealed that peer organizations were spending eight times more on innovation. They were also spending 20 percent less on maintaining their legacy systems.

To effectively address such issues, Kaercher shifted how the organization views its processes and the model on which it runs. “Creating a new culture has enabled us to build an agile and sustainable operating model that strikes a healthy balance between agility, execution, and cost,” he explains. “The results range from clinical enhancements to infrastructure improvements that patients will never see but will still have a positive impact on their experiences.”

The new culture has already produced noticeable results. In 2017, 32 percent more successful projects were delivered than in 2016, and in 2016, 23 percent more successful projects were delivered than in 2015.

Much of that success was made possible by embracing Vijay Govindarajan’s 3-Box Approach to Innovation and Change, Kaercher says. The approach helps manage change through Box 1: Manage the present or “The Now;” Box 2: Selectively forget the past; and Box 3: Create the future, or ”The Next.”

The following five projects illustrate what Kaercher and the new culture are helping Blue KC achieve.

Spira Care Centers

In January, Blue KC entered the primary care market by opening its first Spira Care Center, and others are planned to open in the near future. Each is expected to accommodate several thousand patients, who will work with individual care guides to help them navigate the healthcare system and to understand their treatment options while achieving high-quality outcomes. “If Spira helps drive down the cost of care while maintaining positive outcomes, that’s a success,” Kaercher says.

Catalyst Teams

As part of the new culture—and among the reasons IT productivity has increased so dramatically—Catalyst Teams assess business priorities and aggressively pursue opportunities. In one recent instance, team members attended a three-day Microsoft Technology Center (MTC) hack-a-thon, where they created a Spira Care mobile app that can schedule appointments, show locations, and provide contact information for care guides. Kaercher estimates that it previously would have taken up to six months to get the same results.

Cloud-First Initiative

Blue KC is the first of the Blue plans to retire its mainframe data system without outsourcing or BPO contracts. It may also be the first with more than five hundred thousand members to retire its data center. The center is now only 20 percent of its previous size. Its two off-site colocation systems and full cloud migration—which is expected to be completed in the first quarter of 2020—will save the company 20–30 percent of its current operating costs.

Workday Cloud Platform

This program, known internally as BlueLink, is serving as the benchmark for Blue KC’s future efforts. It rationalized and consolidated six autonomous, fragmented, and disconnected applications into a single integrated platform that handles all finance, HR, and learning management functions. It has also introduced automation that has eliminated all manual data processing and shortened the time required to complete many payroll and HR functions. In many cases, what took days to accomplish now takes only minutes or hours. In addition to more accurate and efficient reporting, Kaercher conservatively estimates that the Workday platform will save more than $1.3 million annually in maintenance costs.

Apigee API

Kaercher sees Google’s Apigee platform—the Blue KC API engine—as the “digital glue” that replaces traditional extract, transform, and load development. “API’s go hand in hand with our enterprise data and cloud-first models,” he says. “In addition to reducing the time to access or integrate data from weeks and months to hours and days, it’s critical that we are able to securely integrate and share data with our Blue KC customers and partners.”

While all of these implementations and initiatives position the organization for an increasingly digital healthcare environment, they have an even greater significance for Kaercher.

“These are the kinds of challenges that drew me into healthcare as a career,” he points out. “Part of our job is to act as counselors and educators. If we can leverage data and analytics to help our customers make proactive, positive changes, those are opportunities for us to help them live happier, healthier lives.”

Photo by Mark McDonald


David is a true business-driven CIO with a solid grasp of the healthcare ecosystem as well as its associated business models and opportunities. His deep understanding of the business gives him the ability to rapidly deploy IT to solve business problems and innovate on today’s toughest healthcare and consumer challenges.