The daughter of low-income immigrant parents from the Philippines, Cora Tellez grew up poor, worked her way through college and then through the ranks of the male-dominated health care industry.
When an opportunity came along to head Kaiser Permanente’s operations in Hawaii, Tellez was willing to make a tough sacrifice: her family life. Leaving her husband and three children behind in the San Francisco Bay Area, she took the job and then commuted across the Pacific every week or two to be with her family. She rejoined them permanently when she was named president of Blue Shield of California.
In November, Tellez was hired as president and chief operating officer of Health Net with the mission of turning around a health maintenance organization that, while in the black, is not meeting Wall Street expectations.
Q: What is your personal take on the managed care system, vs. the old traditional indemnity plans?
A: I have a great deal of passion about managed care, because I believe it offers a superior alternative to the costly medical care we used to have. It is superior in two ways. One, it holds sectors in the industry accountable for performance. Under managed care, we can show improvement in health status. We can monitor how well they immunize children, check mammography rates and retinal exams for diabetics. Also, we have made health care more affordable through our contracting mechanism.
Capitation (a system under which health care providers are paid a set fee per enrolled patient, regardless of how many patients they treat in a given period) is seen as a very bad word but it is the right way to align behavior with the right incentive. Doctors have the right incentive to keep people healthy. If people are not well, then it will cost you more.
Q: What do you tell customers who complain about Health Net’s service?
A: I have already fielded those calls. Thirty days on the job and they find you. By the time they get to me, they are very frustrated. But by the time I return a call, a lot of homework has been done about the complaint, so I can offer some solutions.
Q: How do you feel about working in an industry that so many people dislike?
A: It is tough. I wish I could talk to everyone. I wish I could get feedback about what people’s particular concerns are about managed care and what we are trying to do to address them. People are worried that when they really need medical care, it will not be there for them. We need to give people the assurance that the health plan will be there for them when they need it. We will help them navigate the system and help them through. Health care can be frightening and bewildering. You never think about the health plan being warm and fuzzy, but I see that as part of our mission.
Q: What are you planning to do to turn the company around?
A: We have already embarked on a three-pronged attack to improve performance. One is to focus on profitable growth, the second is to reduce the cost of care and the third is to reduce our overhead. We have a goal, for example, to reduce administrative costs by $30 million.
Q: Does that mean you are going to have to lay some people off?
A: We are looking at non-payroll expenses first. We are being very stringent on traveling and stringent on a whole lot of administrative things. We are looking at not replacing where there are vacancies, not adding physicians and at the very last resort we are looking at layoffs. My hope is that if we do our job correctly with the first two initiatives, I will not have to lay people off. I do not want to have to do that.
Q: It seems more than likely that some form of HMO liability legislation will become law next year. What is Health Net’s position?
A: My understanding is that people are most concerned about being denied care that they consider appropriate and necessary. So customers get really angry when they feel like they have been denied care. They want to go after the physician, the medical group, and most of all they want to go after the health plan. Health Net’s solution, I think, solves that problem so much better (than a lawsuit) through its external review program. It says, “If you have been denied whatever it is that you wanted and you don’t agree, Health Net will take your appeal to a third party of physicians that is not employed by us.”
Q: A lot of consumer advocates say external review is fine, but why not just let people have the option to sue if they want to?
A: Because as a responsible corporate citizen, you also have to know what the consequences are of that choice. One is that people will practice defensive medicine, and that means we may subject a lot of citizens to unnecessary procedures because doctors are worried that they will be sued. Then you would have health plans practicing medicine, and I am not a doctor. So what am I going to do? I am going have to employ an army of doctors to make sure that everything gets done exactly right. I will guarantee you that the probability of raising premiums to cover all of these expenses is there, because it doesn’t come free.
Q: How do you balance answering to investors and consumers at the same time?
A: My background is as a person who understands what it means not to have access to health care. I grew up poor. There were times when my parents were very worried I would get sick and they couldn’t afford to send me to a doctor. At a very personal and visceral level, the idea of affordable care is really important. That affects me profoundly and drives me in my job today. The for-profit or non-profit nature of any health care organization I see as having the same mission: work like crazy, deliver value to members and make that care affordable. Yes, I have investors who are owed a fair return on their investment. I believe the best way I can do that is to satisfy my customers. I am going to satisfy my customers by keeping them well, keeping their costs low and showing them value.
Q: There are very few women in top-level positions at health care companies. What have been some of the barriers along the way?
A: People don’t expect to see a woman as a chief executive officer, and I faced this a lot in Hawaii. I would show up and they would want to meet my boss, and I would say, “This is it, I’m here. You have to deal with me.” They are taken aback. Sooner or later they find out I am a person who delivers and I am a person who has successfully led organizations.
I am very conscious of the fact that there are very few women who are in my position. So I hold it as a responsibility, not only to be a role model, but to help provide opportunities and showcase the talents of women as well. What I am particularly conscious of is that health care is a decision that is mostly driven by women. Women buy health care on behalf of their families and companies. I am a mom and wife, and I buy health care too. I reflect in my work the issues and concerns that I think women and families face.
Title: President and CEO
Company: Health Net
Born: Manila, Philippines, June 29, 1949
Education: Bachelor’s degree, Phi Beta Kappa, Mills College; master’s degree, California State University, Hayward
Most Admired Person: Eleanor Roosevelt
Turning Point in Career: Taking a job with Kaiser Permanente as chief operating officer in Hawaii
Hobbies: Spending time with family, travel, reading and needlework
Personal: Married, two sons and one daughter
