To begin a successful legal value transformation project, it helps to begin with a BHAG—a “big, hairy, audacious goal”—and then planning for your BHAG several years into the future and working backwards, says Loretta Cecil, Executive Vice President and General Counsel at Change Healthcare (CHC). The Legal & Compliance team at CHC did just that. Not satisfied with a moonshot for their BHAG, they set their sights on Jupiter as a metaphor for the ambitious scope of their project. Their BHAG was certainly ambitious: no investigations, no accounting restatements, no litigation, and no embarrassing moments.
As a newly constituted department resulting from a joint venture between McKesson Corporation and The Blackstone Group Inc., the team inherited legacy systems and processes as well as a desire to get a fresh start. Careful planning began well beforehand, but Project Jupiter launched in January 2020. This transformation initiative is three-pronged, comprising cost-effective, outsourcing of sales contracting and rigorous outside counsel management, along with a new approach to fostering compliance and ethics. Outsourcing the sales contracting was definitely “hairy” for Cecil, given her contracting experience at McKesson. “I had resisted it for years, thinking it too complex and challenging for the healthcare IT market,” she says. “I had to be dragged to the idea.”
Jan Sbarbaro, Managing Senior Counsel, did the dragging. “It was a perfect storm situation. The legacy systems brought many and duplicative forms, and processes. There were contracts everywhere, and the sales team was anxious. We had hundreds of contracts in backlog. We needed smart spending and smart sourcing,” she explains.
Seeking an ideal resource allocation model, CHC selected Integreon as its outsourcing partner to manage sales contracts for two business lines. They adopted a “One Big Room” strategy to accelerate onboarding, in which six members of the CHC legal team rotated through Integreon’s Austin, Texas, headquarters, working with 15 colleagues there to build relationships and transfer knowledge.
“It was hands-on learning, fast and concentrated,” says Sbarbaro. “We were able to impart knowledge quickly, while developing great training and process materials.”
CHC also selected UnitedLex to manage one business line’s Business Associate Agreements (BAAs). Although the pandemic forced a pivot to virtual onboarding, the training materials from CHC and process maps developed by UnitedLex stood the team in good stead.
Both partnerships have yielded major successes in quality and cost. On average, 97 percent of sales agreements managed by Integreon meet all specified attributes. UnitedLex is turning around high-risk BAAs in half the time of the historical average. “These contracts are so complicated. We could not compromise quality. Although we began with a 100 percent review of the LPO work, quality control is now being achieved through the auditing process we created for our outsourcing partners,” says Sbarbaro.
The significantly lower cost of these resources has helped CHC’s bottom line, lowering the costs of outsourced sales contracting by 25 percent and of BAAs by 58 percent. It also has helped CHC better meet its customer needs. The relationship between the legal department and sales also has been strengthened. And perhaps less quantifiable but no less important, the internal legal team has benefited as well. “They are enthusiastic about the additional resources, and the high quality of the work,” says Cecil. “These outsourcing arrangements have allowed our in-house attorneys and contract professionals to up their game and provide more strategic support to the business.”
In parallel, the pair sought to bring greater structure and rigor to outside counsel management. Reducing the number of firms by more than a third and introducing new value expectations, billing guidelines, and engagement letters, Cecil sought to “be a better steward of our resources and stop the madness,” as she puts it. In January 2020, CHC hosted its first annual outside counsel summit, bringing together the top 12 firms. Featuring candid panels with in-house and external perspectives and education from CHC Investor Relations, the program was designed to usher in a new era of collaboration, openness, and transparency, Cecil says.
CHC also focused on streamlining processes through e-billing provider SimpleLegal, adopting the Intelligent Invoice Workflow for automated invoice review and to collect and analyze spend data. All new matters since February 2020 have been pursuant to the new billing guidelines. In the months since, CHC has seen a 27 percent reduction in outside counsel spend.
These initiatives were complemented by a novel, targeted training approach designed to make complex topics understandable. Leveraging social media and broadcast television techniques, sessions on Code of Conduct, integrity, and compliance have generated widespread employee engagement and empowerment. Training is being completed 15 percent faster and with 40 percent less seat time, yet learning objectives are not sacrificed: Post-intervention surveys show that 94 percent of learners will use the training information in making decisions.
Cecil had long been aware of the ACC Value Challenge and the impressive, varied transformation projects it recognizes. As a first-time entrant this year, she says, “It had been our hope and dream to win.”
If that’s not a BHAG, what is?
