January 19, 2012

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From Blue to Green

Sustainability Meets Health Company’s Goals

Daniel J. Medin

January 19, 2012

Businesses seeking to grow their market share are increasingly aligning with consumers’ values. We see this as more and more customers are increasingly factoring sustainability into decisions about buying stocks, products and, as Regence is finding, health insurance. Potential customers are beginning to ask about our sustainability practices and many of our 6,000 employees have offered ideas for “greening” our corporate operations. The confluence of both internal and external interest spurred Regence to examine sustainability as a corporate strategy. Given the recession, the uncertainties of health care reform and stiff competition from local and national health plans, only a strong business case could persuade us to devote resources to developing a sustainability program. We faced several challenges in examining whether sustainability was a reasonable corporate strategy for us. First of all, we don’t manufacture products or ship them. We sell products and services intended to protect and support our customers, and help them feel smarter and more connected in their health care experience. Any new initiative must meet our goals of growing the business by delivering value to our members, such as preventive and coordinated health care, while keeping overhead costs down. New initiatives must also help us meet our obligations as a steward of member resources and responsible corporate citizens. And, new initiatives should help us thrive in the post-health care reform environment, even as our business model may shift. What’s Sustainability? While our company supports recycling and energy conservation, we learned from prospective customers and our own employees that corporate “sustainability” goes far beyond these now common practices. From Wal-Mart’s insistence on recyclable packaging to Whole Foods’ emphasis on local produce, sustainability is about reducing the overall carbon footprint of conducting business. Advocates call it a “deeper shade of green.” Examined through the lens of our roots in service to our communities, the context came into focus: sustainability in the everyday operations of our business is an extension of our stewardship of the billions of dollars members entrust to us for their health care. They trust in us to be here today and long into the future to meet our obligation to them. Next, we canvassed our operations and invited employee scrutiny and suggestions to identify our sustainable efforts, and what we can do differently. More than Costs Several activities surfaced illustrating an economic drain on our resources—this was an imperative during the recession. • Travel. Regence is a multi-state company. As we reconfigured our teams along functional rather than geographic lines, travel budgets rose. Our fraud investigation unit is sited in Salt Lake, for example, and has members in Idaho, Washington and Oregon. • Office supplies. As a heavily regulated business, we document our actions extensively. No paperless world, here. In addition to internal use, we send out 20 million explanations of benefits (EOBs) a year to members, documenting their medical treatment. That’s a lot of trees and toner. • Utilities. We use an average of 6,000 desktops, which require a lot of electricity. Reminders to power down at night obtained spotty results. Scrutinizing functions like these, and others, we took direct and specific actions: • Emphasized our many forms of electronic communications to keep interstate teams in touch, while tightening travel policies and off-campus meetings. • Set many copiers and printers to double-sided printing to reduce paper use and waste, and automated a message in all e-mails to consider whether it really needs to be printed. • Automated a nightly power-down of computers. Green Savings Savings from our efforts in 2009 alone topped $20 million. During 2010, we plan to continue our sustainable efforts. For example, one paperless effort required us to obtain the approval of insurance regulators in the states where we operate. We already place our EOBs on the secure member website, myRegence.com. But to give members an opt-out of paper, EOBs required an official approval by state regulators. As that rolls out this year, we estimate savings could be $1.4 million. Reducing costs is only one factor of sustainability—it inherently encompasses stewardship of the indoor environment as well as outdoor. Our facilities team has implemented many LEED (Leadership in Energy and Environmental Design) standards such as: • Using paint with low or no volatile organic compounds (VOCs), which reduces harmful negative impacts to indoor air quality. • Using tactable glue when installing all carpeting and flooring, reducing odor and allergic reactions • Using products made of recycled and easily recyclable materials. • Sourcing products and services from suppliers recognized for their sustainable practices, such as the janitorial vendor who uses low-impact, environmentally-friendly cleaning products. Finally, sustainability efforts are truly sustainable only when they become part of the culture. The hallmarks of companies with successful sustainability programs are remarkably consistent, and Regence employed such tactics including the following: • Lead from the front. Everyone understands the drive comes straight from the C-suite. The CEO’s vocal and visible support goes a long way toward getting everyone on board. • Name a champion. Call it a project manager, advocate or evangelist, deem one person to champion sustainability throughout the company. That person needs direct access to top management, to ensure sufficient two-way flow of information, and authority to get the job done. • Bake it into key goals. Identify and define the sustainability practices that best link to your corporate strategy. The closer the fit with existing initiatives, the more likely sustainability becomes an essential ingredient in future planning. • Build it in the culture. Understand your corporate culture and frame your sustainability efforts within that culture. At Regence, we framed sustainability that fits within our ethical culture and with our historic commitment to support the communities where we live and work. It’s everybody’s job, no matter what their department. Our pilot Sustainability and Wellness Action Teams (SWAT) focus on finding opportunities and implementing change, and being ambassadors to other employees. Their success means we’ll be starting up SWAT teams in other Regence locations. Going Forward As we look back over 2009, our sustainability efforts to date are meeting our business goals: Current and prospective customers appreciate our story, employees like being heard and making a difference, and we’ve reduced costs significantly along with our carbon footprint. We’re just getting started and expect sustainability to be an ongoing process, which we will continue to measure. Additional activities will meet the triple bottom line of balancing economic prosperity, environmental quality and social equity. We’ve learned you don’t have to be a manufacturer, resource extractor or giant retailer to go a deeper shade of green. Sustainability is a powerful expression of who we are as a company: A steward of not only our members’ shared resources, but of the resources of the communities where we live, work and serve our members. It turns out that sustainability is a natural fit for a nonprofit company with a culture of stewardship. It also move us toward the goals of recruiting new business while strengthening ties with existing clients and with employees, and helps trim operational costs, and curb the upward trend. In aligning operations with our own values—and those of current and potential customers and employees—we find that what’s good for all of us can be good for business. Dan Medin is responsible for Regence’s sustainability efforts. A nonprofit licensee of the Blue Cross and Blue Shield Association, Regence is the largest health plan in the Pacific/ Intermountain region, serving 2.5 million members throughout Utah, Idaho, Washington and Oregon. It serves 400,000 Utahns through its Salt Lake City office.
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