The health plan Chief Medical Officer (CMO) has a wide range of responsibilities, including strategic planning and development, operational management, financial planning, investments, compliance, and quality improvement. As the health insurance marketplace shifts towards value-based reimbursement and integrated products and services, the CMO is pressured to improve performance and innovation while controlling costs.

In light of that drive for efficiencies, CMOs need to provide health plans with insights into innovative problem solving. CMOs must align the health plan with a broad base of members with diverse health situations and needs. This alignment requires a high level of thought leadership and innovative problem solving. The developing field of design thinking is a new area in which a CMO may engage in order to more astutely provide cost effective and quality focused clinical programs and services.

Design thinking is a new strategy for solving complex problems through a focus on end-user needs and requirements in order to more fully understand a problem and develop comprehensive and effective solutions.1  For a CMO faced with a changing healthcare market that means retooling organizational processes with the health plan member in mind. It requires identifying and understanding customers’ latent needs and challenges.

Design thinking at work in health

In 2008, the Mayo Clinic became one of the first institutions to employ the design thinking method to enhance their patents’ clinical experiences. The clinic’s Center for Innovation (CFI) uses design thinking to revamp patient clinical experiences. Using a design thinking approach, the Mayo Clinic found that while the physical examination is only a brief part of most patient appointments, the exam table itself is an uncomfortable place for Q&A with doctors. From this they built a new exam room that separates the physical examination from a collaborative space where the patient and physician can discuss results or questions.

As design thinking becomes more prevalent in healthcare, CMOs should follow suit by implementing it into health plan processes and care management programs. Because this approach identifies problems and solutions as part of the process, it is especially useful when problems have been poorly defined in the past or previous efforts have failed.

Some health plans have already successfully employed design thinking. In one case, a regional health plan struggled to control costs. After multiple iterations of designing and testing new processes, the CMO and team identified ways to reduce expenses through improving the budgeting process, optimizing service delivery, and proactively setting metrics for management of the expected process improvements. The regional health plan provider saw 15% savings in administrative costs.

In another example, a CMO and consulting team collaborated with a design thinking approach to improve the claims intake process. After interviewing end users, they learned that having the same personnel manage claims for all products was unmanageable. After several rounds of prototype testing, the CMO’s team created three specialized intake groups based on regulatory and clinical complexity. This allowed the health plan to better allocate resources, meet regulatory requirements and reduce costs associated with transferring calls between agents.

There are multiple scenarios where health plans have benefits from design thinking. This strategy can be a powerful problem solving tool for health plans, particularly in areas such as care management and revenue optimization. This paper will first explore the design thinking process and then highlight several areas where design thinking can play a key role in member care and operational excellence.

Implementing design thinking into healthcare processes

For CMOs looking to launch a design thinking approach, the first step is a research phase that involves empathetic engagement with stakeholders, whether members or plan employees depending on who is directly affected by or involved with the area that needs to improve.

Empathy is a crucial ingredient in design thinking and requires understanding stakeholders’ experiences, thinking process and values, according to the Institute of Design at Stanford University. This allows CMOs to truly dig into the root problem. CMOs should draft their problem statements (such as “transferring new customers between agents is decreasing member satisfaction”) with the end user in mind. CMOs and their teams then should workshop scenarios and processes that address the greatest number of needs and can be accomplished within the organizations constraints (such as time and budget).

Next, the team uses a prototype process to test it on a small scale, using feedback and testing before implementing on a larger scale. The prototype might go through several iterations of testing before it is implemented.

Design thinking and care management

CMOs can apply design thinking across a range of care management processes. Because more than half of healthcare spending is on behalf of people with multiple chronic conditions, teaching self-care benefits both the patient and the health plan, yet average member program participation rates linger at 25% on average.

For example, one company used a care management plan to help members of their health plan manage chronic conditions such as epilepsy, lupus, multiple sclerosis, Parkinson’s disease, and rheumatoid arthritis. The goal of the plan was to increase patient knowledge about their conditions and teach them self-management skills in order to avoid unnecessary trips to the hospital. Each person who enrolled in the plan was assigned to a nurse who regularly assessed their knowledge and self-management skills. The company studied more than 16,000 patients to evaluate the care management plan. They found that those enrolled in the care management program did not see a measurable increase in their health care costs, while those who were not enrolled saw increases between $16,000 and $18,000 a year.

With results like that, it’s easy to see why a CMO might spend time and resources creating innovative care management plans. And there are many opportunities – numerous potential areas in care management that CMOs can develop and integrate using design thinking. Here are several examples:

Lowering costs on chronic conditions

When Kaiser Permanente researched their health plan costs, their study revealed that 15% of members accounted for 35% of costs, and that these members had one or more of the following chronic conditions: diabetes, asthma, congestive heart failure, coronary artery disease, and depression. As a whole, plan members averaged 250 hospital days per 1,000 members a year. But diabetics were hospitalized at a rate four times that. If those same diabetics also suffered from chronic depression, that figure doubled again to 2,000 hospital days. It cost Kaiser $4,000 more per year to treat a diabetic than to treat the average patient.

Using design thinking, Kaiser discovered that these members lacked proper tools to manage their conditions. Kaiser invested in a Care Management Institute and leveraged a design thinking process to divide plan members with chronic conditions into risk categories, with the lower risk members receiving most of their treatment and ongoing care through their normal primary care providers. Higher risk members were assigned care managers who arranged a series of visits that included self-management training, environmental controls, and tracked medications.

Kaiser had good results: Over four years, overall medical costs went up, but diabetic patients stayed steady at a cost of $4,000 more a year than average.

Medication adherence: a misunderstood care management technique

Part of care management is helping patients adhere to their medication schedules. Adherence can be particularly difficult for the elderly: In the United States, 40% of people over 65 take more than 5 medications a day8, which creates major adherence challenges as the number of medications, timing, and various doses can be confusing. In this example, design thinking was used to create a service to simplify medication dispensing for the elderly.

Many solutions have been presented to help people remember their medication. These solutions range from reminder apps on mobile phones to basic pillboxes labeled with the days of the week. Using empathy as part of the design thinking process, a study found that none of these solutions fully addressed the patients’ needs. Pillboxes still required too much organization by the patient, and reminder apps still required the patient to look for the pillbox and take the right pill – plus have the ability to use a smartphone.

Using design thinking to define a new process, the group came up with a service that delivers all of an individual’s prescriptions packaged into daily packs labeled with the time of day that the patient needs to take them. The packages can be separated so the patient can take a small set of pills with them as needed.

Finding care management talent

The decreasing pool of nursing talent in the United States is one barrier to care management, as nurses are often employed as the care managers in these programs. To overcome this challenge, CMOs should evaluate the care management capabilities of a wider network of global clinical professionals from countries such as the Philippines, South Africa, and Colombia.

Design thinking can help evaluate these new professionals as resources for care managing, health and wellness assessments, and other areas of care delivery.

The opportunity is to frame the right problem to identify for solution-building across the care continuum. The following are starting points to initiate an empathy based approach to end users in regards to current processes in care management across CM and DM programs:

  • What are the most effective speed to market programs under the ACA?
  • What does your care team do today to engage members to enroll and participate in care management programs?
  • What is the role of population health management in improving outcomes and reducing health care spend?
  • Are care managers aware of the impact and value their work has on improving member outcomes and reducing costs?
  • What are the redundancies or inefficiencies across different programs?
  • Are outcomes linked quality metrics for revenue optimization?

Design thinking and revenue optimization

Most health plans use measurements such as Medicare Advantage’s Star Rating to give scores to variables and decide which ones to improve. Because the Star Rating compares plans and distributes payment based on performance, CMOs are particularly focused on raising scores as part of revenue optimization. In this case, revenue optimization in health plans involves figuring out which variables are performing best, and which ones to tweak to increase the overall return on investment. For example, a CMO might take a look at all scored variables and decide to invest time and money improving the lower metrics. But upon careful consideration, investing less time and money to greatly improve the medium-ranked metrics might be more effective in optimizing revenue and raising the overall health plan score.

Using design thinking in revenue optimization usually includes a diverse group of stakeholders coming together to consider care performance, member satisfaction, analytics, and reporting. The CMO should consider consulting clinicians in addition to financial and executive associates. This diverse participation will reduce the typical siloed approach. Because the revenue optimization issues affect the organization as a whole, it makes sense to give these disparate groups the opportunity to work across functional lines to define issues and discuss possible solutions. Design thinking allows each stakeholder group to submit their own revenue optimization viewpoints and discuss how to develop the solution prototypes for the entire organization.

Once the team is assembled, there are several different strategies that health plan CMOs can use to optimize revenue. They include retaining and growing membership, and managing performance-based payments by assessing quality outcomes. It is just as important to understand the health plan member population and their unique care requirements.

Design thinking can be used to understand the health plan member and view each one as an investment to be optimized. In addition to the care management techniques discussed above, optimizing member-level revenue involves thorough health risk assessments, continued vigilance for health status changes, and a focus on member satisfaction and retention.

Navigating HEDIS

In addition to the Medicare Star Rating, health plans often use The Healthcare Effectiveness Data and Information Set (HEDIS) to measure and report their performance. HEDIS offers insight into many different types of data, but one that can benefit through design thinking is gap identification. “Gaps” are disparities in healthcare amongst different groups of members, and reducing those gaps typically focuses on improving health plan engagement for racial, ethnic, or linguistic minorities.

CMOs can reduce gaps by using empathy to discover the clinical needs of a member and come up with processes to help improve that member’s health status. Working with the care coordinators inside the health plan organization, the CMO can ideate, prototype and test broader identification tools for gap documentation and opportunities to engage the member. Typically a full medical record review is done to close the gap, which can reveal additional metrics to avoid future gaps.

Quality measurement and optimizing the new system

As healthcare moves towards a value- based reimbursement system, CMOs are instituting quality metrics to complete the required reporting on their plan.

Recently, the Centers for Medicare and Medicaid Services (CMS), commercial plans, purchasers, physician and other care provider organizations, and consumers worked together through the Core Quality Measure Collaborative to identify a core set of quality measures that payers have committed to using for reporting. While 2016 is a transition year, the Core Sets will be applicable next year to minimize redundancy and reporting errors in health plans and regulatory entities.

For many health plans, the data required for metric reporting resides in their claims systems, member records, immunization registries, and other systems. For Medicare Advantage programs, participation in these quality metrics is applicable to their Stars rating. For all plans, compliance with the Core Sets requires significant numbers of specialized personnel to obtain, review, analyze, and report the results.

Because this new measurement system affects reimbursement, it is a revenue optimization challenge for the CMO. It is important for the CMO to understand where the reportable data initially enters the plan’s system, so the original research phase should include those individuals who gather and manage that data. It is critical that any solutions arrived at through design thinking facilitate this data capture and integrity. It is also important that the CMO addresses the question of how to ensure reportable data is easily accessible for analysis and review. Design thinking solutions applied to the overall quality reporting process should support both the dissemination of reporting results as well as solutions realized to improve the process of data entry and access.

A new way of improving healthcare

Design thinking helps CMOs completely retool organizational processes that are ineffective or will become obsolete with new healthcare changes. The method replaces traditional health plan management tactics with creative and innovative problem-solving and long-range planning. Traditional strategic planning may no longer meet the requirements for today’s rapidly-changing healthcare environment, especially one in which reimbursement hinges on value-based metrics. Design thinking offers CMOs a new tool to solve care management and revenue optimization problems, and helps them generate solutions that benefit both the end users and the health plan.


  1. Healthcare, Volume 4, Issue 1, Pages 11-14 Jess P. Roberts, Thomas R. Fisher, Matthew J. Trowbridge, Christine Bent
  2. “Mayo Clinic: Design Thinking in Healthcare.” Yale School of Management.
  3. Mayo Clinic Center for Innovation website
  5. Sipkoff, Martin. “Health Plans Begin to Address Chronic Care Management.” Managed Care. December 2003
  6. “Benefits of Managed Care.” CVS Health.
  7. Sipkoff   2003.
  8. Weintraub, Rebecca and Jose Colucci Jr. “Design Thinking Can Help Improve Care for the Elderly.” Harvard Business Journal.

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