Pat Hughes, 64, joined Fallon Community Health Plan as senior vice president in 2007 and was named to the top job at the Worcester-based health insurer in February 2010. Since then, he has worked to expand nonprofit Fallon’s business at a time of increased state regulatory oversight and sweeping changes in health care. In an earlier career, Hughes played 10 years as a linebacker in the National Football League. He spoke with Globe reporter Robert Weisman on a sweltering day last week.
Fallon chief tackles tough market
ON THE HOT SEAT
How tough is it to run a health insurer in the current environment?
How tough would it be to be a snowball on pavement outside today? It’s difficult. But I think there are opportunities if you push an agenda of change. Change is inevitable, and we need to be a part of it as opposed to a victim of it.
What’s the hardest challenge - gauging risk, negotiating with providers, dealing with state regulators, or bracing for federal health care changes?
Is it fair to say all of the above? For us, in the past, we have had difficulty with our underwriting risk and the ability to effectively price the product. I think we have put those issues behind us. We have been profitable now for four consecutive quarters.
Fallon is the smallest of the state’s commercial health plans. What are you doing in the market that’s unique or creating growth opportunities?
Fallon is a jewel, in my mind. It has been innovative and creative in its marketplace for the last 30 years. When the health plan began back in the 1970s, it was operating under a global capitation payment for its business, long before any of that became popular.
In 2002, the health plan began to offer a limited network product, the first anywhere. And most recently we crafted a solution for the city of Worcester that narrowed a $7 million budget shortfall and saved in excess of 100 jobs.
Looking forward, will the health insurance business in Massachusetts be dominated by limited networks, where patients can only see certain doctors, and global payments, where providers are given annual budgets for patient care?
The marketplace requires choice. As limited networks provide additional choice, it’s important to have those. In terms of global payments, I don’t think one size fits all. There are those institutions that are ideally suited for it. There are those that over time can move from volume-based fee for service to more of a global capitated arrangement. And then there are other situations where you might want to stay with fee for service.
You have a strong market position in Central Massachusetts. Do you plan to expand more aggressively statewide?
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