Highmark Dreams of Growth Beyond Insurance

The largest health plan provider in Pennsylvania is exploring opportunities to diversify beyond the insurance market. Its latest innovation is a retail concept for consumers with sleep disorders.

One of the largest Blue Cross Blue Shield-affiliates in the country is seeking growth opportunities outside its core health plan business line.

Pittsburgh-based Highmark Inc. offers health insurance products that provide coverage for 5.2 million lives in Delaware, Pennsylvania, and West Virginia. But the Business Innovation and Development department Highmark created three years ago is thinking outside the BCBS box.

"Our fundamental purpose is to develop new products and services that meet a consumer need and drive growth for the company," says Paul Puopolo, VP of business innovation and development for Highmark. "We are not looking at insurance. We are an innovation group, with a heavy emphasis on going to market."

Puopolo's innovation and development crew has helped launch two new Highmark business lines. "Our group has only been in existence for three years," he says. "Two new businesses in three years is a pretty good rate."

The first was CaregiverHQ, a home-based caregiver support service that the company started marketing in April. Individual consumers pay a subscription fee for the service, which includes emotional support and stress management strategies for friends and family members who are serving as caregivers.

The second is set to launch next month, with the opening of a REMWorks Sleep Store retail business in Homestead, PA. It seeking to fill an unmet market niche, says Amy Phillips, director of the new business. "There are nearly 80 million people in the United States who have sleep disorders of one kind or another."

The Sleep Store will be staffed with three respiratory therapists, a nurse, and a polysomnographic technologist. Rather than conducting overnight sleep studies, a questionnaire will be used to "[identify] whether the level of your sleepiness during the day is normal," she says.

The Sleep Store will offer counseling and sell durable medical equipment that requires a doctor's prescription. Market differentiators of the Sleep Store include a direct-to-consumer business model and "an environment that is not focused on disease," she said. "It will be a soothing environment; you won't see tubes when you walk in the door."

Puopolo says development of the Sleep Store followed a four-step process that Highmark has adopted for growth opportunities: intake, conceptualization, business case formation and commercialization. "It came in as an idea because of the market," he said. "We met with consumers, and we saw there was a gap."

The development process for the Sleep Store has taken about two years, Phillips said. "Once we put the business case together, we had to go through Highmark for approval," she said.

Highmark is poised to develop retail business lines because of the company's experience with Highmark Direct, nearly a dozen brick-and-mortar sites in Pennsylvania that help individuals and families purchase health insurance products. "They blazed the trail," Puopolo said.

Highmark Direct's branded storefronts have given the company critically important institutional knowledge to succeed in retail ventures, he says. "We have people in this company who have experience now. It's not a heavy lift. If you don't have that experience, it could be daunting."

Highmark is dreaming big for the Sleep Store.

"We want to see this one be successful and get off the ground," Puopolo said of the Homestead location. "We're taking it one step at a time, but it could be national. We have a lot of other Blue plans we work with."