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Capital BlueCross board chairman talks changes, challenges

Lehr succeeded by St. Hilaire as company CEO

William Lehr Jr. remains chairman of Capital BlueCross, a position he's held since 2004. Photo/Submitted

Nearly four years after taking on the role of acting CEO, Capital BlueCross board Chairman William Lehr Jr. has stepped aside to usher in a new era of leadership at the Susquehanna Township-based health insurance company.

Effective July 1, company President Gary St. Hilaire assumed the title of chief executive.

Lehr, 72, who held the three top positions after the 2008 resignation of Anita Smith, announced his retirement as CEO in March. He remains chairman of the company, a position he’s held since 2004.

Before working for Capital, Lehr was senior vice president, secretary and treasurer of The Hershey Co., where he worked for 28 years. He also was the lead director of the publicly traded Hersha Hospitality Trust, which has offices in Philadelphia and Harrisburg.

Under Lehr’s leadership, the insurer has introduced its Better Health Works program, MyCare Advisor, patient-centered medical home pilots, accountable care arrangements and other quality care initiatives such as consumer-directed health plans and value-based benefits.

Collaboration has been a company priority because of changes in the marketplace, Lehr said.

And Lehr has stressed increased communication and has remained engaged with employees at all levels, resulting in better products and services, said David Skerpon, a company spokesman.

The Lebanon County resident remains active in several nonprofit organizations, including Americans for the Arts and the Harrisburg Symphony Association. He also enjoys traveling.

Lehr sat down June 28 with the Business Journal to discuss the transition and challenges the health care industry faces, including ongoing reforms tied to the Patient Protection and Affordable Care Act, or PPACA, signed into law in March 2010.

Q: How has this role compared to your past leadership roles with other companies? What drew you here to this company?

A: I had never been the CEO at any of those other companies. I had high management positions at Hershey Foods. The rest has really been board work and chairing lots of different organizations.

It really is different when you have to be the CEO, where you are working with every single constituency in the company, starting with the board and working on down through the organization.

I was on the board and had been on the board for a long time. When the former CEO left, we needed to have leadership in place. A number of us from the board — Ron Drnevich, who had been on the board a number of years and been chairman and CEO of Gannett Fleming — he and I as well as Jim Mead, the former CEO here, came as a trio, so to speak, to keep the ship stable and to look for a new CEO.

As that process developed, those of us who were on the board said, ‘Hey, we can make some progress here.’ While we continued to look for a new CEO, we got into it enough and said, ‘We don’t have to hurry. We can develop the talent and make sure the talent that’s in-house, if it can rise to the top and take over the CEO duties, that would be the most ideal situation.’ That’s what indeed happened.

Gary St. Hilaire came through that process and is going to be a great leader here for us going forward.

What would you say have been some of the company’s biggest highlights during your tenure as CEO?

One, we’ve had an incredible recession in this country. And two, we’ve got massive changes going on in the world of health care, not the least of which is the health care reform federal act, the PPACA.

Trying to navigate a company through all those of shoals, if you will — and I think we’ve come through it successfully — I think we’re very, very strong and incredibly strong financially.

I think we are understanding where the health care reform is going with respect to the federal government, now that it’s been settled. We’ve tried to be a leader in terms of educating the community and our customers as to what the law requires.

There are certain aspects of what the law doesn’t touch in terms of things that need to be changed in the health care system — in particular is the cost side. The act is very, very good at driving more access to health care for folks who previously didn’t have it. The act doesn’t directly address some of the cost aspects, so we’ve spent a lot of time trying to figure out ways of approaching the whole system.

In this fast-paced marketplace, what do you believe will be the biggest challenges health insurers will face in the year ahead, or next two or three years, and why?

In general, (health care reform) is such an overwhelmingly complex issue for the country. We’re talking 18 percent of the whole economy. We’ve got a law that’s some 2,700 pages and regulations that come out in the hundreds of pages. There are a lot of aspects that haven’t been addressed yet regulatorily.

So the challenge for everybody in the system is how to react appropriately (and) quickly enough to the regulatory scheme that is going to be coming down the pike, in addition to what is already there.

Why is collaboration even more important now? Are there any drawbacks to accountable care arrangements?

There has got to be a different approach here, because things have spiraled to a point that it’s not working really well for anybody.

(ACAs) are brand new. You never know what you are going to get. But when you’ve got smart people working on things as long as we have and (they are) working with other smart people, you do your best. In a partnership, which this is, (there has to be) a willingness on both sides to improve whatever has been happening. The idea is to continue to improve

It’s not a short-term fix. These are three-year relationships, five-year relationships and presumably well beyond.

How is the role of chairman different from that of the CEO? What are your primary responsibilities and do the two positions work in concert?

The chairman’s role is primarily a governance role, coordinating work of the board. The CEO really has the laboring role and is more of the central person managing the company.

In terms of how they relate, the CEO reports to the board and the board, in turn, has responsibility for the oversight of the management.

And so there is a close relationship, but they are clearly different roles. The day-to-day operations and management belong to the CEO. And the overall fiduciary responsibility for the organization belongs to the CEO, but (he or she reports) to the whole board.

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