Arcadian Health: Robert Fahlman, Chairman and CEO

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Arcadian Management Services was founded by Dr. John H. Austin in 1996 with the goal of providing high-quality, cost-effective back office administrative services to hospitals, physicians and medical groups. In 2005, Dr. Austin expanded the company to include a Medicare Advantage health plan which is available through state and locally-branded health plan options in 15 states. Dr. Austin was killed in an airplane accident in May of 2009. A proponent of bringing quality health-care to rural communities and an avid conservationist, Dr. Austin created a legacy that continues to flourish.

Rapid Growth and Employee Focus

Arcadian Management Services is a company that has seen enormous growth in the health plan business in a short amount of time. In December of 2008, when Robert Fahlman, Chairman and CEO, first arrived to work with Arcadian, the turnover rate was well over 30%. That number has dropped to 12%. “We believe it’s because we are  focused on the fact that our employees are the most important asset,” says Fahlman.

The company currently has 490 employees. One hundred of those have been added in 2009 alone. The 2009 revenue was t $460 million, the Arcadian plan involves topping a billion dollars in revenue within three years. “We’re bringing in people from all types of organizations and we want to assimilate them into the type of culture we recognize and reward,” says Fahlman. “These values include an environment of collaboration and team work, transparency and accountability.”

Every individual in the company has key metrics defined that they need to achieve. They are individually scored at the end of each quarter. “We’re very results focused, very results oriented,” says Fahlman. “We work with those who aren’t meeting or exceeding in results to see what the issues are and to find out what resources they need in order to meet or exceed their objectives.”

Fahlman has spent a lot of his time since coming to Arcadian focusing on the human resources side of things. “We’ve expanded in several departments in terms of people, we’ve created a process where we define the position we want and we’ve upgraded other positions within our company,” he says.

The company has developed questionnaires to make sure that new employees fit in culturally and they’ve developed training programs that get new employees off to a good start. “It’s difficult for people even in the healthcare business to remember all of our acronyms, so our programs are as basic as defining acronyms and, more importantly, what our business is, who are our customers, and what are the different internal processes and so on. Then we have a variety of training programs for employees on the career track and for employees that are on the development track.”

By career track, Fahlman considers employees who are very successful at what they do and will probably remain in those positions or positions of a similar type. Development candidates are employees Arcadian wants to develop for additional responsibilities down the road. The company is now in the process of adding management training programs to their slate of offerings.

Investments in Markets and Technology

Rapid growth does have a downside, however. “There are some areas, for instance product development, where we are under-invested, so we need to make those investments and get those areas shored up, get up to speed,” says Fahlman. “More importantly, how do we make sure we’re building ahead of the growth wave so that we’re scalable to a billion in revenue with over 100,000 members? This includes people, systems, operations, and marketing.”

In 2010, Arcadian moved into four new states. The primary way of reaching new markets is through distribution channels with brokers and agents. In select markets where the brokers don’t exist, Arcadian has its own sales force. They also have an internet presence where people can actually enroll at the website. The company is in the process of developing partnerships with online distributors.

“We’re investing it in a number of key areas, including our operations and infrastructure. We’ve got to make sure we’re scalable to a billion dollars in everything from systems to processes,” says Fahlman. “The biggest challenge we’ve had is how to manage our growth. We need to grow the top line while making sure we’re maintaining a modest bottom line. It’s a unique situation in today’s environment.”

Building a Scalable Company

Fahlman expects Arcadian to continue growing at a fairly rapid pace. His goal is to make sure everything is in place so that the company can successfully grow without leaving any aspect of operations behind. “We’re going to continue to grow and we’re going to have to scale with people as well,” says Fahlman. “Hopefully, technology and process improvements is going to bend the cost curve a little bit and at the same time we continue to professionalize the organization at all levels.”

Arcadian is making ongoing investments in marketing and sales, focused on getting our message out there. “We are also making investments in medical management, our clinical side of business,” says Fahlman. “Nursess, social workers, case workers, physicians, etc. We are going to continue to determine the best or leading practices in order to improve the quality of care and to improve the outcomes of healthcare for our members.”

“Our people have a real commitment to being here, a real desire to be here and to be successful,” says Fahlman. “We need to make sure that we can replicate that commitment as we scale the company to a billion dollars and beyond. We’re not striving for any awards here; we’re just heads-down in focus on serving our customers and growing our company.”

-by T.M. Simmons

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