Predictive Analytics Case Study: Carol McCall, FSA, MAAA
Carol J. McCall did her first pension valuation at the age of nine.
She mapped out decrements for the Des Moines Teachers Retirement Plan on large green-bar paper, using colored highlighters.
Some may say McCall got an early start. Others may see her health actuary career as fated.
McCall followed her father into the profession, earning her degree in actuarial science from the University of Iowa. Initially, McCall worked in life insurance and annuities. But it wasn't until she transitioned to health insurance that she began her love affair with data, getting a taste of the possibilities from combining financial and diagnosis data.
This was also when she became obsessed with novel computational modeling and advanced analytics, which triggered what she calls a 'stoplight moment' that changed the course of her career.
McCall realized the healthcare system needed fundamentally different business models and actuaries could play a central role in that redesign. From that moment, McCall became fixated on applying nontraditional modeling and predictive methods in healthcare and vowed to bring them into her work.
Over time, this led her into other areas of healthcare including health plan operations, innovations in health services, start-ups, health economics and outcomes research, the psychology of motivation and behavior change, personalized medicine, national health policy, and big data analytics. But through it all, she never lost sight of her actuarial roots.
She experienced early success with advanced analytics when she led R&D in Humana's Innovation Center. It was her third stint at the company after previously serving as an actuary and later as Humana's VP of Pharmacy Management.
"Humana's new strategies were centered on consumerism and the Innovation Center was the company's investment in learning to think differently," McCall said. "Humana knew the Innovation Center needed people from outside the industry to be successful. And here I was, this interesting hybrid, because I knew a lot about the industry and the company, but I also had an outside perspective."
In her role, McCall led three teams - predictive analytics, health economics and outcomes research, and personalized medicine. The "river running through them" was that they all leveraged data. Her predictive analytics team eventually built a broad portfolio of models with some of them having a significant impact on Humana's top and bottom lines. The portfolio spanned a wide range of uses, with some that predicted costs and severity, while others predicted events - such as admissions and/or ER visits caused by severe adverse drug reactions. One model predicted which product people would choose when offered a wide range of price and benefit plan combinations.
This last one was launched in 2005, when McCall and her team partnered with the actuarial department to create SmartStart, game-changing predictive analytics software for Humana's consumer driven health plan product SmartSuite.
SmartStart had analytic models embedded in user-friendly software that predicted choice and set prices in real-time. Its real innovation was allowing the sales team to simulate different scenarios and dynamically price the offering while face-to-face with clients. As a result, not only did Humana sell more SmartSuite, it happened faster. And even better, Humana increased its margins, while saving employers money and giving consumers choice.
Since then, McCall has moved on to other companies and focused on new problems. Whether she's creating innovations in health services or launching big data analytics products, she credits her actuarial background.
After nearly three decades in healthcare, McCall describes her expertise as knowing how to leverage advanced analytics and big data technologies to design business models and services that expand the traditional notions of health, care, community and sustainability.
"My professional life has been animated by two passions. The first is data, including anything novel in terms of computational methods, and the second is design, particularly human-centered design and the psychology of behavior change," McCall said. "When I'm able to bring these together, it inspires new ways to see and solve problems, brings new insights for designing policies and business models, and opens new approaches to creating systems and services that fill unmet needs, promote health and reduce healthcare costs."
McCall thinks this is more important than ever, especially since The Affordable Care Act (ACA) created a comprehensive set of changes in U.S. healthcare and accelerated both the rate of reform and the level of uncertainty confronting the industry. Healthcare organizations have been working aggressively to adapt.
"It's bringing unprecedented challenges, threatening long-established sources of competitive advantage, ushering in waves of new entrants, and rewriting much of healthcare's underlying business model," McCall said.
"It's also driving unprecedented innovations. There's never been a better time to pursue creative solutions to complex health issues. I want to do things differently. Working to create more of the same just isn't in my DNA."