January 2025 marks a transformative chapter for Blue Shield of California, one of the state’s largest healthcare insurers. With a bold restructuring plan and historic leadership changes, the organization is setting a course for innovation, efficiency, and growth in a rapidly evolving healthcare landscape.
A New Corporate Structure to Streamline Operations
To enhance efficiency and better serve its nearly six million members, Blue Shield has introduced a new parent company, Ascendiun. This overarching entity will oversee not only Blue Shield’s insurance operations but also its managed Medicaid subsidiary and the clinical services firm Altais. Additionally, Ascendiun includes a newly launched division, Stellarus, which will focus on scaling and marketing Blue Shield’s pharmacy and technology solutions to other insurers.
The aim of this restructuring is to reduce bureaucracy and deliver more seamless services to members. Kristina Leslie, chair of Blue Shield’s board, emphasized the company’s commitment to cutting red tape while ensuring members benefit from streamlined and effective operations. Stellarus, though still in its early stages, has the potential to become a significant player in offering innovative solutions to external clients in the future.
Historic Leadership Change: Lois Quam Named CEO
At the forefront of this transformation is Lois Quam, the first woman to assume the role of CEO in Blue Shield’s 86-year history. With an impressive career spanning public and private healthcare sectors, Quam is uniquely positioned to lead the organization through its next chapter. Her background includes leadership roles at UnitedHealth Group, the U.S. State Department during the Obama administration, and nonprofit organizations focused on health and environmental initiatives.
Quam succeeds Paul Markovich, who has served as CEO for over a decade and will now transition to president of Ascendiun. Markovich will also temporarily lead Stellarus, ensuring a smooth launch and alignment with the company’s strategic vision.
Innovative Strategies to Reduce Healthcare Costs
Blue Shield’s restructuring coincides with its ongoing efforts to tackle rising drug costs—a significant concern for employers, employees, and payers alike. The organization has adopted unconventional strategies to address these challenges, including breaking ties with traditional pharmacy benefit managers (PBMs).
In 2023, Blue Shield replaced CVS Caremark, one of the largest PBMs in the country, with a more diversified approach. The company now collaborates with five different entities, including Amazon Pharmacy and Mark Cuban Cost Plus Drug Company. This strategic move, available to clients starting in 2025, is projected to save an impressive $500 million annually.
Additionally, Blue Shield has shown a willingness to negotiate directly with drug manufacturers. For example, the company recently struck a deal with a German subsidiary of Fresenius for a biosimilar to Humira, a widely used treatment for inflammatory conditions. Such initiatives not only reduce costs but also challenge the traditional pharmaceutical supply chain dominated by PBMs.
What’s Next for Stellarus?
While Stellarus is initially focused on improving internal programs, its long-term vision involves marketing pharmacy and technology solutions to other insurers. This move positions Blue Shield to expand its footprint beyond California and diversify its revenue streams. However, the timeline for Stellarus’ external offerings remains uncertain, as the division prioritizes strengthening internal operations.
A Broader Trend in Restructuring Among Insurers
Blue Shield’s reorganization reflects a broader trend among nonprofit Blue Cross and Blue Shield plans nationwide. These entities are increasingly restructuring to remain competitive with well-funded, for-profit insurers. For instance, in 2023, Blue Cross and Blue Shield of North Carolina received legislative approval to create a parent company structure, sparking discussions about transparency and governance in nonprofit healthcare.
A Vision for the Future
As Lois Quam takes the helm, Blue Shield’s commitment to innovation, efficiency, and cost-saving measures is clear. With significant changes to its corporate structure and a focus on tackling some of the industry’s toughest challenges, the organization is well-positioned to deliver greater value to members while reshaping the healthcare landscape.
For more details on these changes and Blue Shield’s future plans.