607: Applying the Efficiency of Credit Cards to the Healthcare Industry with Raja Rajamannar

Thank you very much for having me, Chad. I appreciate it. I'm very impressed with how correctly you pronounced my name. I'm super impressed.

Thank you. Thank you. It's been a very productive and fulfilling journey so far. And I hope the future also holds some good excitement and things that I would like to accomplish. So let's see, man proposes, God disposes.

No, actually this has been a well thought out transition. So as of the 1st of January this year, I gave up my operating role of chief marketing and communications officer of Mastercard at the enterprise level and also the president of the healthcare business. This senior fellow role is essentially one of thought leadership. It's very strategic in nature. It's about rethinking not just for Mastercard but for the entire industry. What should marketing be about? How do we reinvent and reimagine marketing for the future on the one hand? Secondly, same thing on the healthcare. In a healthcare system, everyone talks about it as being broken not just in the United States but around the world. How do we make sure that we are going to solve the problems of the healthcare? So this is very strategic, a lot of thought leadership. And I also mentor a lot of senior folks from the industry not only from Mastercard but I do mentor several sitting CMOs of various large and small companies. So that's one thing. I also interact very closely with academic institutions and particularly Harvard Business School and Yale School of Management. I joined them as of 1st of January this year as an executive fellow in both the spaces, where I work very closely with their faculty and try to see how we can improve the teaching of marketing. How do we improve the curriculum at MBA programs and how do you actually impart knowledge for the future to the operating executives at various companies. So this is how sort of we're approaching it and it's going to be a pretty interesting journey, very exciting and highly stimulating. And also be a sounding board to my CEO and the board members at Mastercard. So if they want to ask about something, they say, 'Hey, we are trying to do this, what do you think about it?' These are some of the big bets that we want to take, what do you think about it? So I'll be weighing in appropriately and responding to them.

Yeah, the surprise was I thought that I'll have probably more time for myself. And that surprise, surprise, I'm as busy if not more compared to what I was doing before, except what is keeping me busy today is fairly different than what was keeping me busy till now. And I'm also in the process of writing my second book which is also very consuming. So it's again, it's deeply fulfilling and I'm trying to put my heart and soul into it and hopefully it'll turn out to be a great book. But that's another thing which I'm sort of spending time on and I work on a few boards and it keeps me extremely busy. And I thought the time that I'll have for myself is not to be.

Before joining Mastercard, I was in the healthcare industry. So I was there with two insurance companies, health insurance companies, Humana and WellPoint. So WellPoint is now called Elevance Health. So I was actually at both these companies and I understood the healthcare business from the payers perspective, from the insurance companies perspective. And also along the way, after I left the healthcare industry and came to Mastercard, I also joined Bon Secours Mercy Health which is a not-for-profit Catholic organization and it's one of the largest Catholic health systems in the world and they have operations here in the US, in Ireland and in the Philippines. So that gave me unique insights into how the providers ecosystem looks like. The hospitals, the doctors, the ambulatory services and the devices and so on. So I saw a fantastic opportunity based on my experience and insights into the healthcare system from two different perspectives, from the providers and from the payers. And of course I've been a patient and my family members as patients, as consumers, I saw what are the horrors of the healthcare system here. So I said we need to solve it. Now the beauty is there are dramatic similarities between for example credit card business and healthcare business and I'll tell you how. So in credit cards what happens? You first apply to your bank to get approved for a credit card. They give you a limit and then you start using the card. So for example you go from here to Jakarta in Indonesia. So in Jakarta you go to your shop and then you tap your card or swipe your card. The signal from that magstripe or from the chip card gets picked up from the terminal goes to the local bank, say Bank Bumi Putra. Bank Bumi Putra says, 'Hey, this is a Mastercard card,' so they relay it via satellite to St. Louis here. And in Mastercard St. Louis we say, 'Hey, this card belongs to for example Citibank,' and Citibank has their operating center in Sioux Falls. So it goes to Sioux Falls and then Mastercard at Citibank looks at the record of the individual, so yeah, this person, it looks genuine, transaction looks like he has got the credit card, the limit and everything is available. They say approve, comes back to St. Louis, goes to Jakarta, from there it goes to the shop and the shop says done. The transaction has come through, you can pick up your item and then go. This whole transaction takes less than 6 seconds. Now in credit cards you are first using the services and paying later when the bank bills you. Now you flip it around, in healthcare you first pay the health insurance company. Then they underwrite you what they call actuarial risk, medical risk for you. And then each time you go to your hospital or to your doctor you swipe your card or whatever the co-payment. The hospital submits the bill to the insurance company and the insurance company adjudicates and says this claim is passed, this claim is not passed, goes back and makes the payment after whatever is their service level agreement they have, typically 90 days. So that's when the doctor or the provider gets their payment. So it's just flipped. The dynamics are identical except credit cards are exceptionally efficient. And you have got healthcare system which is exceptionally broken. It's a disaster. Now just imagine if you go to your shop, say today you're going to say for example Walgreens. Now you don't call your bank and say, 'Hey, I'm going to Walgreens, can I use my card?' Right? The level of sophistication is much much higher. At the same time the level of complexity in healthcare industry is significantly higher. So there is a better place that we have to get to than where we are and things like fraud, abuse, wastage, all these are in credit cards too. And we have perfected detection of fraud like that. So for example if Raja has gone and made a transaction today in Dallas Texas, at the same time there is a transaction in Dubai in the UAE. The chances that I'm present both the places in a matter of few minutes difference is close to zero. So the credit card company flags it as a potential fraud. And then they say fraud early warning, they try to block that particular transaction to protect the consumer. Same thing happens in healthcare. So if I'm going to a doctor and the doctor says, say I've done a pregnancy test on Raja. Now you know clearly it is a fraudulent kind of a claim he's submitting. This is very obvious examples I'm giving but when you look into the details of this healthcare system there are so many sophisticated ways you can track fraud using the algorithms of credit cards, it's unbelievable and that's what we are trying to bring to the table. So we got HSA cards, FSA cards which are payments in the healthcare space and then you have also got fraud card marketing, you have got consumer engagement and so on. So we're trying to deploy the full range of services that are there in credit cards adapted to the healthcare industry.

So, this is a very important point that you make, right? Because it's not only being successful in the marketplace, but even getting the permission to play in this market from your CEO, from your board of directors. Because nobody wants to be encouraging an effort that strays so much away from your core business that the market starts questioning, have these guys lost focus and direction? Why are they now going all over the place instead of sticking to their core business? And this is not even an adjacency. It is quite a distance away from typical payments. So, the key thing is first, you have to give a sense of comfort to your board of directors that we have not lost the plot. We are taking the core capabilities, repurposing them with minimal investment, and tackling an aspect of the healthcare that is closest to our core business, in this case healthcare payments. So, we went therefore with HSA cards and FSA cards. You prove the value proposition there. You prove that this is a business that we can handle and successfully get results. So, having done that, then you go to the next layer. How do we detect fraud? And the next layer, how do you deploy rewards and consumer engagement, in this case patient engagement? How do you deploy data analytics in this case? How do you deploy cybersecurity that we see? Like for example, there is a statistic I have come across. So, on an average, a company like Mastercard is hit like 800 times every single minute in terms of cyber attacks around the clock, around the year. Which is humongous. So, we have learned a thing or two about cybersecurity. Now, when you go to healthcare industry, it's very fascinating that one-third of all the large data breaches in the entire system happens from healthcare system. One-third. It's a disaster because they are more vulnerable and they are less sophisticated in general. So, can we take our cybersecurity specialization here and offer services for the healthcare system where we can give them cybersecurity solutions and we are doing it. So, what you do is you're not creating something from zero. You're taking what is already there and thoughtfully go step-by-step, prove the value proposition, prove that you can get momentum, and then go to the next one. So, that is how we have been approaching this and the board has been very supportive.

Actually, it's pretty fascinating, right? The first question you get is, 'Mastercard and healthcare system? It doesn't sort of gel.' They say, 'What do you even do? What do you even know about healthcare system?' But then when you start explaining, suddenly the lights go up and they say, 'Ah, okay, fine, we get it.' But interestingly, what also happens is because Mastercard is outside of the system, it brings a level of brand credibility and neutrality to the entire equation. So, therefore people are willing to play with us.

So, one of the things, you are absolutely right. We have been experimenting with AI for more than 12 years now. And in my book, which I wrote in 2021, which got published in 2021, actually one of my prognosis of the artificial intelligence area, I said this is going to augment the human intelligence, human productivity, human creativity, and so on and so forth. And I said there is something which is a capability that will come up, without calling it generative AI at that time, I didn't have that term. I said we are going to have an artificial intelligence of a different type going into the future. Number one. So, this is something which I anticipated and I feel very validated that this has come about. Secondly, I see that this is probably the single biggest enablement for anybody across the board, whether it is a business, whether it's marketing or finance or to HR, or it is a small business or it is patients or everywhere across the board, right? Unbelievable level of enablement that has actually happened. Now, in the business context, I have started playing with it pretty early on. Probably in a month or so after generative AI solutions have been made available, which I've done board, and I have created for on behalf of Mastercard a solution, we call it RFP Factory. So, what happens is we have got about 60,000 banks who are our clients. And they renew every 3 years or 5 years for their contract with us. So, before they renew the contract or before we get on a new customer, they send an RFP. And it takes about 7 weeks for us to do a half-decent RFP. We call it draft zero of the RFP. And after the draft zero is done, which basically fills all the answers to the questions that are being asked in the RFP, and then we start constructing the deal, saying that what's the pricing, what the proposition that we are offering, services we are offering, and so on and incentives and so on. So, what I said is that can generative AI take away the drudgery and create the draft zero very rapidly. So, we trained the AI engine on every single RFP that Mastercard has done in the last 10 years. And we also provided it with the content, the latest and the best, which is constantly updated. So, it has got the plugins into our databases. And so, today if a bank is sending an RFP, it comes to us. We give it to the AI engine. This RFP Factory is what we called it. In less than 4 hours, we have draft zero available. 7 weeks to 4 hours. And the satisfaction level, because then what we do is we are still scared about hallucination and falsification of content or misrepresentation, whatever. We have a human oversight on top of it. So, after the AI gives us the RFP draft zero, our people go through it and then say, 'Yep, this all looks good.' So, by end of day one, we are done with the draft zero.

No, no, it's only with the AI generation.

That's exactly right. That's exactly right. So, we do exactly that. So, what we now do is that draft RFP, what we say draft zero RFP. So, we have got number one, internal customer satisfaction, which is our sales people, 95% plus. The quality is actually far superior than the ones which are made manually. The answers are sharper, more consistent with our brand tone, the content is the latest. And what it does is it looks at what's worked in the past, what did not work in the past as part of the training. So, it picks up all the winning elements, combines it, and then spews it out. So, this was our very first effort. We went into something called the marketing engine. So, this marketing engine is something which we created and developed and launched in Singapore. So, what it does is it looks at all the signals from social media and traditional media. And says, what is trending now? And what will trend tomorrow? And these trends are micro trends, which means the trend does not last for more than 3 days. We call it micro trend. So, we say that if you can give your message that is consistent with a micro trend and ride that micro trend as it is coming up, your media is cheap, number one. Your message is much more contextually appropriate and the output is going to be very very effective. So, this gen AI, I think what it does, first it analyzes everything in real time. It predicts what is going to be your next micro trend. Creates an ad for that micro trend. Based on the library of offerings that we have got, it looks at the library and say, this is probably the most appropriate thing that I should talk about in this particular micro trend conversation. Creates a communication around it. Buys the media. Puts it in. Measures the response. And by the end of the day tells me, is it working and how do we improve for tomorrow? Now, this is a game changer because the effectiveness has gone up something like four to eight times. So, we are not talking about percentages here, we talk about multiples. So, this is one kind of a thing. We have done things like what we call as a Mastercard Design Studio. So, if you are a bank, you want to issue a card. So, you are Citibank. So, you want to issue a card for youth. So, you brief your agency. Agency gives you after a few days designs. You like some designs, refine, come back, come to the final product, send to Mastercard for approval. Because your design has to be consistent with my branding guidelines. And they approve or decline. If I decline, you go back to square one. If I approve, you go ahead with it. So, we said this is a silly process. So, we have now a design engine where you as Citibank plug into my system. You say this is my audience. This is youth. This is what I'm trying to communicate. They give a small brief. It immediately gives them 20 designs which are pre-approved for brand consistency. They like something, you're done. So, what would take again multiple weeks is now a matter of few hours. Area by area by area. Look, on the creative side, it's been amazing for us.

So, the team comprises of three different types of people. Number one, my own team members, who are employees of Mastercard in different geographies. They may be within marketing, they may be outside of marketing. It doesn't matter. They're employees of Mastercard. Number two is my agency people. So, we have got agencies of record. Like we have got Omnicom and WPP and then we have got those agencies supporting us. And the third one is brand new companies, startups, who come and pitch to us with an idea. So, these are three different groups. So, internally we do what is called an innovation challenge. Where if you have an idea of how we can deploy a new solution or how we can create a new solution. We have a panel of my leadership team who would evaluate and then prioritize and take one or two or three at the most at any point in time of these initiatives. And they are funded. And the person who came up with the idea is the one who leads that project. So, there is a sense of ownership and pride of ownership. So, that's one.

It depends on how big the project is. The project is big, they move on. But they go back to their original job after the project is done. If it is a project, but if it is an ongoing kind of a thing, yeah, they move completely. Now, on the other hand, if this is a small project, say it takes about 6 weeks or 8 weeks or whatever. They sort of take a break from their regular role and then go back to that role. So, this is number one. Number two, for the agencies, they have competitions happening within the agencies in exactly the same way. They don't have to be people only working on Mastercard account. They can be from anywhere across IPG or Omnicom or whatever. So, they come up with their idea and every quarter we have a meeting with them. They say, 'Hey, here are 10 ideas we have got for you.' We may like something, we may not like anything. But then the ones which we like, we say, 'Let's commission.' And then we move forward with that. The third one is always this is something which I find is fantastic. A lot of people they come and pitch. They say, 'Hey, we got this new solution. We got this new concept. We got this new product.' Many times innovation happens much better outside large organizations than within organizations. Because in organizations you're busy with your day-to-day. Whereas those people outside who are startups etc., they do it for a living with passion and tremendous amount of focus and energy. So, when we partner with them, that becomes a phenomenal win for them because they're getting a brand like Mastercard and the scale of Mastercard. And for us, it is like quickly jump-starting and going to market pretty rapidly without having to go through the usual cycles of development and stuff like that. To do all this, we carve out a small percentage of our total budget. So, specifically for these innovation projects. So, I cannot tell you the exact percentage, but it'll be in high single digits of my total budget.