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Context for Action
Compelling Stats Set the Stage
• Health spending 14.1% of GNP in 2002; 17.7% in 2012
• Private health insurance spending = $500+ billion
• 50% jump in last 3 years in costs paid out-of-pocket
by workers for prescription drugs and doctor visits
• Direct consumer out-of-pocket = $200+ billion
• 25–40% rate hikes in small group and individual market
• Poor quality care costs $550 billion/year or
$1,700/employee
Context for Action
Compelling Stats Set the Stage
• 98% of the 6 million U.S. companies have fewer than
100 employees
• 60% of employers with fewer than 10 employees
have stopped offering health coverage
(38% of those with 10–49 employees)
• The number of uninsured Americans increased by
2.4 million 2001–2003
• Direct-to-consumer pharmaceutical advertising is
estimated at $3 billion
• 1.2 million Americans buy prescription drugs from
reimporters
Context for Action
Ripped from the Headlines
• UnitedHealthcare buys Golden Rule, then MAMSI
• “We’ve had enough” Workers strike over increases in
health costs
• HIAA and AAHP Merge
• Forecast 2004: No relief in sight for health insurance
premium increases
• Surgeons walk out at West Virginia hospitals
• CDHPs emerge: “We’re not in co-pay land anymore”
Context for Action
NEW FOUR-TIER CO-PAY
1. Generic
2. Formulary
3. Brand
4. Bus ticket to Canada!
Context for Action
Drill Down: Challenges Driving Change
• Skyrocketing premiums
• Changing population trends
• Cost shifting
• Business process outsourcing
• Industry consolidation
• Managed care backlash
• Technology advances
• Single payer system
• Struggling economy
• Erratic price competition
• Increasing uninsured
• Prescription drug crisis
• Price transparency
• Consumerism tipping point
Insurance 101
“It’s not the big that eat the small,
it’s the fast that eat the slow.”
— J. Jenning and L. Houghton
Competitive Reality
Regional Health Players
Mega Competitors
• Well-positioned to capture
market share
• Well-positioned to capture
market share
• Local presence, local
brand
• Multi-market presence,
mega-brand
• Local-based provider
contracts and loyalty
• Leverage-based provider
contracts
• Agility to embrace change
and move quickly
• Deep pockets to invest in
change
• Small employers,
individuals and seniors
are prime growth targets
• Small employers,
individuals and seniors
are prime growth targets
In a Consumer-Centric World
CDHP Tipping Point
• Regardless of size, payers jumping in—quickly
• Benefit consultants making big bets on CDHP
• Barriers to entry broken down with technology and
partner availability
• Products reflect consumer decision making
• Point of Enrollment – benefit risk and reward
• Point of Care – price and quality transparency
CDHP: Fad or Trend?
“There’s no reason anyone would want
a computer in their home.”
— Ken Olson, Chairman, Digital Equipment Corp., 1977
“I think the world market may be five
computers.”
— Thomas Watson, Chairman, IBM, 1943
“This anti-trust thing will blow over.”
— Bill Gates, Chairman, Microsoft, 1995
In a Consumer-Centric World
Customers
• Need to be motivated to voluntarily make
economical, logical choices about services
they want and their willingness to pay
• Old Way – unmotivated, isolated consumers with no
information, co-pay mentality and managed care
restrictions
• New Way – engaged, accountable customers with
price/quality information, benefit choices and rewards
for shopping
In a Consumer-Centric World
Payers
• Need to recognize that health insurance
no longer sells itself
• Topline Growth means an investment in market
intelligence, lead generation and marketing ROI
• Customer Satisfaction means practical, educationbased consumer communication and continuous
after-sale selling
Market Reality
“Buy-Knowing is when a buyer already knows
what they need to know.
Buy-Learning is when a buyer needs to acquire
knowledge and weigh alternatives.
A new approach is required for Buy-Learning.”
— Kevin Davis
New business models . New marketing tactics . New partnerships
Payer
Employer
Employee
Provider
Prepare for the Future
Payers
Winners v. Losers: Run With The Pack Strategy
• Financial stability
• Tightly integrated, consistent operations
• Superior customer service
• Current technology platform
Prepare for the Future
Payers
Winners v. Losers: Breakout Strategy
• Product differentiation
• Unique selling proposition
• Expectation setting
• Preemptive customer experience
• Baseline communications
• Rules of Engagement
• Continuous education
• Frequent customer touches
Prepare for the Future
Employers
Treat health care like other business decisions
• Promote change through choice
• Educate employees
• Measure and demonstrate results
Prepare for the Future
Employees
Renew healthcare accountability, knowledge and engagement
• Recognize true cost of care
• Willing buy-in vs. force-in
• Understand differences among
providers
Prepare for the Future
Providers
Move from managing insurer to managing customer
• Get ready for knowledgeable patients
• Prepare for different flow of money
• Make performance indicators
available
Driving
Growth Through Marketing
2121
• Topline growth
• Support and accelerate profitable sales revenue
• Marketing assessment
• Evaluate effectiveness of strategic and tactical plans
• Competitive positioning
• Guide internal and external communications
• Brand architecture
• Influence customer preference and boost valuation
• Integrated execution
• Provide full-service marketing and creative solutions
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