A strategic approach to solving the retention puzzle for health plans

1. Retaining Members in the
Digital Era
A strategic approach to solving the retention puzzle
for Health Plans!!

2. 2
Executive Summary
How do we address this?
We propose an end to end approach
and evaluate the People, Process and
Technology dimensions across the
Organization. The health plan should
focus on every customer touch point
across the lifecycle, to understand
what motivates the customer to leave
and how we can address these
drivers.
Overview
Two thirds covered under ACA (around
4.5 million) are expected to change
plans in 2015 based on a survey1.
While most customers are satisfied
with their coverage, they would still
shop around for better plans.
A 200,000-member plan with a $120
monthly premium and 8 percent
annual disenrollment loses $24 million
in revenue each year. With such an
impact on the top line, health plans
are shifting focus to customer
retention by implementing retention
programs.
Why retention programs fail?
Payers have started investing heavily in
analytics solutions and other
technologies, but they still face
challenges in addressing the key
drivers of attrition.
The focus has been on processing large
data sets and deriving insights, but not
on how these insights can be put into
action.
Most of the existing solutions use
analytics to identify customers
propensity to churn, when they should
be identifying the root of the problem
and how these customer can be
retained.

3. 3
Expect a whopping 4.5 million
looking elsewhere!!

4. 4
Overview
The healthcare reforms have fundamentally changed the insurance
market. With changing healthcare landscape and maturing
customer demand, the non-agile will be weeded out of the system
with alacrity. Price is slowly becoming less important and the
customer today needs a reason to stay. Lack of access, long waiting
time, claims management and bad customer experiences will no
longer be tolerated and customers are more than willing to change
plans (see sidebar for example).
With the emergence of exchanges, porting plans have never been
easier and even the members who are completely satisfied with
their health plans, would shop around for better products and
alternatives. In fact 2 in 3 members covered under the ACA are
expected to change plans in 2015 based on a survey1.
Highmark recently lost
150,000 members to
competitors who were
concerned about keeping
discounted access to the
UPMC's huge network2

5. 5
What are payer challenges?
Health plans are struggling and
slowly moving towards an inflection
point due to numerous
unprecedented market challenges:
Falling Profitability
With an annual turnover rate of
40%3, healthcare payers are
experiencing unprecedented
decrease in profitability. A 200,000-
member plan with a $120 monthly
premium and 8 percent annual
disenrollment loses $24 million in
revenue each year, according to The
Bayer Corporation Guide
With newer market
challenges, Customer
Retention is paramount if
Payers want to emerge as
winners
Competition
Emerging disruptors like Oscar and
HealthLoop are disrupting the
conventional market and are
competing on customer experience
rather than price. With the emergence
of exchanges, porting plans have
become easier and simpler.
Maturing Customer Expectations
With pricing taking a back seat,
exceeding customer expectations is
the order of the day. With industries
like retail and banking way ahead in
providing a WOW experience,
customers have similar expectations
from health plans. Most customers
today expect the smooth, fast, secure
and individualized services of a bank.
Healthcare has no option but to follow.

6. 6
How are Health Plans reacting?
Customer retention has always been a
concern in every service industry and
healthcare is no different. Many health
plans have attempted to improve their
retention rates but, have met with
limited success. Customer retention
rates are less than 30% in many
instances4.
Customer retention rates
are less than 30% in many
instances even after health
plans have implemented
retention programs
Why are Health Plans failing?
Our analysis of payers of different sizes
has enabled us to identify the key
reasons for the failures of customer
retention programs :
 Payers don’t understand the root
cause of churn
 Payers have limited understanding
of market flows and customer
segmentation to perform effective
retention management
 Payers are performing marketing
and risks functions in silos and
there is limited cohesion between
the various departments within
the organization
 Health plans lack analytical
capabilities and sometime even
the data for effective analysis
 Plans use complex analytics
programs to process data but
are not converting the insights
into actions

7. 7
Key Drivers of Attrition
We performed a detailed analysis of
the healthcare payers across various
customer touch points and found that
myriad of factors leads to attrition. As
discussed earlier, some of the
customers leave because of multiple
reasons rather than a single reason.
Each of the reasons may be
insignificant, but multiple small ones
often cumulatively frustrate the
customer and cause the customer to
port to a better plan. Thus, the success
of a payer will depend on how
effectively the payer can identify the
key drivers of attrition.
We have identified the following key
drivers of member churn:
Organization Value
Proposition
 The organization value propositions do not meet the customer’s
changing needs
Product Design and
Premiums
 The factors for increasing the premiums over the years are
opaque
 Products are generic and not developed with the consumer in
mind
Ineffective Incentives
 Incentives are focused on the ‘bottom line’ when it should be
ideally targeted to the customer preferences
Limited Focus on End
Customers
 Focus is on the intermediaries and employer groups rather than
the individuals who are the end customers
Customer
Services
 Customer’s bad experiences in customer call centers, bill
payments can lead to attrition
Organization Culture
 Cost cutting on member satisfaction and bulking up sales does
not help in the long run
 No ownership for retention activities
Economic
Outlook
 An economic downturn can reduce the affordability of the
products leading to consumers moving to inexpensive plans

8. 8
Customer churn is not the result of
a onetime event; It is a “snow ball”
effect of multiple bad experiences
across various touch points
A detailed understanding of the customer journey
along with the experience of the customer at each
touch point in the journey is key to understand the
drivers of attrition. Though the frustrations of the
customer may look benign, multiple instances like
these lead to an inflection point and the customer
ends up porting to a different plan (see Figure 1).
Solving the Retention puzzle – Our Mantra

9. 9
Figure 1: John’s journey with a Payer
Enroll
Manage
Benefits
• Why are products so complex?
• How do I find the products that
suit my needs?
• The products do not cover my
needs?
• There are others health plans
offering better products at
cheaper price
• Why is it so difficult to find the
information that I need?
• How can I update outdated
information?
• Why can’t my plan provide
better mobile facilities?
• Many time I don’t even get my
explanation of benefits. Why
can’t I get it online?
• Why is the explanation of
benefits so complex?
• Why does not my plan offer
me personalized wellness
programs and provide me with
a coach?
• Why can’t I see my progress
towards my wellness goals
• The plan only offers rewards
which I’m least interested in
• The doctors recommended by
my friends and family are not
in the network?
• Why can’t I set up an
appointment through my
phone?
• None of the specialist
providers have any
appointment in the near future
• Why do I have to wait so much
and press so many buttons to
reach an agent?
• Why are the agents so rude
and unhelpful?
• Why do I have to repeat my
info so many times to different
agents to fix one issue?
Visit Doctor
Claims
Status
Customer
Service
Loyalty/
Wellness
Never
Again!!

10. 10
Customer retention cannot be
achieved by working in silos; It
takes the focus of the entire
organization
In order to implement a successful customer
retention program, there should be an organization
wide initiative. All the departments interacting with
customers at various points of the journey should
work together. The initiative should be driven by
the executive leadership with a well defined
governance structure with representation from
across business functions.
Solving the Retention puzzle – Our Mantra

11. 11
A WOW Experience
“To WOW, you must
differentiate yourself, which
means do something a little
unconventional and
innovative. You must do
something that’s above and
beyond what’s expected. And
whatever you do must have
an emotional impact on the
receiver.”
Tony Hsieh, CEO Zappos 5
Healthcare has always been Business
to Business and the focus was on large
employer market. The health plans
never built a lasting relationships with
the end consumers and never really
understood what they really wanted.
With the rise of consumerism, the
focus has shifted to individuals and the
healthcare payer market is being
disrupted by players like Oscar who
rely on digital technologies to embrace
the mantra of consumer centricity and
focus on user experience, customer
service and innovative care options
delivering a WOW experience to
customer.
Health plans who fail to innovate and
focus on customer experience are
expected to lose their relevance in the
changing healthcare landscape and will
become obsolete.
As discussed earlier, to provide a WOW
experience, selective focus on the
touch points will not suffice. But a
focused end to end transformation of
all the touch points in the customer
journey is the need of the hour (see
Figure 3). The change process is
complex but will ensure that the plans
are fit for future.

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Figure 3: Illustrative WOW Experience
Enroll
Manage
Benefits
• Products designed based on
the voice of the customer and
customer segments
• Cost effective products for
customers and on par with
market needs and competitor
offerings
• Seamless multi channel
enrollment /signup in minutes
• Easy to use portals and call
centers, price estimators, free
generic drugs, free x visits to
doctors
• Multiple options to access
benefits – websites, phones,
sms
• Multiple channels to check
claims status and submit out of
network claims through mobile
• Low turnaround time on
appeals or claim payments,
personalized health timeline
• Easy to understand
explanation of benefits
• Personalized and proactive
engagements with the
members, fitness rewards
• Personalized health coaches
• Identify trends in digital and
provide members with smart
devices like fitbit
• Networks preferred by the
customer
• Low waiting times, quick
appointments
• Low out of pocket costs
• Support for tele-health and
tele-visits
• Easy to reach customer service
and automatic routing to
representatives, Low waiting
time
• Access through multiple
channels and based on
customer preference
Visit Doctor
Claims
Status
Customer
Service
Loyalty/
Wellness
WOW !!

13. 13
Moving Forward
Managing customer attrition is not a
one time silver bullet but is a
continuous process requiring focused
effort across the organization. There
should be ongoing focused efforts
across the various touch points in the
customer journey to identify what are
the customer pain points. The
feedback acquired after the customer
exits has immense scope for providing
insights but is retrospective!! Thus,
these processes should be well
developed and the feedback loop fully
designed and integrated into the
organization to rectify issues before
hand.
Benchmark your organization to identify areas
of improvement
If you can’t identify it, you can’t improve it… We believe that assessing
your organization will be the first step in building a strong customer
retention program. Benchmarking your existing capabilities with best in
class capabilities will help you in understanding how your competitors
fare and gain an understanding of what your strengths and weaknesses
are.
1
We recommend the payers to adopt a three pronged strategy to reduce
its customer attrition and to build a strong customer retention program:

14. 14
Make customer retention one of the top priorities in the organization
Imbibe a culture of customer retention across the organization. A top down approach using a well defined
governance structure would be ideal. To ensure that this vision is sustained, include customer retention metrics in
your SLAs and also in the performance evaluation of your employees. And finally ensure that all your employees are
empowered to serve the customer in the most effective manner and are not penalized for providing the best
customer experience.
2
3Invest in analytics and adopt agile processes to refine the model
Invest in the right technology and the right partner to do more than identifying customers who are expected to
churn. With analytics moving from predictive to prescriptive models, payers are now more empowered to analyze
the data and come up with insights to identify the best action to retain the right customers. It is not enough to
focus on data and insights, the highlight should always be on converting these insights into effective actions. From
all the insights gained from analytics, perform an end to end transformation on the customer touch points to
enhance the customer experience.

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End Notes
1 Two-thirds Of Insured Via Obamacare Will Change Plans In 2015 (http://www.radius-global.com/about/news-
releases/two-thirds-change-healthcare-plan)
2 Highmark loses subscribers in possible fallout from UPMC fight (http://triblive.com/business/headlines/7707881-
74/highmark-company-percent)
3 PWC Experience Radar 2012 - Consumer insights for the US healthcare payer industry
(https://www.pwc.com/us/en/advisory/customer-impact/assets/pwc-experience-radar-healthcare-payer.pdf)
4 Curing Customer Churn (http://www.pwc.com/us/en/increasing-it-effectiveness/assets/curing-customer-
churn.pdf)
5 Delivering Happiness: A Path to Profits, Passion and Purpose by Tony Hsieh

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About the Authors
Kevin Mathew John
Kevin has completed his post graduate program in management from the Indian School of Business. He has a total experience of 7 years
with experience in PMO, business analysis, digital strategy and operational improvement.
https://www.linkedin.com/in/kevinmathewjohn
Bhargava GH
Bhargava is a Healthcare IT Professional with a rich experience of 16 years in the Payer & PBM domains with a total industry experience
of over 18 years. He has extensive experience in supporting large IT applications for Fortune 50 clients in the Payer & PBM space.
https://www.linkedin.com/in/bhargavahukunda