f o r i n t e r n a l u s e o n l y cigna: select segment analysis

F O R I N T E R N A L U S E O N L Y

Cigna: Select Segment Analysis


2Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel. © 2012 Cigna

Agenda

• Segment Overview

• Select Segment Strategy

• 5 Drivers of Select Segment

• Competition Overview

• External Factors



Overview of Cigna Select Segment

• Cigna Select - serving businesses with fewer than 250 employees1 - offers the full scope of health service solutions clients need to maintain their employees' health, well-being and sense of security. Working alongside its broker partners, Cigna Select leverages a long history and expertise in serving this unique segment, offering more choice in plan design, more funding options than its competitors and the strong network access and service capabilities that clients demand. And by promoting the value of full participation in Cigna's extensive health and wellness programs and resources, Cigna Select provides clients a clear opportunity to benefit from healthier, more productive employees that can translate to a healthier bottom line.



Overview of Cigna Select Segment

• Services/Products:

– Medical: HRA, HAS, HMO, PPO

– Pharmacy: Performance/Advantage/Medical/Generics

– Ancillary: Dental, Vision, Disability, Life/AD&D

– Medical Management: PHS +

– Health Advocacy: Common chronics, Maternity Management, Oncology, Pain Management

– Wellness: Risk Assessment, 24hr Nurseline, Healthy Frontiers, Trend Management

• Geographic Operations: US Domestic

• Customers/Demographics: Employers with 50-250 Employees

• Distribution Channels: Brokerages



Select Segment Strategy

• Core Strategies:

– Broker: Select Segment relies upon Brokers for all sales, however going forward, Select Segment will have multiple sales channel.

– Client: Build direct-to-client relationships across multiple channels. Streamline and coordinate experiences across all products.

– Customer: Build a direct connection to customers on a client intranet portal. Have the ability to purchase supplemental products using retail transaction engine with instant/accurate pricing.

– Provider: Create a true partnership with providers including a deep point of care coordination. Obtain rich data to help providers make decisions.



Select Segment Strategy ctd.

• Value Propositions:

– Client Experience: Provide clients with a streamlined experience across multiple Cigna products.

– Customer Engagement: Increase engagement through enhanced health and wellness capabilities including incentives.

– Products/Capabilities: Deliver next-gen wellness programs

– Sales: Develop sales strategy based on 100-250 customer segmentation and geography

– Pricing/Underwriting: Prepare for a more “retailized” environment with instant and accurate quote capabilities.



5 Drivers of Select Segment



Competition Overview



Competition Overview ctd.• All major competitors are focusing their Select messaging on brokers (vs. employers or

consumers). • Similarly, all of our communications are directed at Brokers and half of these touch points focused

on self-funding, in alignment with our communications strategy.

Communications Touch Points by Health Plan

0

50

100

150

200

250

300

Carrier

Co

mm

un

icat

ion

s V

olu

me

Consumer

Employer

Broker

Consumer 0 1 0 1

Employer 14 1 0 14

Broker 71 96 19 263

Aetna Anthem BCBS CIGNA UnitedHealthcare


Cigna ranking -- 1st, 2nd, 3rd or 4th -- Versus Aetna, UHC and BCBS

All broker respondents

Only the brokers that put Cigna in

their top 3

Broker Table Stakes

Providing good benefits for the cost 4th 2nd

Providing good network access for the cost 4th 3rd

Providing good service and problem handling for me, the agent/broker 4th 1st

Providing me with the resources to sell more business 4th 1st

Offering ways my clients could lower healthcare costs 1st 1st

Broker Differentiators

Being efficient and accurate in administrative matters for employers on payments, billing, and service 4th 1st

Providing overall good member service for my clients’ employees 3rd 1st

Providing different ways my clients can fund health benefits – including self-funding and fully insured 1st 1st

Providing data and information to my clients’ employees to help them make better health decisions 1st 1st

Providing useful data and information to my clients about their employees 1st 1st

Having programs and plan designs that help increase the productivity of my clients’ employees 1st 1st

Providing effective health, wellness and disease management capabilities 1st 1st

Offering convenient ways to bundle health, disability, life coverage and other products and services 2nd 1st

If we just look at the 34% of brokers that put Cigna in their top 3, we have a competitive advantage -- except for COST

See Appendix for detailed rankings


SWOT Analysis

11

Strengths Opportunities

Weaknesses Threats

• Cigna is the fastest growing player, but still lags the national competitors in brand awareness, top 3 consideration and net promoter score. Brokers rank Cigna 1st out of the 4 national players on being “differentiated”

• If we just look at the Brokers that put Cigna in their top 3 consideration set, we have a competitive advantage -- except for Cost

• Brokers rank Cigna 4th out of the 4 national players on being able to “meet their table stakes” (primarily due to cost)

• Lack of incentives offering.• ROI is difficult to measure and prove.• Wellness Select Segment “story” is not well defined leaving

Sales with little or no direction on what solutions work best for each client.

• Marketing material content and availability needs rework to provide the best turnkey solution for Select Segment.

• Gaps in reporting capabilities (i.e. Participation results for a defined market or wellness solution).

• Trend Management System is used as a supplement predictive modeling tool behind our vendor partner. Is there a strong enough linkage between the Health Assessment, TMS and outcomes?

• Price sensitive market. • Solution through vendor partner

• 43% of brokers believe that the percentage of employers switching carriers will be higher in 2012 then it was in 2011

• Brokers are evenly split on how they are thinking about their future – 40% are optimistic and 44% are worried. This seems to indicate uncertainty.

• The top two topics of interest to brokers in 2011 are Reform and Health and Wellness…Case studies and bundling are of least interest

• Competition: ongoing product development and activities by our competitors. Is $3.54 pepm a competitive price?

• Carve out to stand alone vendors (client desire to have a consistent wellness presence agnostic to medical carrier).

• Differences between Select and other CIGNA business (CIGNA Onsite Wellness Health Initiative.

• Health care reform.

• Overall, Aetna appears to be the national competitor in the weakest position. Cigna compares favorable to Aetna on most key measures.

• Continue to invest in building brand awareness and image • Communicate to the marketplace that Cigna is the up and coming

carrier• Reminder that our price situation is still a significant barrier to

sales growth• Focus our resources on the 34% of brokers that already put us in

their top 3 consideration set• Consider targeting Aetna to exploit their apparent weaker position

with brokers• All competitors include services for wellness need.

Differentiation is based on how packaging and Incentives.


Conclusion

• What can we learn from analyzing this Segment? What should we do?


Wellness 3.0: Milestones

Opportunity Owner/Lead Due Date

Launch of Apollo Product Initiated 6/1

(phased launch)

Develop marketing collateral for CSI Product 7/1/2011

Continue to enhance Sales Training Plan for Q3 & Q4 Product/Wellness Directors 7/1/2011

Define Wellness Story Product/Wellness Director–Cris Benz 7/1/2011

Define program valuation approach (i.e. ROI) Product 7/1/2011

Develop COH biometric data feed to Alere Product 7/1/2011

Develop next generation of client/customer communications

Product/Wellness Directors 8/1/2011

Complete simple time and resource studies. Product/Wellness Director–Cris Benz 8/1/2011

Expand Health Assessment participation reporting capabilities

Product 8/1/2011

Determine Select Segment Wellness fund approach Product 9/1/2011

Complete annual refresh of competitive analysis Product/Wellness Directors 91/12011

Determine Healthy Frontiers program design changes for 2012

Product 9/1/2011

Complete Trend Management analysis Product/Wellness Director – Marsha 8/1/2011

Develop on-line survey for clients with Basic Wellness Product 10/1/2011

Capitalize on any opportunities presented by Healthcare Reform Product 1/1/2012


Wellness 3.0: Measurement of Success

Metric Target

Successful Apollo Launch on 6/1 - Yes or No

- Low client disruption

-Yes

-Less than 10 unique customer issues

CIGNA Onsite Health Wellness Initiative (Client Engagement)

Client penetration for new and renewing clients

Presale: Current = 20%; Goal = 30%

Renewals = 7%; 2011 Goal = 10%; 2012 Goal = 15%

Health Assessment Participation Rates (Customer Engagement)

Health Assessment Participation Reporting

Partnership Program: Current = 34%; Goal = 40%

Healthy Frontiers: Current = 29%; Goal = 35%

Sales Communication Certification of Wellness Phase I: Consultative Expert - 6 Wellness questions included in Value Proposition.

Phase 2: TBD. Working with Sales Effectiveness.

Healthy Frontiers Satisfaction Survey by Health Frontiers Customers only

(Note: confirming current results)

-85% satisfied or very satisfied in the program and helping them improve or maintain healthy habits

-85% find health assessment report useful or very useful in improving or maintaining healthy habits.


Facets Spectrum of Wellness

Product: Solutions provide options for Clients based on commitment to wellness and funding available.

Standard Wellness

Health Assessment

Resources & Tools

Smoking Cessation

Nurse24 Chat

Client Reporting

Baked-in Medical

All funding types

Wellness 1.0

Health AssessmentParticipation Rate

1st Year Rate Adjustment

Presale Only

All funding types

CIGNA Onsite Health

Wellness InitiativeOnsite biometrics (or home kits)

Highly Engaged includes

Coaching and Seminars

Client Reporting

Rates socialized/Baked-in(across Presale and Renewing)

All funding types

Healthy Frontiers

Standard Wellness

24/7 Nurseline

Health Coaching

Healthy Living Programs

Quarterly Challenges

Trend Mgmt System

Buy-up at $3.54 pepm

All funding types

Levels of Client and Customer Engagement

Partnership Program

Healthy Frontiers

Plus Biometrics

Multi-Year commitment

HA Participation Rate

Health Coach/Lifestyle

Mgmt Participation Rate

Year 1 & 2 Rate Adjustment

Presale Only

All funding types

Low High


Wellness Program Performance

Alere Book of Business

(Benchmark)

Facets Book of Business(Includes clients w/Standard pkg)

Basic Wellness

Wellness 1.0*

Healthy Frontiers***

Partnership Program*

% of Customers

45% 3.5% TBD TBD 29% 34%

Client Level Engagement

Health Assessment Completion Rate Comparisons (Customer Engagement)

Healthy Frontiers*

(160 clients)

Partnership Program*

(62 clients)

Wellness 1.0*

Presale Only

(230 clients)

CIGNA Onsite Health Wellness Initiative – Presale*

(202 clients)

CIGNA Onsite Health Wellness Initiative – Renewals**

(115 clients)

% of Total Clients

6.4% 2.0% 25%+ 20% 7%

*Select Segment Only; **Includes Proclaim and Facets Select Segment

***Included Regional; +Estimate provided by Underwriting

Healthy Frontiers clients represents only 6.4% (160 clients) of all Facets Select clients.

Health Assessment completion rate is 29% for Healthy Frontier clients and 3.5% for all Facets.

Bottom line ~ Client and Customer engagement levels fall short.


Product Level SWOT

Strengths Weaknesses

1. Packaged Wellness solution with baked-in or buy-up options providing a combination of turnkey and flexible features.

2. Quick to market with new solutions through vendor partnership (i.e. Nurse24 Chat).

3. Robust reporting package for Healthy Frontier clients at no cost including year over year cohort reports strengthening multi-year results and relationship.

4. Using wellness as a risk selection tool whereby actively increasing engagement (Wellness 1.0 and Partnership Program).

5. CIGNA Onsite Wellness Initiative delivering biometrics, seminars, coaching and detailed client report out session by a Health Educator at no cost.

6. Consulting staff resources for continued wellness services such as multi-year planning and incentive planning (Wellness Directors, CSS and CMs).

7. Trend Management System (unique, effective and compelling).

1. Inconsistent wellness fund handling (Fully Insured vs. Self-funded).

2. Lack of incentives offering.

3. ROI is difficult to measure and prove.

4. Wellness Select Segment “story” is not well defined leaving Sales with little or no direction on what solutions work best for each client.

5. Marketing material content and availability needs rework to provide the best turnkey solution for Select Segment.

6. Gaps in reporting capabilities (i.e. Participation results for a defined market or wellness solution).

7. Trend Management System is used as a supplement predictive modeling tool behind our vendor partner. Is there a strong enough linkage between the Health Assessment, TMS and outcomes?

8. Price sensitive market.

9. Solution through vendor partner


Product Level SWOT

Opportunities Threats

1. Client issues: budget, time and staff resources.

2. Customer privacy concerns (i.e. intrusiveness objection).

3. Vendor relationship and performance.

4. Competition: ongoing product development and activities by our competitors. Is $3.54 pepm a competitive price?

5. Carve out to stand alone vendors (client desire to have a consistent wellness presence agnostic to medical carrier).

6. Differences between Select and other CIGNA business (CIGNA Onsite Wellness Health Initiative.

7. Health care reform.

1. Determine Select Segment wellness fund approach for both funding types and implement (considering incentives as part of that fund or separate)(W1, W2, W8 and T1)

2. Create an Incentives White Paper. (W2)

3. Define ROI messaging (be smart about what to measure keeping aligned with the Value Proposition and possibly deliver above and beyond). (W3)

4. Define the Wellness story – define the continuum of wellness solutions and the client attributes that fit. Include both client and customer story. (W1, W4, W8, T2, T6)

5. Develop the next generation of communications. The right communications to ensure turnkey for all levels. Include customer facing materials describing what is done with the data an how it is protected. (W5 and T2).

6. Continue to enhance Sales Training plan for 2011. (W1, W5 and T1)

7. Expand reporting capabilities for defined markets and wellness solutions. (W6)

8. Complete simple time studies to determine time and staff resources required for successful wellness solutions. (T1)

9. Complete annual refresh of competitive analysis. (W4, W8 and T4)

10. Complete wellness vendor research study to determine the actual threat of carve-outs. (T5)

11. Schedule at a minimum of 2 discussions with Alere to discuss their planned product enhancements. (W9 and T3)

12. Promote industry leading report out session by CIGNA Onsite Wellness experts. (W4, W5 and T1)

13. Complete Trend Management analysis on the additional identification and value provided. (W7)

14. Capitalize on any opportunities presented by Healthcare Reform (i.e. Grants for small businesses). (Not tied to specific Threat or Weakness)


Wellness 3.0: Opportunities Focus

Product

Create an Incentives White Paper. Medium

Define ROI messaging. Medium

Expand reporting capabilities. High

Schedule two discussions with Alere to discuss planned and future product enhancements. High

Capitalize on technology enhancements by vendor. High

Complete Trend Management analysis on additional identification and value provided to Facets Select. Low

Complete annual refresh of competitive analysis, including product and technology focus. High

Capitalize on any opportunities presented by Healthcare Reform (i.e. grants for small business). Low

Price

Determine Select Segment Wellness Fund approach for Fully Insured and Self-Funded clients. Medium

Complete annual refresh of competitive analysis, including price focus ($3.54 pepm check). High

Promotion

Define the Wellness story. High

Develop the next generation of communications. High

Promote industry leading report out session by CIGNA Onsite Wellness experts. Medium

Continue to enhance Sales Training plan. High

Complete simple time studies to determine time and staff resources required for successful wellness solutions. Medium

Place

Complete wellness vendor research to determine the actual threat of carve-outs. Low

Emerging Markets and Small Group. Low

Back to the fundamentals of 4Ps

Product + Price + Promotion + Place = Increased Engagement

f o r i n t e r n a l u s e o n l y cigna: select segment analysis

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