Navigating Market TrendsContext For Action

© 2007 finelight

Rough Time Ahead for Boomers as They AgeUSA Today

Health Insurance Eroding for Working Families; Employer Coverage Declines for 5th year

Economic Institute

Americans Take More Care Buying A Refrigerator Than Picking a Doctor

PRNewswire

U.S. spends over 15% of GNP on health care and ranks 29th in overall life expectancy (78 years).

Wall Street Journal

Navigating Will Only Get Harder

47% of U.S. employees live paycheck-to-paycheck

26% of America’s 300,000,000 people are baby boomers

4% of health plan participants account for 50% of the spending

75% of American adults online (6 billion searches every month)

Influence, pressure and ideas

Conundrum Employers & Employees

QUICK STATS

- 158 million employer coverage

- 82 million self-funded

- 66 million fully insured

- 10 million Taft Hartley

IN LAST FIVE YEARS…

- Employers offering coverage ↓↓↓↓9%

- Employer costs ↑↑↑↑76%

- Employee contributions ↑↑↑↑126%

- Premiums ↑↑↑↑2.5x inflation & wages

Pharma spent $11+ billion on advertising

(40% consumer; 60% to physician)

Big Blue Top Ten = 72+ million livesWellpoint - IN, KY, OH, CO, CT, ME, NH, VA, NV, CA, GA, WI, MO, NY, Unicare

HCSC - IL, TX, NM, OK BCBS Michigan Highmark – PACarefirst – MD,DC Regence - OR, ID, UT, WA Blue Shield CABCBS AL, FL, MN, MA, NC

38 BCBS Plans

Heavy Weights Top Ten = 95 million livesUnited Aetna Cigna Humana Kaiser Health NetGHI-HIP Coventry Great WestMedical Mutual Sierra

50 Regional Health Plans

Middle WeightsAssurant Guardian PrincipalTrustmark Healthmarkets-UICI IHC

100 Regional Health Plans

Light Weights American Community Celtic WPSAmer Republic/World Nationwide MennoniteFederated Pekin BenicorpDestiny Best US HealthAmer Family Nippon Amer NationalMutual of Omaha Physicians Mutual

400 Regional Health Plans

Health Insurance Competitive Landscape

Consumerism at Work

Customers: Up to the challenge?

Consumer Driven Healthcare

The big idea —

Increase awareness and accountability around

healthcare cost and quality to give consumers

greater discretion and control over benefit dollars

and care choices.

The theory —

Rather than shielding consumers, if they have

skin in the game and start spending money like

it’s theirs instead of someone else’s the holy grail

of cost containment will be attained.

AA behavior change extraordinaire.behavior change extraordinaire.

Consumer Directed Healthcare

• CDH estimated 5% market share (12% by 2008)

• 57% employers believe CDH will be extremely importantin their ability to continue to offer health benefits

• 60% people say even with price & quality information they are unlikely to change behavior and shop for care

POINT OF ENROLLMENT

• Deductible & Coinsurance

• Defined Contribution

• Tiered Provider Networks

• Account-based Benefit

• Pharmacy Plan

• Risk Assessments

• Lifestyle Incentives

POINT OF CARE

• Price of Services

• Quality of Providers

• Health Coach

• Account Balances

• Decision Support Tools

- Self-Service Benefits

- Clinical Content

HSA and HRA Covered Lives

Top Ten CDH Companies – January 2007

139,697BCBS Louisiana

141,800Humana

177,310BCBS Regence

209,000BCBS Minnesota

275,000BCBS HCSC

400,000Assurant

500,000CIGNA

627,000Aetna

821,000Wellpoint (Lumenos)

2,145,205United (Definity)

Source: Consumer-Driven Market Report, January 2007

Health Plans

Employers

Employees

Brokers

Providers

Proof of concept

Employee buy-in

Change in behavior

Move to financial advisor

Price transparency

Stakeholder What’s it going to take?

Consumer

Directed

Healthcare

WATCHWORDS ’07

Product ROI – Consumer Education – Benefit Preservation

HDHP

HSA

FSA

Mini MedHSA Benefit Plans

Today…– 6 million HSAs

– 4 million HRAs

– Average HSA balance $2,000

– $5.5 billion HSA funds under mgt

– 50,000 new HSAs every month

Big sales obstacle…– Deductible shockshock– Fear of high OOP cost of HDHP

The futureThe future’’s so bright . . .s so bright . . .

StackablesStackables

The acronyms never end!

HRA

SKU

AHM

PHR

UPC

MPS

New Buzz

Health Risk Assessment*

Stock Keeping Unit

Active Health Management

Personal Health Record

Universal Product Code

Multi-Purse Stacking

* This one even has two definitions!a.k.a. Health Reimbursement Arrangement

Healthcare TechnologyAn unimaginable forceAn unimaginable force

DETECTION– Genomics and stem cell research

TREATMENT– Implantables, polypills, bionics

MONITORING– Wireless remote health monitoring and compliance

COMMUNICATION– Blogging, mobisodes and podcasts

60% of Americans support portable personal health records

So What…does this mean for you?

ROI

Take A Strategic & Tactical Path

Leverage Brand Strength

- Sustainable competitive advantage

Integrate Data

- Customer profiles, segment, CRM

Maximize Messaging

- Tailor messages by customer segment

Test and Refine

- Test and refine

Be Accountable

- Measure ROI and lifetime value

Always Be Closing (The Loop)

Keep An Eye On Your Brand

“An orange is an orange is an orange…unless, of course, that orange happens to be a Sunkist, a name 80% of consumers know and trust.”

— Russell Hanlin

• What are your top three market advantages?

• Are you reaching the right prospects?

• Why do you lose sales to competitors?

• What is your “big idea” - your market clutter buster?

Ask Tough Questions

Why YouYou?

Data

Information

Intelligence

Action

Market Intelligence is a systematic ongoing business process allowing

you to see your total business environment – customers, adversaries,

technologies, regulations, economics, national and local pressures.

Raw Material

Data in Context

Actionable in Scope

Market Segmentation

The practice of dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing — age, gender, income, interests, attitudes and spending habits.

It’s the Customer Stupid

Focus On Your Customer

CONFUSION New benefits, responsibilities & terminology – HRA, HSA, HDHP and CDH

INTIMIDATION Employers & employees seeing CDH plans for the first time are concerned

EXPECTATIONS Workforce diversity and shifting roles are a huge communication challenge

FRUSTRATION On a good day health insurance is bureaucratic and filled with red tape

RESISTANCE Entitlement mentality and insulation from cost of care has employees saying NO!

Reset expectationsReset expectations

Manage Your Sales Cycle

Customer Centric

• Customer is central asset of your company

• Services tailored to unique needs of customer

Product Centric

• Creation of product is primary focus

• One size fits all – you can have any color, as long as it’s black!

LIFETIME VALUE – MARKETING ROI

B2B – ZIP, size, SIC, network, renewal

D2C – age, sex, ethnic, income, family

Position for Your customer

2.7 billion searches on Google/mo

55 million blogs

100 million iPods

100 TV channels in American homes (10 in 1990)

3.7 million books available on Amazon (100,000 in largest retail bookstores)

Embrace A New Communications

Your brand isn’t what you say it is…

… it’s what Google says it is!

Differentiation Key To Success

Simplify– Make your value message simple

– Simplify it some more

– Boil it down again

Segment– What do current customers look like?

– Where are prospects in the sales cycle?

– Are you delivering the right message?

Connect– How are you reaching your prospects?

– Are these the optimum channels?

– What else can you do?

Retain– Selling doesn’t stop with acquisition

– Retention = customer experience

– Remember the after-sale sale

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Contact

© 2007 finelight