Pressure Test your 2019 Expansion Strategy in 3 Steps

November 15, 2017
|In Sales & Marketing, Strategy
|By GHG Advisors

Do it now! Get your benefit strawman, enrollment projections, and financial goals developed before benefit season begins!

Step 1: Market Analysis – Hopefully you have already performed this step before you submitted the Notice of Intent to Apply (NOIA), but if not, it’s not too late. A market analysis typically includes the following:

  • Penetration analysis
  • Enrollment trends and market share
  • Product trends and growth patterns
  • Competitive analysis
  • Premium and benefit trends
  • Demographic analysis

Now that the 2018 benefits have been released, it is time to relook at the product, benefit, and premium trends through a market analysis to see what has changed so you are fully prepared for the beginning of benefit season in February 2018. The Gorman Health Group (GHG) Marketing team was just evaluating a new product for a client and discovered their competitors added three new plans for 2018. This changes how you look at the market. It is important to understand how your clients changed their product and plan portfolio for 2018 and then look at the 2018 Annual Election Period (AEP) results in February to solidify your market analysis, but you will want to start building your strawman of benefits and premiums now.

Step 2: Market and Enrollment Opportunity – Understanding your market opportunity is critical, and too many times a Medicare Advantage (MA) plan develops enrollment projections on the back of an envelope or in a board meeting instead of looking at the market and understanding the “real” market opportunity. Understanding the market potential and then looking at how much of the market you will be able to gain is a much better way to estimate your enrollment projections.

Our Product team recently worked with a client who was trying to determine why there was such a variance between their current sales results and enrollment projections. During GHG’s review of the client’s enrollment projection methodology, GHG identified certain demographic and market considerations were not included despite being taken into consideration when developing their marketing and sales strategies.

“These exclusions [demographic and market] are common,” says Nilsa Rudisill, Vice President, Sales, Marketing & Strategy, “and even more so is disconnect between company enrollment projections and sales and marketing strategies.”

Step 3: Financial Feasibility Study – The next step is to pressure test your hypothesis with a financial feasibility study. Although a feasibility study is not an actuarial study, it does test whether a hypothetical benefit design could work in a target market based on revenue and cost characteristics of that market. It also takes into account assumptions about the Centers for Medicare & Medicaid Services (CMS) payment trends, enrollment, premium and costs, and projected enrollment over a period of five years.

GHG’s Finance, Marketing, Sales and Product teams work very closely together to customize the assumptions that impact this study for our clients based on level of comfort, capabilities, and growth opportunity, even if it means the overall opportunity does not look promising in the end. For example, this study was performed for a client who was interested in offering a Special Needs Plan statewide. Although the financials appeared sound, we looked beyond the numbers to tell the client “what it really” takes to launch a successful product in their particular market by providing multiple financial scenarios, including a scenario that appeared less profitable in the short term but actually more manageable as a company new to MA.

This process allows you to make smart, informed decisions about your current or potential market without all the investment upfront. This type of process is not a one and done! It tends to be a very iterative process to understand how to dial the levers in the market to see if and when you can expect profitable growth. So take the time now to get it done right, or spend the money later by guessing incorrectly.

 

 

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