Competitor cost advantage assessment

Competitor health plan brings advantaged total cost of care position to the market

A leading regional health plan was facing a competitor entrant with a vertically integrated plan/provider model. Elsewhere, this competitor had a very advantaged total cost of care position. If they could do the same in this new market, our health plan client – which traditionally focused on clinical quality and member experience as differentiators – could be significantly disadvantaged. We needed to assess the size and sustainability of any cost of care advantage this competitor might build.

Getting under the covers of how the competitor created cost advantage

Did a “tear down” of rating filings across multiple markets to size competitor cost advantage and assess consistency across components (admissions, outpatient, pharmacy etc). Interviewed clinicians treating the competitor’s members to understand the concrete clinical strategies being used and how effective these were in influencing clinician and patient behavior. Compared the competitor’s affiliated physician footprint (size, specialty mix, turnover) to its locally calculated cost of care advantage in each geography to quantitatively confrm the mechanisms for cost managemnet identified in the market interviews. Developed probability-weighted scenarios for how the competitor could build out a sustained cost advantage in the client’s market.

Early warning signal to incorporate into strategy development

Given the insight into how a major competitor creates cost advantage, the client launched a series of initiatives to shore up their cost management capabilities. The learnings regarding competitor provider integration also supported new approaches to how the client managed its networks.