Regional leader facing a stark financial future. Historically they had been able to cross-subsidize losses in their government lines of business with robust profits from their commercial business. While pressure on state budgets and new specialty drugs were causing a dramatic increase in government losses, ACA related changes (such as the 3Rs) were constraining profits on their fully insured book which was primarily small-group. Firm needed to determine immediate steps to stem their government losses while determining how to return their commercial line to higher profits.
We worked with the payer leadership team to frame the key decisions to be made ranging from market segment participation to network strategy. We supported the team through a rigorous choice structuring process and supported interactive discussions with a dynamic model that showed the impact of strategic choices under different scenarios. Ultimately the process led to alignment around the optimal pathway for the firm given the information available and the high future uncertainty.
The company was able to make a clear business case for its actions on the government side including exiting some segments and setting clear guardrails for the future. We subsequently developed a commercial market growth strategy that made sense in the context of their network position and product portfolio. In addition we helped them determine a completely new and distinctive position in the market which will be implemented in the 2015-16 plan years.