Does the annual enrollment period impact STAR ratings and enrollment numbers?

In 2009, CMS began aggregating the domain level quality scores into an overall STAR rating for Medicare Advantage plans and made available to beneficiaries. Beginning in the 2012 enrollment period, contracts were incentivized to receive a high rating through rating-dependent reimbursement schemes.  But what has been the real effect of these changes on payers?

According to market data, after 2010, there has been a significant increase in plan ratings.  This has narrowed reimbursement gaps.

What has become painfully clear is that seniors are paying close attention to the STAR ratings.  STAR ratings directly impact enrollment.  In fact, authors affiliated with CMS conducted a study of almost 1.3 million Medicare beneficiaries. They found a positive relationship – a one-star higher rating was associated with a 9.5 percentage point increase in likelihood to enroll. (SEE “http://media.jamanetwork.com/news-item/higher-quality-rating-for-medicare-advantage-plan-associated-with-increased-likelihood-of-plan-enrollment/”)

This number is actually conservative.  IGATE, a large BPO/ITO vendor in healthcare, has experienced one Payer’s enrollment drop between 30% - 40% based on their STAR rating!  How?  CMS in their push for quality actively promotes moving to 5 STAR plans.  So much so they offer a “5-star Special Enrollment Period” that lasts almost a year allowing members to switch to any 5 STAR rates plan.

One key measure used in the STAR rating system is “customer experience with the plan.”  Remember the phrase “there’s no chance to make a second good impression?” A member’s experience starts with the Annual Enrollment Period (AEP).  IGATE’s experience fixing the AEP can have an immediate and long lasting impact on STAR ratings.  Of course, getting a 5 requires a commitment to 3-4 other key measures (depending on MA vs. Part D).  But without a positive AEP experience, a Payer is doomed from the start.

If you need to boost your STAR rating contact to discuss AEP in a Box at:

healthcare@igate.com 

This proven service is the key to success at one of the largest payers in the country.

David Lung is a Director in IGATE’s Healthcare Services practice.

 

How to Assess Underperforming Sales Teams

The question was recently asked:
What would you do if you managed a group of sales reps who in 7 months only produced less than 5% of their annual quota?
One of the responses suggested "sacking the whole team and starting over." Interesting thought, maybe necessary, but very "shoot from the hip".
It's rare that an entire sales team is underperforming. Look at all aspects of the role first to find the real cause of the problems before blowing up your organization.
Ask yourself these questions:

1. Is your product / service truly competitive in the market? If not, it doesn't matter who you have in sales.
2. Is your brand new to the market? If so it's not realistic to expect immediate results. It takes time to create brand awareness.
3. What is your sales model?  If it is relationship selling based and starting from ground up it will take time to build relationships.  Hiring sales people with existing relationships can help.  This being said, I’ve never seem a “magic rolodex”.  It gets the door open but doesn’t mean companies will buy.
4. What is the average sales cycle time for your product or service?  If 7 months or more then there may not be an issue.  If 60-90 days then there is a big issue.
5. Do they have the proper lead systems to drive pipeline? If you are asking them to play marketer, appointment setter, closer and relationship manager their bandwidth will be severely limited.
6. Do they have proper motivation through leveraged pay?  
7. Did you hire junior sales people to save money? Experienced sales people, in my experience, drive 2X – 4X the sales of junior sales people.
8. Are any salespeople making their targets?  If not the targets may be off.  It’s unlikely that the entire team is missing their targets.  Your position requirements might also be off systematically bringing in unqualified people.

Although not an exhaustive list, this would be a good start. 

You may have to replace people, but don't throw out the "baby with the bathwater". Start looking for new candidates. The first person you replace will send a clear message to your team. If that doesn't motivate them then start replacing as soon as you can.

Just don't stop forward progress in your pipeline by scrapping everything until you are sure it's the people. It may be the process or their tools

BPO Pricing Simplified

The BPO market can be confusing when it comes to pricing.  As BPO providers mature into core business processes it is becoming even more complex.  It’s starting to look like “anything goes”, but there is some reason to the madness.

There are three basic models for BPO pricing:

1.       INPUT / OUTPUT:  Traditional services based pricing.  Pay for units of input and maximize output (i.e.  hours, FTE’s).

2.       ACTIVITY / VOLUME: Pay per unit of activity within a volume range (i.e. transactions, documents, scans, calls). 

3.       VALUE / BUSINESS OUTCOMES: Pay based on the value a service provides.  Often a hybrid of the activity / volume model and performance measures (i.e. claims processed within 3 hrs, issues resolved in single contact).  It could also be based on a percentage of savings or growth (i.e. increased sales, reduced cost per transaction, reduced aggregate procurement spend).

An entire book can be written on the variations of these models in practice.  That being said, the slate is usually wide open.  BPO vendors often entertain any model they feel comfortable with in terms of risk, quality performance and reasonable profitability.

Here is a simple process to follow when talking to your BPO vendor:

1.       Decide what processes make the most sense to outsource.  These usually bubble up easily based on organizational strategy, pain, cost and capabilities.

2.       Define your strategic goals for the process.  Are you looking for growth, quality improvement, scalability, reduction in cost, innovation or consistency in cost per transaction?

3.       Define who you feel should take ownership and risk for that process.  Not just execution quality but process innovation, design, performance, outcomes, etc.  The more risk you want the BPO vendor to take, the more value you want them to add, the more control they will want over the process.

4.       Now define a proposed pricing model based on the above attributes.

The outcome will best represent your expectations and significantly simplify BPO vendor discussions.    

 

Consider these links:

http://www.outsourcing-law.com/2012/05/four-%E2%80%9Chot%E2%80%9D-deal-structures-and-pricing-models-in-sourcing-of-bpo-and-kpo-services/

http://www.offshoringtimes.com/Pages/2006/BPO_news1255.html

http://www.siliconindia.com/shownews/BPOs_see_better_revenues_through_new_pricing_models-nid-46430-cid-2.html

http://www.internetviz.com/psjblog/2012/07/outcome-based-engagements/

BPO: Going Deep and Wide Requires Commitment

Business Process Outsourcing traditionally has focused on high volume, low value activities.  Labor arbitrage and streamlined processes created price and process efficiencies: 

“The traditional cost centers such as HR, finance and accounting and some low-value, high-volume customer-facing functions have been the most frequently outsourced activities. In such services, reducing cost has been the objective, though the means of achieving that have evolved over time.”

 (http://www.offshoringtimes.com/Pages/2006/BPO_news1255.html)

Many companies have already outsourced cross-functional support processes.  In addition, the cost of global labor is eroding margins for BPO firms. So how are BPO providers responding? 

One method has been moving the focus to core business process outsourcing.  This will deepen the customer relationship and divert discussions from “savings” to “value”.  Value can be anything:  Market agility, scalability, global delivery capability, etc.

I often hear the words: “We want to go deep and wide.”  Yet there is little tolerance for taking on anything but the highest margin work.  In my experience with IBM going “wide” requires investment on both sides.  Customers will want the BPO provider to take over processes that THEY HAVE THE MOST TROUBLE WITH, high margin or not.  If it was easy and cheap for them to manage why would they outsource it?

Is it a matter of BPO firm contract profitability measurement?  Is it a myopic view of relationships?  My experience is customer portfolio measurement provides better outcomes for service companies.  It measures the profitability of the relationship, not individual contracts.  It allows for taking on a broader selection of processes from customers, with different margins, to lock in customer trust and relationships.  It shows the commitment of the BPO vendor to the benefit of the customer.

Don't let past experience inhibit growth!

In recent months I have discovered a disturbing trend.  There is a vicious cycle where economic risk has caused executives to become very conservative.  They are avoiding taking risks to grow their company, blaming their actions on their "experience".

Webster defines experience as:

"a :  direct observation of or participation in events as a basis of knowledge"

OR

"b :  the fact or state of having been affected by or gained knowledge through direct observation or participation"

I contend that experience is not static.  Experience is based on many variables that change over time.  Cultural norms, economic conditions, business practices, technologies available and the legal / regulatory environment are just a few.

Executives count on their experience to drive decisions.  It provides a base of stability to feel empowered, important and valuable.  It is the executive "comfort zone".  Challenging that experience means challenging the very essence of executive value.  Or does it?

It is far easier to say "no, that business is not profitable" than to say "how would you make that profitable under today's environment and would it be sustainable".  Yet how many times in the last ten years have companies redefined ways to drive profit out of their business?  Too many to count.

This is where I see opportunity lost.  Who is going back to re-review industries, processes, growth ideas and business models in light of changed variables?  These ideas are intellectual capital that has already been invested in that could drive growth.

There are numerous examples in history:

The steel manufacturing market was considered "saturated" and having "high barriers to entry".  The Japanese said "what if we use the arc furnace to recycle scrap steel?"  This fundamentally changed the process, profit margins, the supply chain model and removed the barriers to entry.

The beer industry was a highly localized, fragmented industry.  It was when Adolphus Busch in the early 1870's asked "how can we keep beer fresh to transport it long distances".  Pasteurization was applied to the process opening the door to national distributing and national brands.

Buying a software company in its "mature > decline" life cycle was once considered a catastrophic mistake.  Computer Associates thought "this is when the purchase price is lowest; what if I buy them and fund only required maintenance through the end of life".  This increased margins, severely reduced sales expenses (buy existing customer base) and provided instant brand recognition.

An outsourcing example for today:

Healthcare Payers (insurance) have been consolidating for years.  Providers started a few years ago but are in the midst of a long cycle of consolidation.  Labor intensive process like coding, collections, billing and transcription have been outsourced for decades.  Most of this work is done regionally by small businesses.

One might say "But given the labor involved margins are low."  True, if you follow the traditional labor model. 

What if you consider your company a "business process outsourcing" company instead of a "services" company.  Reduce the use of labor through automation (natural language processing) for electronic coding.  Buy the receivables at a discount (very common) and make arbitrage between the buy price and collections.  Integrate with the provider's billing systems to handle bill generation and automate distribution processes. This fundamentally reshapes the profitability of the business.

Now, take the lead from Computer Associates, BUY YOUR CUSTOMERS.  Quickly buy up the local / regional revenue cycle companies.  Eliminate overhead through centralization of administration and processing but keep the local sales rep's for their relationship.  Rapid growth and low cost of sales.  Oh, and a stronger national brand.  Now I'm getting excited!

So now you have a profitable, high volume, national business line.  Economies of scale and automation provide high margins.  A large customer base and geographical presence provide create a strong national brand.  Now cross-sell and upsell those customers and grow to the next level.



"No" is too easy.  Relying too much on experience can be detrimental.  Re-assess opportunities and reshape your experience frequently to grow the business and your career. 




 

Executive Ledership Attributes for Success

Someone recently posed the question:

If someone was to ask you to describe what the primary and secondary skills or leadership attributes that were most important for the success of a Senior Executive (e.g. CEO, CFO, COO, CTO, VP Sales, VP Marketing) working within your firm, organization, or agency, what would they be and why?

I read the question as factors influencing the success of the “executive”, not the “company”.  This is important as there are executives who flourish in poorly run companies.

I would say self and situational awareness are tied for first.  Emotional intelligence and integrity run a close second.  Why not intelligence, industry knowledge or experience?  What about ethics or leadership by example?

History Proves Conventional Wisdom is Suspect

Formal education and Industry Knowledge – The list of successful leaders with no college degree is quite long:

1.       Henry Ford

2.       Andrew Carnegie

3.       David Geffen (Dreamworks)

4.       David Geffen (Carnival Cruise Lines, Miami Heat)

5.       Steve Jobs (Apple)

6.       Haim Saban (Paul Mitchell, Patron’)

7.        John Paul DeJoria (Power Rangers, TV/Media)

8.       David Green (Hobby Lobby)

People like Henry Ford and Andrew Carnegie entered their respective industries with no knowledge whatsoever.   Formal education and specialized skills are in great supply and can be bought.

They quickly became forces to reckon with.  Also, why do some senior executives excel when changing industries?  Although important, these examples suggest education and industry knowledge are not highest on the list.

Experience – Experience can play a role in executive success, but so can having an experienced subordinate.  The value of this experience is largely dependent on when, where and how the experience was acquired.  Each company has unique elements to its culture, management style, processes, etc.  In addition, why do some make successful executives at a young age and most not at all?  Again, although important, experience gets bumped down on the list.

Ethics – Let’s not be naive.  Ethics are dependent on the organizational culture and global geography.     This is important, but subjective.  It will help executives move ahead in some companies, but not all.  It’s sad but true.  It also moves down on the list.

Leadership by example – Great in supporting integrity, it depends heavily on what the “example” is.  If the leader has a misconceived notion of how to behave, poor habits and/or follows a poor strategy they are leading everyone to doom.  Even worse, the leader is brilliant but leads without consideration to the culture and strategy of the organization.  Once again, the pied piper of doom.  Drop this attribute down the list, but not too far. 

 

Leading by Recognition (plan, sense & react) Has Worked for Years

They first key to their success started with self-awareness.  They knew what they wanted, where they excelled and where they were weak.  They used this to identify skilled people they needed to surround themselves with to achieve a goal.  They didn’t have to be all things to the business.

The second key to their success is situational awareness.  They were savvy enough to read market players and define who they should engage on their team to drive success.  They had a sense for when to be passive, aggressive, defensive, etc.  Identifying when a significant event is probable to occur and how to position properly for success is crucial.  The wrong action during a critical time could be devastating.    The right action could be monumental.  This mix of intuition, sensibility and control is hard to master.

The third key, emotional intelligence is closely akin to situational awareness.  Reading key constituents both inside and outside the company is critical.  It is required to determine what actions to take in a given situation.  The same situation may require different actions for different players based on any number of variables.  This mix of listening, reading people’s queues, politics and diplomacy can actually be taught.   Mastering it is another story.

Finally, integrity plays a key role.  By this I do not mean ethics.  Ethics define what’s good or bad based on cultural norms.  I mean it strictly as “being structurally sound”.  Integrity provides a foundation of trust in the leader through:

1.       Sending consistent messages

2.       Meeting commitments to individuals, the business and its customers

3.       Leading by example

4.       Taking responsibility for actions and choices

5.       Reacting consistently to situations over time

6.       Sharing credit for success with those involved

Personal and situational awareness provide the opportunity to excel.  Emotional intelligence opens the door to drive success.  Integrity creates the foundation for long-term success.

Employee Engagement - Making Lasting Change

My experience supports the statistic that 70% (maybe more) of employees are disengaged. The new trend seems to be deployment of “employ engagement” programs.  A program have happily endorsed and engaged in.  Yet the numbers only improved slightly.  Why?  It’s not empirical, but I have a good idea as to why.

As good managers we sent out anonymous surveys, get employee feedback and train managers on engagement techniques.  We execute on the few good ideas we received.  We communicate more and instituted an employee recognition program.  But did we make their lives easier?

People (let’s personalize it, they are human of course) don’t change easily.  It takes something personal, substantial and lasting to create change.  Although somewhat personal, the activities listed above are superficial.  Are employees better enabled to do their job (http://davidlung.blogspot.com/2013/03/what-makes-employees-truly-enabled.html)?  Are they seeing substantial benefits?  Did we:

1.       Less stress?

2.       Less time at work?

3.       Higher pay?

4.       More job satisfaction?

5.       Better promotion potential?

If not, the engagement program will only be seen as superficial. 

The most engaged employees I have managed were those I or my peers have taken a personal interest in.  Asking them about their goals, making reasonable promises, enabling them to their job and being a personal advocate for their success are powerful.   It’s honest, sincere and life changing.  It truly leaves a lasting impression.

For those seeking company-wide change, it’s about changing the culture.  This can take many years based on formal and informal behavior.  The best formula I have seen is simple yet bold:

“Rapid Change = Start at Top + Employee Focused Strategy – Powerful Change Inhibiting Executives”

It will put new life into the employees who felt disenfranchised.  It will startle those managers who felt too comfortable to change.  It will send a clear message to everyone that “this is the way we do business”.  It will create a life changing event for everyone to make the change stick.