You are currently browsing the monthly archive for October 2009.
Why does my health insurance cost so much?
It’s that time of the year again. No, I am not talking about the holidays. It’s the time of the year, when you figure out how much more money you need to make, in order to afford the rise in your healthcare costs. It’s Annual Enrollment time! But as most folks have already realized, there probably won’t be any raises, bonuses, etc., this year to help off-set the rise in healthcare premiums. The economy is experiencing its biggest downturn since the Great Depression and yet our quoted health insurance cost for next year is rising at a double-digit pace. How is that possible?
“Over the last decade, employer-sponsored health insurance premiums have increased 131 percent”.
My wife and I calculated that pre-tax, she would need to earn another $ 1,200 a year this year to off-set the rise in the monthly premiums being charged for an HMO plan with family coverage. Currently, we belong to the #1 ranked Health Plan in the country, which is increasing its rates to the tune of $100 a month for the same level of coverage as last year. Unfortunately, we have been experiencing this trend for more than the past 20 years.
I realize its not a simple answer, and there are several external factors including rising pharmacy costs, inflation, etc. However, one could argue that since the economy is in a tail-spin, unemployment is sitting just under 10%, and the federal government is wasting time and my tax dollars trying to create a new public option for health coverage, that the best option for insurers is to hold premiums steady and to finally get a handle on what are the true drivers of cost and utilization. Thus, they would not risk losing its most important constituents, their employer groups and members, who every year are now faced with the idea of reducing their level of healthcare coverage just to make ends meet.
If the #1 health plan in the country is raising their premiums by $100 a month for a basic HMO plan, can you imagine what the lower ranking health plans will charge to their members? There are no quick-fix-it solutions for the healthcare industry. However, with so many inefficient processes, fraud, overhead, flawed reimbursement methodologies, expensive compliance and technology projects, etc., the industry is ripe for opportunities to become more analytics focused. With today’s business intelligence and data warehousing technologies available, health plans now have the ability to create high-value metrics that involve integration of disparate data sources from key areas such as: sales & marketing, operations (ex. Claims processing), and cost and utilization across members, providers, and employer groups.
Despite the quoted savings achieved by health plans from a variety of medical management programs, disease management, formularies, network discounts, etc., why is it never passed onto a subscriber’s premium? Are health plans not evaluating the right metrics? Pushing the boundaries for increasing the use of payer analytics will allow health plans to truly understand the drivers of cost and utilization and thus to migrate their business model to become more predictive in nature. Maybe this is wishful thinking, but a health plan could actually reduce their monthly premiums if they can drive out the unknown costs and inefficiencies. A futuristic but intriguing thought would be to have benefit plans that are created and priced for each member, which is based on both historical utilization and predictive analytics to determine the monthly premiums.
At a minimum, can we stop the double-digit price increases?
You’ve performed project triage.
You’ve run the required diagnostic tests.
It takes more than a diagnosis to avoid more implementation failures. Now what?
Here are some quick remedies and prescriptions for fixing ailing projects:
- Treatments
This takes us back to the beginning of the cycle. Periodic triage and interim project health-checks are the best way to make sure your project portfolio will contain fewer implementation failures.
In my last project management blog post, I talked about performing triage on a project portfolio. Over at the Oracle Infogram blog, they picked up on our post with a reminder that triage is a pervasive activity, and one that is essential to project management:
“Triage runs from the queuing on the CPU all the way up to the user’s daily calendar entries, it is a concept that should always be kept in mind when planning and building projects.”
The result of the triage effort is to identify those projects most in need of immediate intervention. Just as in the medical world, the next step after triage is diagnosis; now it’s time to focus on projects in the third group and perform project diagnostics. If you are tasked with rescuing a failing project, here are the first steps that you should take to find the root cause(s) of the project’s difficulties.
1. Obtain a thorough patient history: Skilled medical diagnosticians may not rely solely on the patient’s recollection. In some cases they need to interview family and friends to obtain information on subtle symptoms. Likewise, the skilled project diagnostician should combine the skills of Dr. Gregory House and Dr. Cal Lightman. When trying to diagnose failing projects, they shouldn’t don’t rely solely on direct interviews of the project team. A multi-perspective view of the situation is needed:
- Have a closed-door session with the project sponsor: Find out what the key issues are with the project and begin to explore areas where a rescoping might help bring things back on track. Find out what kind of scope reductions are likely to be accepted by the business, and which might require significant salesmanship or a fierce battle. Understand the organization’s politics so that you can factor them into your corrective action plan.
- Talk to the project stakeholders about their original expectations, their current concerns, and any difficulties they may be experiencing with the project team.
- Create comfortable communication channels with all members of the project team, and dig deeper than project plans, status reports and issues logs. Find out what is causing project anxiety within the team. There are often valuable clues here. Be sure to probe any areas that are glossed over or brushed aside quickly.
2. Next, take the project’s vital signs:
- Pulse check: Assess the burn rate. Are you eating up budget faster than you anticipated? What is the new estimated total cost?
- Blood pressure: perform a risk assessment, in terms of what could happen between now and the go live date to cause a significant incident. Various frameworks exist for this assessment. The Six Sigma FMEA template can be modified to suit your needs here, giving you an objective framework for assessing all possible places where your solution could fail, and steering your future corrective actions toward those that have both the highest likelihood of occurrence and greatest criticality.
- Temperature: Red yellow green heat sheet with respect to key milestones. This should be part of your regular status report, along with some basic trending. For example, we once managed a huge portfolio of interdependent concurrent projects with weekly reviews that tracked both last week’s and the current week’s milestone status. Because we were in an M&A situation facing TSA deadlines, we had not time to bring up robust project portfolio management tools, so we kept things moving with simple, homegrown Excel tracking tools.
- Other specialized diagnostic tests as needed—assess the scope (original and current), review the technology strategy, development strategy, testing strategy, release strategy and change management strategies.
After performing these steps, you should have insight into why the project has gotten off track. Our next blog post will cover some of the intervention steps to take after the diagnosis is complete.
Real Time Web is the latest trend to capture the media’s attention over the past few months, and indeed seems to encapsulate well the effect that Twitter and the social networks are having on the flow of information. The ability to get up-to-the-second information about people, news and activities around the world is a foundation for a new wave of startups and services and is being integrated into search and other services.
As many users of the real time web will attest, its constant stream of information can be overwhelming and disjointed but at its best, it allows awareness and insight to emerge as the confluence of information takes a clearer shape.
Can this be useful in the enterprise? (I’ll be careful about using the term “The Real-Time Enterprise” that Gartner coined a few years ago; it means something else).
Companies generate huge amounts of data that rarely sees the light of day. Let’s consider the following scenario – you are an account manager for several key accounts in a particular vertical. What information are you getting? Most likely direct and indirect emails consist of 90% of the information while the rest is verbal, non-documented conversations. But what if you could get real-time updates on the following:
- Client specific news
- Client brand related blog posts, discussions, videos and tweets in real time
- Vertical news
- Client services updates about milestones reached
- Customer support alerts about open service tickets and their resolution status
- Internal discussions and email regarding the client
- External email communications with the client by different team members
- Etc..
Not all of these would constitute information that someone will send a specific email on. Being aware of the stream of news, discussions and information can be invaluable for an agile and responsive approach.
Our current document and email centric information systems are not built to provide this level of constant details. Using the new generation of web mashups and aggregation tools are beginning to offer reasonable solutions.
As Jennifer Martinez had recently observed in GigaOm, there is a huge potential for tools that will help sift and provide context for all of these huge streams of data.
What surprises me is that most of the discussion looks at this as a new phenomenon while there is an industry that has been using this method very successfully for a long time. The Bloomberg (and other) terminals provide bite size financial information in a continual stream that can be filtered, sorted and analyzed. It combines company news, industry news, transactions, price changes, etc., in a way that for a novice seems indecipherable but for the experienced broker is a goldmine.
Providing the right tools are put in place, the potential business value seem significant:
- Accelerating cycles of decision making
- Pushing all relevant information to you rather than pulling from multiple sources is a great time saver
- Decreasing the unbearable email load
- Increasing and broadening awareness to domain knowledge
For more information on the real time web and the type of tools that exist around it, ReadWriteWeb has compiled a great list of top 50 real time web companies and services.
An Agency Website with a polished, rich design and robust functionality OR an Agency Website with a basic design and moderate functionality – which would your Agents choose?
I can state with certainty they would choose the robust, functional, polished agency website! How do I know this? Experience. Client’s I work with that have invested the time and dollars to re-architect, re-brand and add advanced functionality (aka, “Website Trilogy”) to their out-dated agency websites are reaping the benefits:
Satisfied agents that Sell their products.
So, if your asking what I mean by the Website Trilogy and what is involved, I have two comments:
- First, continue to read;
- Second, maybe it’s time to realign your agency website to support the growth in your business, get on track with the latest technology, and remain competitive.
Website Trilogy is a term that I use with my client’s to design, develop, and revitalize their out-dated, agency website. This process has three (3) components associated with it:
- Architecture
- Branding
- Functionality
Each component of this trilogy is explained below.
Architecture
When Insurance carriers began developing agency websites, the technology available had limitations. Technology and technology platforms have advanced considerably from those days. Insurance carriers may not be utilizing today’s latest and greatest technology platforms as the foundation for their agency websites. One reason may be the age old thinking – “if its not broken then don’t fix it”. I disagree and pose this – “if its out-dated and doesn’t support your business, re-build”!
Technology platforms utilized today to develop and maintain websites offer many benefits over their older counterparts. These more sophisticated platforms are the foundation for re-architecting your current agency website. Advantages associated with these platforms include:
|
|
|
|
|
|
Technology platforms are abundant in today’s market. Prior to selecting a platform, complete your in-house due diligence by determining:
- What the agency website needs to do,
- How it will be accomplished,
- What functionality is required,
- Who will own the site content.
Having the answers to these important questions will guide the technology platform evaluation and selection.
Branding
As the platform is integrated into your environment, re-branding of the site should be undertaken. Older sites tend to have a monochromatic (a single color schema) or a “mainframe green screens” look and feel.
Bring your agency website into the 21st century by re-branding. This means:
- New graphic design: color, logo’s, images, etc,
- New content design: pages designed for readability, functionality, and content relation,
- more efficient navigation throughout the site,
- menu options that are understandable and meaningful,
- help sections
Don’t be afraid to audit your competitors’ websites and see how they’ve updated their design.
Don’t make the mistake of overlooking this critical step – The presentation of your new site is just as important as the functionality you will build into it.
Functionality
Working with your internal staff and some key agents, you must strategically plan what functionality should be included on the new site. Review your current functionality, but consider new services that will make your agents’ lives easier. Figure 1 below represents some of the key functions to consider.
Figure 1
It has been my experience that sites that have not been upgraded in the last 3-5 years lack some of the key functionality noted in Figure 1. Today’s agents are technology savvy. They want websites that give them the information and the tools that will make them successful in performing their jobs. Give your agents the ability to login to your agency website and:
|
|
These are just a few key functions that that I have helped our clients develop for their new upgraded agency websites.
Built into the agency website is a tight security model, to protect all agent data from those who should not see or have access to it.
Conclusion
If you’re serious about advancing your agency website, then consider the Agency Website Trilogy. You want to cover all three phases in-depth. Omitting just one could jeopardize the success of your revitalization project.
I’ve had clients say that they believe the cost and time commitment for undertaking such a project is more than they can afford during this economic downturn. After spending a few weeks with a client to strategically plan a project such as this, the cost and time commitments are far less than what they anticipated. In addition, completing a project like this in iterations can help to alleviate the impact of a financial “big bang” or a long-term deployment.
So what is stopping you from revitalizing your agency website? Could I be right that you are still thinking, “Jeff – it’s not broken”?
A quick google search shows that the medical concept of triage is commonly applied to evaluating IT projects and other major business initiatives. 
The concept of triage comes from medicine, and in particular medical treatment under difficult circumstances—war, epidemic, disaster—where the number of people needing treatment exceeds the resources available. In such situations, the sick or injured are typically assigned to one of three groups.
In the business context, it usually means allocating scarce cash and human capital under difficult economic conditions, when the number of ongoing projects exceeds the level available resources.
Project Triage Framework
In the current economic climate, it probably makes sense to perform a mini-triage of your project portfolio quarterly, with an annual triage as the last fiscal quarter approaches. In addition, you may be faced with the need to triage in emergency situations such as a sudden shift in business strategy, in the face of a new acquisition, or when presented with an across the board budget cut. Periodic review is a cornerstone of an effective project portfolio management strategy. This regular triage can be a valuable form of project insurance. Preventative medicine is always less costly than crisis treatment.
Your triage team should include your senior IT management as well as functional business leadership. Performing project triage is easiest if there is regular, reliable status reporting from the project teams, on their milestone and budget status.
Triage is also easier if your project initiation process includes a business case that assigns a business criticality score to the project. It’s entirely possible that business criticality of a given project might change over the course of the project’s lifecycle, and a master project status tracking document helps the triage team keep track of this.
After reviewing the health of individual projects and their alignment with current business needs, triage will place them into three groups which align perfectly with the medical definition of triage:
1. Persons who are likely to live even if they don’t receive immediate treatment—projects going well that need no additional intervention
2. Persons who are likely to die even if they do receive immediate treatment– projects that you should suspend NOW before they chew up additional resources
3. Persons who are like to live only if they receive immediate treatment– projects that need you to perform an immediate intervention
Our next blog post will cover specific diagnostic tests you must perform on projects that fall into the third group. In the meantime, let us know your apporach to project triage by answering this poll:
ROI communication & calculation can make a difference in a project getting funded or not
In today’s economic climate justifying the cost and benefits of an IT initiative has become more important than ever. Often the fate of an IT project depends on the justification of benefits and recuperation of the costs. Therefore calculating, presenting, and demonstrating the benefits of a project in an appropriate manner can make the difference between getting a green light and getting stuck in an endless review cycle.
Value-statements can help bridge the communication gap
During my interactions with various IT departments I have noticed that the IT staff values a project differently than the business sponsors or executive team. Calculating and communicating the value of an IT project puts the IT staff in an uncomfortable and unfamiliar role which requires financial, sales, and technical skills. Quite often even when the IT staff tries to focus on business benefits they fail to align the benefits of a project to the business concerns in a manner that resonates with the executive team. The use of appropriate terms and prioritization of business concerns is key to grabbing the attention of the business sponsors and the executive team. A value statement [i]can be a useful tool to summarize and contextualize benefits of a project in almost all circumstances. Sometimes there are cases when ROI is not clearly defined, is impossible to define, or simply not that important to the stakeholders. Under such circumstances a value statement can be instrumental or even a must. They help overcome resistance, bind together stakeholders, and focus the project around delivering real business value. To summarize, they help you see the forest from the trees where as ROI calculations help you count the trees.
A value statement can take many shapes and formats depending on the context of the project and audience reviewing it. However, it is always a good idea to try and tie it back to the mission or value statement of the project. For example consider the following sample value statement:
The benefits need to be tied back to the capabilities by linking them to preferably operational measures. Financial measures although are more accurate they typically lag operational measures.
Calculating ROI
When calculating direct [i]and indirect [ii]benefits of a project it is important to keep three important aspects in mind:
- The Rate of Return of the Investment
- Capital Recovery Horizon
- Variance Potential
The rate of return of the investment is not just returns exceeding the original investment plus the cost of capital but it should also include compensation for the risk of undertaking the project. For example if a project returns 20% and cost of capital is 18% then the additional 2% may not be sufficient justification even for a “sure shot” of a project. As a very rough rule of thumb ROI of less than twice the cost of capital should be considered high-risk. A ROI of 4 times or more of the cost of capital is considered ideal. Capital recovery horizon is the time that a project will need to generate enough benefits to recover the original investment. The rapid pace at which technology, business environment, trends, and preferences change (especially in the IT industry) pose a significant risk of future benefits not being realized. Changing market conditions and new competition can create new more lucrative opportunities as well diminish the value of existing ones. Therefore it is highly desirable to recoup the original investment as quickly as possible to minimize exposure to sudden changes in market conditions. The ideal recovery time can vary significantly and depends significantly on the market conditions and maturity of a given vertical. For fast moving verticals recovery time of 1 to 2 years is ideal. Variance potential portrays the risk associated with changes or variances in the calculations and estimates of the future benefits of a project. Indirect benefits are hard to calculate accurately and are most susceptible to errors and variances. If indirect benefits constitute a high percentage of the overall benefits or a project then the variance potential for the project is high and vice-versa. Indirect benefits that are less than 50% of the overall benefits are ideal whereas a number of 90% or more indicates high risk to the project.
Calculating the ROI with appropriate level of rigor can be a daunting task. Coming up with a justification for a project is not a “one size fits all” exercise and does not always have to result in punching numbers and formulas into a spreadsheet. Depending on the type of project and the company the right type of benefits calculation has to be tied to the appropriate level of rigor. Sometimes a clear and well articulated value-statement can be sufficient while at other times you have to have hard numbers to backup your claim. A simplified ROI sheet that ties the benefits to the operational levers (operational capabilities) is presented below.
[i] A value statement focus more on the qualitative aspects rather than the quantitative ones, it is simply narrates the benefits without tying it to the bottom-line.
[ii] Direct benefits are the ones that are only one step removed or are a direct consequence of the implementation of the project (e.g. hardware/software/staff consolidation, time savings, inventory reductions, increase in revenue, etc.).
[iii] Indirect benefits are the sub-consequence of the change brought about the project implementation or are the unquantifiable side-effects (e.g. improvement in morale & good will, more knowledgeable support staff, increase in revenue, etc.).
