Health Coaches

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Information that can be shared if inquired:

Competitive dynamics (not core to the case)

With increasing health care costs, the industry is under pressure to innovate new products that will control spending Assume client is first to market Past attempts to purely automate disease management have yielded minimal savings

Health Coaches

All activity conducted remotely via phone/email Typical profile is registered nurse that wants to work from home It’s difficult to actually reach patients, so coaches can contact 8 members per day (assume 25 days per month) Annual costs per coach: $60K salary +20% other (training, benefits, laptop, etc) There are no other program costs

Here the interviewee should investigate the customer segmentation by disease area and the costs per member.

The candidate should inquire about information about the client’s membership segmentation and about medical cost data.

The interviewee should choose to focus on the 65+ segment

Using Diagram 2, discuss which segments and disease areas are most important to explore.

65+ (Medicare) patients are the sickest, followed by the individuals, while the group members are the healthiest (younger, working).

Sicker patients are likely to drive higher costs, which will make them better candidates for the disease management program (i.e., the 5% cost reduction will have a bigger impact).

Diabetics make up the largest portion of sick members.

As a chronic disease is primarily brought on by behavior, Type 2 diabetics are most likely to benefit from disease management programs.

Main conclusion

• Profit is $72,000 per health coach, which is 50% of the total revenues/savings generated.
• Based on a PMPM diabetic cost data, the “Individual” segment is break-even (50% fewer savings as PMPM is only $150)
• Based on PMPM diabetic cost data, the “Group” segment is a loss.

Recommendation

Give the interviewee a moment to prepare a recommendation.

The following one is a strong example:

• The client should launch the health coaching program, and first focus on diabetes for the 65+ Medicare segment

The client should take the following steps:

• Launch a pilot program to prove our assumptions (e.g., 5% cost reduction, Coach portfolio capacity, etc.)
• First expand to entire 65+ segment ($144M per year savings, a 2x return on each Health Coach)
• Consider introducing to expand to the Individual segment despite only being able to break even.

This could be done due to customer retention, a moral rationale and many other factors.

Possible solution:

• More efficient disease management program (e.g. coaching at work, bi-monthly contact, automated correspondence, etc.)
• Seek additional revenue sources (e.g. employers might be willing to pay a fee, government support)
• Since 5% is the average savings, the program can target members who will respond with savings well above 5%

Possible solution:

• It’s tempting to suggest that the client should market to 65+ Medicare patients with diabetes since this is where the program yields the greatest savings.
• While it’s good that we have lowered the cost of older diabetics, the client should keep in mind that more diabetic members will increase overall health care costs, considerably – (still almost 4x after savings)
• An instinctive interviewee might suggest an alternative: The client should sell its health Coach service to other payers.
• But how would you price that? What are the challenges (e.g., regulatory, info sharing, etc.)?

More questions to be added by you, interviewer!

At the end of the case, you will have the opportunity to suggest challenging questions about this case (to be asked for instance if the next interviewees solve the case very fast).