Competitive Intelligence (CI): Think like your Competitor and War Gaming

This morning, I attended a quarterly breakfast meeting of the Oregon Chapter of the Society of Competitive Intelligence. Competitive Intelligence has become one of my default job responsibilities and it's also one of the cooler sounding parts of my job. When I say that I work in product development for health insurance, people always wonder what a health insurance product is. In case anyone is curious, a product is any type of health insurance plan such as an individual plan with a $1000 deductible and a buy one colonoscopy get another one free option. I really think the idea of a 2 for 1 colonoscopy has traction.

Back to the post at hand, my competitive intelligence responsibilities include reviewing the quarterly financial filings of other insurance carriers, analyzing market share by product line, and working with the sales teams on gathering market buzz. I also test our competitors by applying to their plans and attending their presentations. However, SCIP has provided a structured way for me to think about my intelligence gathering and also how to use cool terms like "War Gaming". This was explained at the breakfast meeting today and other topics such as:

War Gaming: is term used by Mark Chussil, who is the founder of Advanced Competitive Strategies, Inc. It is an approach where rather than thinking about how you would respond to competitors, you put yourself in a competitors position and think about their approach or what they would do. As Mark describes it, it can be as simple as sitting around and asking, "What do you think they would do?", "I don't know what do you think?" For me, the beauty of it is that it can be a simple change of perspective to gain new insight. Rather than look at past data to see what happened, you guess what you think someone will do in the future.

One of our Medicare competitors had some very successful high end plans (or products) and if we had put ourselves in their position, we would have realized their next logical step would be to launch a low priced product to reach a new segment and hedge for any economic down turns. That's exactly what they did. This approach breaks down insular thinking and it's fun to pretend you're someone else and role play, especially for us former Dungeons and Dragons players.

Job Descriptions: This is an even simpler tool but looking at what job positions your competitor is posting is a way to look at their future strategies. Are they hiring construction project managers? Probably building something new. Hiring a new VP? Someone probably left or they are adding a new department. Some companies will even detail the business objectives in a position with beauties like, "Hiring new position to launch a $x strategic initiative that will launch product line Y."

The Business Case for Competitive Intelligence: Cool terms like War Gaming, Competitive Intelligence, and Hit Points (sorry lapsing into Dungeons and Dragons again) will get you at least 6 months but eventually someone is going to ask for the ROI on your CI. The best calculation that I heard was that competitive intelligence improves your odds of successful product launches, getting new accounts, maintaining business, or other strategic initiatives. Improving the odds of a successful $1 million product launch by 10% is worth $100,000.

Two Non Insurance Parts of Health Care Reform

Bob Laszewski had an excellent blog post about some of the aspects of health care reform that we don't think about. They don't require transforming the system but rather are important adjustments that are needed regardless of what kind of health system we have. These are not easy adjustments or really "shovel ready" as he describes but compared to universal health coverage, they are more like the 80 pound primates. Two adjustments that I want to address are making primary care sexier and data.

Primary Care: making it sexier
I'm not talking about making primary care appointments like Thai massage with an option for a "happy ending". Right now, primary care physicians are only 30% of practicing physicians while specialty care makes up 70%. These numbers are the reverse in other countries. Our local medical school, Oregon Health and Sciences only graduated 10 primary care physicians last year. While we can give everyone health insurance, if there are not sufficient primary care physicians, we cannot give everyone efficient health care.
From remembering conversations with our pre-med classmates, we can all imagine why those who enter primary care are only the ones who are really passionate about it. Doctors are smart and follow the data. They see hours, lifestyle, prestige, and earnings and primary care doesn't pencil out compared to some specialty care. That's why so many people become urologists or opthamologists. The penis and eyeballs are not that exciting, well the first one cannot really be called unexciting, but that's a different topic. Instead, rather than deep passions for those parts of the bodies, classmates see lucrative careers with manageable hours.
The residency programs will follow supply and demand so if the health care industry makes primary care exciting where primary care physicians are every mother's nightmare but every school boy's dream, the medical students will follow. Costs for primary care visits have not increased more than the cost of inflation which makes them an efficient method of managing health. Give primary care physicians more control over the health care dollar and specialists less. When I present this proposal, I get asked if someone really needs to go to a primary care physician when they know that their throbbing shoulder should really be seen by a specialist. It befuddles me that someone thinks they know better than someone who studied the body for 7 years and that someone thinks they can bypass a general physicians because they can identify the specialist most appropriate for them. To me, it's like telling a teacher that they will not come to school on Fridays since they have identified a curriculum that they think is better suited to their educational needs.

Data: this is the Highlander's Sword
While in the classic movie series, "The Highlander" in the end there can only be one, there will be multiple winners in the roller derby of health care reform. I'm going to stop with the 80's culture references now. As I have posted before, health insurance companies have the best data which is why despite being as popular as plantars warts in a yoga class, the insurance industry will not disappear. Health insurance companies have the population data to measure the outcomes, the holy grail of health care reform and the cost data to know how to operate their business. Physicians don't staff for this kind of data. Hospitals have become too complicated and their charge master work around billed charges to maximize insurance revenue has made their pricing as vague as a lot of Dennis Miller references. Billed charges for hospitals is unfortunately a meaningless number. The story of pharmaceutical and medical devices companies is low marginal costs but high prices in order to recoup research and development which is a tough cost structure to defend. Insurance companies know their administrative expenses well, their medical costs, and their revenue and have the data to defend it. Other players in the health care industry do not.
In the blog post that I linked to, Laszewski does ask why health insurance companies don't share that data as that would truly benefit the health system. Doctors would get reports on their patient care and hospitals could get a better feel for their cost data. It's a good point as that would benefit all. However, currently health insurance companies are refining their data capacities as a competitive advantage to show improved health outcomes and improve provider network outcomes by rewarding those providers who demonstrate good outcomes. The data is a potential revenue generator. If sharing data or reporting in a certain universal fashion becomes a mandate, than it is no longer a potential revenue generator but a cost of doing business. Goal of any business is to drive costs down which will limit the investment in data (except to reduce costs).

The One Job that I Truly Loved

In my last post, I drove over the TMI (Too Much Information) line and didn't really back up with my comments about Sperm Banks and Team 88 million during my first ascent of Mt Hood. In my humble opinion, one really can't casually mention sperm banks and specific sperm count (88 million) and not offer additional comments. Well, I am kind of begging for someone to ask for more comments almost like when someone casually mentions that they remember the late 60's. While being paid to give bodily fluids doesn't usually fall into the post-MBA experience category, the MBA career path can take many twists and turns. I am sure that I can't be the first MBA to do it and won't be the last.

Since you asked (or at least are still reading), I was a sperm donor for about 9 months. I did get a milestone payment so I was a professional but I never went on the market due to some silly FDA rule. The best response that I got about my profession was:

"Wow, you are the one person that I know who truly loves their job and you make money hand over fist. But after a hard day's work, what do you do to relax when you get home?"

Here are some other questions that I have been asked about being a sperm donor:

Is it hard- er I mean difficult to get selected? The tricky part is that your family history can change at any time which would eliminate you as a candidate. If anyone in your immediate family gets diagnosed with cancer or a chronic disease, your DNA changes. You also have to be appealing to someone selecting a donor. However, with my Ivy League educated background and especially being Jewish, I was fast tracked.

What are the donation rooms like? They are like the doctor offices where you have exams only one drawer is filled with some porn magazines. There is also a two way cabinet where you leave your donation. Otherwise, it's just like a doctor office. I was slightly concerned that an unintended consequence of my work would be that I would get aroused every time I went to the doctor.

Don't you have to abstain for a certain period of time before giving at the office? 48 hours but it varies based on how quickly you can replenish your supply. I had just started dating my wife around this time period so this was really tough. That's how I learned that 88 million was an acceptable sperm count because I didn't always meet that threshold.

Did you get to meet any of your co-workers? I did not and that's one thing that kind of disappointed me. Although we probably wouldn't shake hands with each other, there was ample opportunity for conversation topics and have some form of community.

What's this profile that people use to pick a donor? Marketing is important to help position brands of tooth paste so it's definitely important to position someone's future offspring. The sperm bank had a social worker interview me and we carefully reviewed my profile to emphasize talents and show my flattering side. This profile was posted on a website that recipients could peruse. It also had to be anonymous but this profile was so good that it could have been used for my on-line dating profile.

The toughest question that I had to answer was, "Why do you want to be a sperm donor?" Others had written some really heart felt responses about the importance of children or wanting to help other fulfill their dreams of starting a family. I realized that writing, "He heh heh heh, you said sperm, heh heh heh" wasn't going to cut it.

How many times can you be selected? There are rules around how many different parents can select a donor. If I remember, it was about 9 so there was no building of future empires. The rule was derived mainly to limit the number of times two kids would fall in love only to discover that they were related.

The Sperm bank used to be located right next to the medical school. That made it really easy to get donors and probably might have really distracted some students during lab (or maybe it relaxed them, either way I just hope that they washed their hands).

Fair readers (or any who are still left), anyone have bodily fluid donation experiences that you would like to share?

Our Fair City's Guardian: Mt Hood

You can see Mt Hood, an 11,235 foot peak, from a surprising number of spots around Portland. Mt St Helens also makes an appearance with it's distinct flat dome that's slowly rebuilding the top that was blown off in 1980. Those 2 peaks as well as Mt Adams make up the Guardian Peaks. The story that ties those peaks together is a Native American legend that has a few versions but essentially involves a love triangle with Mt Adams and Mt Hood competing for the affections of Mt St Helens. It did not end well for the lovers were smitten in place for eternity. The symbol of a smoldering, lava-spewing volcano is a very appropriate for a star crossed lover.

I took this photo above which shows the east side of Mt Hood. The south side to the left is the most popular climbing route. The 3 climbers who received national media attention in December 2006 climbed up the steeper north route. With respect to the climbers, Mt Hood does have many faces, not just the inhospitable one.

We made it out to the Mt Hood area for the first time this season which is what got me thinking about the peak. We snow shoed around a popular area called Trillium Lake which has enough open areas to give a perfect view of the south side of Mt Hood with all of its features. I also see Mt Hood on most clear days when I leave the western suburb where I work. It looms behind one of the downtown towers and than shows up again when I cross the bridge on the way home. It's a comforting reminder that in the city, the mountains are never far away.

I consider myself to be a mountineer because it makes me sound tough and every guy wants some ability to claim that they haven't grown completely soft. The mountains nearby made mountineering really appealing so I don't have to start doing mixed martial arts or practice survival skills. The mountineering also gives me some training goals to always shoot for. For my Mt Baker climb, I used a work stair master while wearing a backpack with a 45 pound weight. It took my co-workers a month to muster the courage to ask me about this unusual exercise routine.

The picture to the right is both really spectacular and shows the south side climbing route that I've done twice. It reminds me of my 3 favorite experience with Mt Hood which were:

1. First Ascent: On my 31st birthday, a crew that I played Ultimate Frisbee and I headed out for most of our 1st climb. We knew just enough to be dangerous as only one of us had climbed it before. Our team was dubbed "88 million" after the typical sperm count that makes up one serving at a sperm bank (which is another story all together :). Two climbers who had done all 3 Guardian Peaks within 48 hours stormed past us on the way up. We almost got turned back by the fog but just as we had given up, we hiked through it and saw a clear sky which gave us the 2nd wind. It was my first ascent of Hood and you never forget your first.
2. Snow Climbing: Three years later, I had gotten more serious and took a climbing class with the Mazamas, a volunteer outdoor group. We had found a 20 foot wall of snow that had melted out where we practiced climbing, rappelling, using our ice axes, and setting anchors. One our teammate fell through the soft snow, blew out 3 anchors, and slammed into a rock wall on the bottom which ended the playful mood and made us realize that we had to be serious. He was all right and we resumed snow climbing up some pretty vertical walls. It made me realize that I had gotten pretty serious about climbing as I spent a Saturday simulating climbing. It was also a lot of fun, kind of an adult play ground.
3. Teaching how to fall: The lower part of the south side is often used by Mazamas for early trainings on how to travel in the snow which includes self-arrest for a rope team that falls. Luckily, the most spectacular falls that I have seen were only during this training. One involved a rope team of 4 Intro to climbing students. As the team hiked on the edge of a cornice close to a steep snow wall, a co-leader grabbed the rope and took a running leap off the cornice and dropped at least 10 feet to the snow below. It was an incredible self-sacrific for an authentic falling experience. Everyone dug their ice axes into the ice in time. The 2nd incredible fall was one that I created. We were hiking up a canyon below a parking lot (training areas weren't really great view but effective for the conditions) when a leader instructed me to fall. I took a running leap and flipped the person ahead of me onto his back. He caught himself with his ice axe but that was one of the few times this individual was speechless.
   
   
   
   

Segment Me: Even the Government is telling Health Plans about it

One of the biggest goals of a good product portfolio is a well-segmented product suite. If you're going to offer more than 1 widget, ideally it would appeal to a different type of purchaser that looks for different features. A goat herder who sells goat milk would appeal to more customers if they get chicken and sold eggs rather than getting yaks and selling more yak milk. In case any reader is curious, yaks do make milk and it tends to be higher in fat and creamier. Did you also know that yaks are called "grunting ox" and can climb as high as 20,000 feet? All right, I'll stop. I went over a month without any animal husbandry posts and as you can tell, that was too long.

My insurance company had previously been more rudimentary in its segmentation. We would offer an expensive HMO plan and a cheaper HMO plan and just focus on price. However, there are people who would rather lick an ash tray than join an HMO so that only broadened our appeal by so much. Even the federal government in the form of CMS is getting the idea of segmentation. They recently released a call letter for everyone involved in the private Medicare world that told us as much:

[Private Medicare Plans] must eliminate those Medicare Advantage (MA) and Prescript Drug plans that are substantially duplicative in terms of cost sharing, provider networks, and benefit design, including Part D offerings,” CMS said in the draft letter. “It is expected that the cooperation of private plans in this matter will help beneficiaries to select the MA plan that best suits their needs.”

In other words, don't flood the market with just different versions of the same animal by-product to make it seem like you have a lot of plans to choose from when it's all just the same sausage.

Other industries are farther ahead of health insurance in terms of segments and developing products that match segments. For Medicare, all we have essentially come up with so far is cheap/expensive and limited provider choice (HMO) and lots of provider choice (PPO).

For our individual commercial plans, we're a little better. Just in case you're trying to figure out why I only talk about individual or Medicare plans, it's because that's what I am in charge of. I get to ignore the whole employer group segment. For individual, we use age and figure what kind of benefits or features would each age band would want. We're trying to figure out what consumers value and would pay more money for in terms of plan features. State requirements for certain type of features get in the way but we still have a lot of opportunity. Here are some of the thoughts that we have for segmenting our individual plans:

1. Drugs and who needs them? Prescription drug coverage is a significant cost and for anyone who is not on regular prescriptions, they would not value drug coverage for the price that they would. I see a split by with and without drugs which is kind of how a lot of people view the world. Some things are just better with drugs but I digress.
   


2. Catastrophic coverage? Another significant part of the health plan price or premium is what we call the out of pocket maximum. That is the most that would ever have to pay for health care in a year and it can be anywhere from $2,500 to $10,000. For some, knowing that you won't ever have to pay more than $X is very re-assuring. For some, their only projected health care expenses are a doctor's visit, a bottle of Advil, and a packet of cue tips so this thousands of dollars of out of pocket maximum is meaningless. I do wonder how many people really even look at this.
3. Is is just the message? I wonder if the we'll reach different segments not with new features of insurance plans but more deciding what features we call out. Would we point out that for a $20 copay you can see any number of Ear, Nose, and Throat doctors in order to appeal to the musicians? Do we point out the accident benefit and Emergency Room copay for the extreme sports people? These are all pretty common features of health plans that aren't always obvious unless you look at the details. Do we just need to do a better job of pointing out relative information?

Would any readers let me know what they think would be the most valuable feature of health insurance for them? Or what do you think are some of the largest segments of individual health insurance purchasers?