Until the late 1990s, Health Plan of Nevada, a health maintenance organization based in Las Vegas, was a happy settler on the frontier of Nevadas HMO landscape. In fact, it was the only real settler in the states HMO lineup, enjoying almost 100 percent market share.
But that all changed when outside competitors began to swagger into town. Parent company Sierra Health Services Inc.—which is also based in Las Vegas and whose commercial sales group is charged with selling the HMOs services—became alarmed when national HMOs such as UnitedHealthcare and Aetna Inc. started invading its territory.
Sierra officials knew they had to defend their turf, and CRM (customer relationship management) turned out to be the fence that would allow them to keep members home on the range.
With 70 percent of its business sold through brokers, Sierra started with a hard look at the practices of its commercial sales group that works with brokers, said Robert Church, Sierras electronic data interchange manager of IS.
This revealed to the company that a real CRM solution was a dire necessity if Health Plan of Nevada was to hold its ground, Church said. Each major department—sales and marketing, underwriting, and customer service—kept information separate from one another in its own legacy database systems. Therefore, it was impossible to get a single view of the brokers clients or of independent groups without making numerous phone calls and combining reports from different legacy systems.
In fact, before Sierra implemented a CRM package of software and consulting services, its salespeople relied on little more than Post-It Notes, whether to remind them to make or keep appointments with brokers or to create a handy paper trail on the status of a particular companys policy in the underwriting stages.
But Sierra executives realized that Post-Its would not cut it once Health Plan of Nevada was no longer the only HMO game in town, Church said. Even more troubling, he said, is that poor communication between departments meant that salespeople were using far too much of their time gathering and entering information instead of being out in the field selling.
Plus, he added, “We were concerned that the new competition could lure some of Sierras salespeople away, and all those Post-It Notes would walk right out the door with them. Anyone we hired to replace them would have no records of that salespersons last interaction with their brokers.”
In January 1999, the company launched a CRM application, Onyx Front Office, from Onyx Software Corp., of Bellevue, Wash. Onyx Front Office links different departments legacy system databases.
Sierra is just one among many health insurance companies that have been early adopters of CRM systems, said Harry Watkins, an analyst at Aberdeen Group Inc., in Boston. Watkins described health insurance companies as the perfect candidates for CRM. “They have large volumes of people to keep track of, extensive and varied databases, and revenues that are completely dependent on reducing churn rate,” Watkins said.
Onyx Front Office, which runs on Microsoft Corp.s Windows NT and SQL Server database, allows marketing, sales and broker services to access all data from a single interface, according to Church.
Problem solved? Not quite.
To Churchs surprise, Sierras least-organized, worst-performing sales team members embraced the new CRM system with open arms. They were thankful, he said, for something to keep them organized, since their own sloppy methods hadnt been working. But, on the flip side, the sales teams star performers gave a firm “No, thank you” to the new, pricey contact tracking system.
Said Church, “They felt they were just fine with the way they handled their broker contacts, and they were not looking to change methods.”
Church could have had a nightmare on his hands if the Onyx application had not had the full support of Sierras executives. But having taken four months to implement the system, as well as having spent more than $1 million of their IS budget on consulting services, implementation and training, they werent about to let the new system sit idle, Church said.
Instead, the company chose to directly link how much sales representatives earned to their use of the CRM system. “Basically, sales commissions could not be earned unless information on brokered sales was entered using the new system,” Church said.
Substantial return on investment started to appear in several compelling forms over the next year.
Sales reps found they could close more business with brokers more quickly each month because data on new companies needed to be entered only once, instead of several times into several systems.
For example, it used to be that, once a group was sold a plan, it took about two to four weeks for members to receive membership cards because the groups information had to be re- entered into the claims and billings system.
Now, the same data that was entered into one database to produce quotes can be flowed directly into the claims and billings system so that cards can be printed and mailed out the very day after the group is signed on.
Consequently, Church said, the ability to close the loop on sales faster has resulted in $800,000 in net new sales per each of the companys 20 sales reps.
The use of CRM moved into Sierras customer service departments as well. Overall membership since the implementation has increased 15 percent, according to Church.
The HMO competition in Nevada is, of course, there to stay. But more than two years since the implementation, Health Plan of Nevada is still the largest HMO in the state.
All this probably isnt very good news to the manufacturers of pads of paper with adhesive backings. As for Church, you wont hear him mourning the loss.
