Perspectives

Case Study

Product Portfolio Process Improvement Reduces Cost and Drives Innovation for Health Insurer

industry & client situation

Our client was a premier health insurer with operations in multiple states.  Products were developed and maintained on a decentralized basis, leading to a complex product portfolio with significant cost and service issues.  The talent level of the product development groups was mixed (they did not attract the highest performing and potential individuals in the organization), and the group’s focus was largely on product maintenance, rather than innovation and concept origination. As a result, the company was losing market share to more innovative, larger insurers in national accounts and to cost-competitive regional insurers in smaller accounts.

approach

We conducted an exhaustive analysis of our client’s product portfolio, identified best practices in product development and life cycle management from comparable multi-state insurers, and developed a solid understanding of product design elements most important to customers and critical to cost containment.

Our analysis demonstrated that proliferation in the product portfolio had led to duplicate offerings and surplus products within and across states, and that the existing portfolio management processes delayed new products coming to market.  We recommended:

  • Developing a common product architecture which could be tailored to specific regional demands
  • Simplifying (i.e., reducing size and complexity of) the product portfolio, starting with the elimination of inactive products and consolidation of PPO products
  • Enhancing product development and portfolio management processes, including robust upfront planning, a phase-gated approach to development, and a consistently applied non-standard benefit approval process. 
  • Defining metrics and building tools to track product-level performance and actively manage the product portfolio 

results

The end-state design included a product concept phase that was forward-looking and driven by consumer needs and market trends.  The product development cycle was reduced to less than 1 year (requiring a close partnering with regulators), and the portfolio was managed using key product metrics.  Our client developed a regional product organization which implemented the new product process, with specific talent hired to upgrade the product concept phase.  The client subsequently used the process to develop an innovative regional product concept.