Compelling Stats Set the Stage

2. Context for Action Compelling Stats Set the Stage • Health spending 14.1% of GNP in 2002; 17.7% in 2012 • Private health insurance spending = $500+ billion • 50% jump in last 3 years in costs paid out-of-pocket by workers for prescription drugs and doctor visits • Direct consumer out-of-pocket = $200+ billion • 25–40% rate hikes in small group and individual market • Poor quality care costs $550 billion/year or $1,700/employee

3. Context for Action Compelling Stats Set the Stage • 98% of the 6 million U.S. companies have fewer than 100 employees • 60% of employers with fewer than 10 employees have stopped offering health coverage (38% of those with 10–49 employees) • The number of uninsured Americans increased by 2.4 million 2001–2003 • Direct-to-consumer pharmaceutical advertising is estimated at $3 billion • 1.2 million Americans buy prescription drugs from reimporters

4. Context for Action Ripped from the Headlines • UnitedHealthcare buys Golden Rule, then MAMSI • “We’ve had enough” Workers strike over increases in health costs • HIAA and AAHP Merge • Forecast 2004: No relief in sight for health insurance premium increases • Surgeons walk out at West Virginia hospitals • CDHPs emerge: “We’re not in co-pay land anymore”

5. Context for Action NEW FOUR-TIER CO-PAY Generic Formulary Brand Bus ticket to Canada!

6. Context for Action Drill Down: Challenges Driving Change • Skyrocketing premiums • Cost shifting • Industry consolidation • Technology advances • Struggling economy • Increasing uninsured • Price transparency • Changing population trends • Business process outsourcing • Managed care backlash • Single payer system • Erratic price competition • Prescription drug crisis • Consumerism tipping point

7. Insurance 101 “It’s not the big that eat the small, it’s the fast that eat the slow.” — J. Jenning and L. Houghton

8. Regional Health Players Well-positioned to capture market share Local presence, local brand Local-based provider contracts and loyalty Agility to embrace change and move quickly Small employers, individuals and seniors are prime growth targets Mega Competitors Well-positioned to capture market share Multi-market presence, mega-brand Leverage-based provider contracts Deep pockets to invest in change Small employers, individuals and seniors are prime growth targets Competitive Reality

9. In a Consumer-Centric World CDHP Tipping Point • Regardless of size, payers jumping in—quickly • Benefit consultants making big bets on CDHP • Barriers to entry broken down with technology and partner availability • Products reflect consumer decision making • Point of Enrollment – benefit risk and reward • Point of Care – price and quality transparency

10. CDHP: Fad or Trend? “There’s no reason anyone would want a computer in their home.” “I think the world market may be five computers.” “This anti-trust thing will blow over.” — Ken Olson, Chairman, Digital Equipment Corp., 1977 — Thomas Watson, Chairman, IBM, 1943 — Bill Gates, Chairman, Microsoft, 1995

11. In a Consumer-Centric World Customers • Need to be motivated to voluntarily make economical, logical choices about services they want and their willingness to pay • Old Way – unmotivated, isolated consumers with no information, co-pay mentality and managed care restrictions • New Way – engaged, accountable customers with price/quality information, benefit choices and rewards for shopping

12. In a Consumer-Centric World Payers • Need to recognize that health insurance no longer sells itself • Topline Growth means an investment in market intelligence, lead generation and marketing ROI • Customer Satisfaction means practical, education-based consumer communication and continuous after-sale selling

13. Market Reality “Buy-Knowing is when a buyer already knows what they need to know. Buy-Learning is when a buyer needs to acquire knowledge and weigh alternatives. A new approach is required for Buy-Learning.” — Kevin Davis

14. New business models . New marketing tactics . New partnerships Payer Employer Employee Provider

15. Prepare for the Future PayersWinners v. Losers:Run With The Pack Strategy • Financial stability • Tightly integrated, consistent operations • Superior customer service • Current technology platform

16. Prepare for the Future PayersWinners v. Losers:Breakout Strategy • Product differentiation • Unique selling proposition • Expectation setting • Preemptive customer experience • Baseline communications • Rules of Engagement • Continuous education • Frequent customer touches

17. Prepare for the Future EmployersTreat health care like other business decisions • Promote change through choice • Educate employees • Measure and demonstrate results

18. Prepare for the Future EmployeesRenew healthcare accountability, knowledge and engagement • Recognize true cost of care • Willing buy-in vs. force-in • Understand differences among providers

19. Prepare for the Future ProvidersMove from managing insurer to managing customer • Get ready for knowledgeable patients • Prepare for different flow of money • Make performance indicators available

21. Driving Growth Through Marketing 2121 • Topline growth • Support and accelerate profitable sales revenue • Marketing assessment • Evaluate effectiveness of strategic and tactical plans • Competitive positioning • Guide internal and external communications • Brand architecture • Influence customer preference and boost valuation • Integrated execution • Provide full-service marketing and creative solutions 800.951.6226