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Medium Profitability Operations Opportunity Assessment

Health Coaches

#Healthcare #Insurance
ProHub Comment

This case tests market segmentation, cost-benefit analysis, and profitability calculations in a healthcare context. The key insight is identifying the 65+ lifestyle disease segment as the most profitable target, where high patient costs combined with behavioral disease susceptibility create a strong ROI for coaching interventions. Candidates must balance quantitative profitability analysis with qualitative considerations about market positioning and customer retention.

Estimated Time 15 minutes
Difficulty Medium
Source Kellogg
50 / 100
Our client is a large national healthcare payer (health insurance company, think Aetna) exploring the launch of a new disease management (‘DM’) program to better serve its 5 million members. The idea is to hire and train a team of ‘Health Coaches’ to manage a portfolio of patients to reduce the costs of overall health expenditures (eg. reminders to take drugs, provide limited medical advice, suggested diet, exercise etc). Studies show that once a month contact with each patient reduces health spending by 5% on average. Should our client launch the program? If so, what steps should it take?

Clarifying Information

  1. Industry: The whole industry is under pressure to innovate new products that will control spending
  2. Company: Assume client is first to market
  3. Operations: Past attempts to purely automate DM have yielded minimal savings
  4. Health Coaches: All activity conducted remotely via phone/email, typically by a nurse that wants to work from home
  5. Patients: It’s difficult to actually reach patients, so Coaches can contact 8 members per day (assume 25 days per month)
  6. Costs: Annual costs per Coach: $60K salary +20% other (training, benefits, laptop, etc.). There are no other program costs