Business Redesign retains $1B in Revenue and saves $2.4M annually
Sector: Healthcare Industry: Health Insurance Company size: ~4500 employees
State contract ends in one year and the State will be going for out for bid. State Line of Business represents 20% of Membership, loss of this magnitude has remaining 80% of business absorbing shared services costs. Reduce the PMPM (per member per month) for the State Line of Business by $3.50, or $2,450,000 annually.
Cost to Implement: Overtime 1000 hours, Facilities $5,500 = $25,500
Annual Savings: $1,600,000 after Process Redesign + $800,000 found thru Financial Analysis
TOTAL SAVINGS: $2,400,000
The Business: Analyzed Financials to find where they could cut costs, finding approximately $800,000.
3D Value: After watching the business swirl for six weeks trying to find savings through Financials and brainstorming, and not being tapped on the shoulder, I requested an audience with the Executive Team. I explained the value of mapping the high level process across the State Line of Business (LOB) (utilizing Value Stream Mapping techniques) and promised to uncover opportunity that Financials simply could not – in just three weeks.
Here is what we discovered in just on of the core processes in the Line of Business – Customer Service:
The red lines represent rework; something did not happen correctly the first time.
- The customer has to call in to request the issue be resolved
- Customer Service First Call Resolution (FCR) was 85%
- 15% of issues were passed onto other departments to solve and report back.
The company had been in business for over 75 years. This was the way it had always been done. They could not see the fact that there were whole sub-departments in the rework loops that did nothing but address issues.
The issues were
- communicated by a Customer Service (CS) person in sometimes different lingo than what a Claims person would say/type
- documented by CS in one system and passed to another workflow system to Claims- translation between the two systems was broken and some information was often garbled or simply lost.
CS promise to resolution was 30 days. While the issue was “over-the-wall” in Claims or Membership, the CS representative spent about 10% of their time following up on aging issues.
- Eliminate entire rework loop – IMPROVE EFFICIENCY
- Retire 2nd workflow system – IMPROVE QUALITY AND EFFICIENCY
- Create cell of experts located in Customer Service to immediately respond to issues CS representatives cannot address. This required the implementation of Instant Messaging, something forbidden in the past in Customer Service. – IMPROVE QUALITY AND EFFICIENCY
- Reallocated two fields in the Customer Relationship Management (CRM) system to capture how issues were resolved (no capture of this prior) – IMPROVE QUALITY
- Estimated Savings: $1,600,000 in 6 months
- Cost to Implement: Overtime 1000 hours, Facilities $5,500 = $25,500
A Testimonial: Communication Improves with Business Redesign
In the old world, Customer Service Reps and Claim Professionals were not encouraged to communicate to each other. Customer issues were thrown over the wall (and back) with minimal interaction, little to no knowledge-transfer, and limited understanding of root cause.
I was delighted to see a very detailed Instant Message (IM) between a Customer Service Rep and Claims Professional on July 20th. The Claims Professional had responded that the claim had processed correctly based upon the desk level procedure. The Customer Service Rep shared a link that showed that an important processing step had been omitted from the desk level procedure.
As a direct result of their communication and sharing of information, the link from the Customer Service Rep is being incorporated in the desk level procedure so that we can ‘get it right the first time‘. Outstanding Teamwork! Outstanding Customer Focus!”
-Darrel J., Business Analyst, StatePPO Claims