Southeast Health Plans, Inc. is a service company that will provide health plan administrative services to self-insured employers. The company will target employers with 50 to 500 employees. Many of these employers have current HMO, PPO, or major national insurance carrier health plans. While the majority of employers with 500 or more employees have at least some element of self-insurance incorporated into their health care programs, our target market is often ignored by the major national insurance companies. The majority of 500-plus employee-based companies are self-insured. However, Southeast Health Plans’ management discovered that less than 25% have plans.
Companies who are currently self insured and those with other types of insurance will have to transition to self-insurance. The availability of high-quality administrative and consultative services is an important factor in the transition from self-insurance to self. Southeast Health Plans, Inc., is managed by an experienced team. It has formed a strategic alliance and a subsidiary of Blue Cross/Blue Shield Pennsylvania, Blair Mill Administrator, to provide the best benefits management services to its target audience.
Southeast Health Plans, Inc. is expected to generate more than $5,000,000 in revenue over five years, with a net profit of $1.6 Million after taxes. After-tax earnings of $560 million will make the company profitable by year three. Margins as a marketing company and service provider will be high. Gross margins exceed 80% (less sales incentives costs) and close to 50% after operating expenses. Once market penetration has reached maturity, the company will turn profitable.
Southeast Plans, Inc.’s success lies in its ability to attract capital to market its services in the metropolitan Atlanta area and northern Georgia. Proper professional sales personnel is critical. The company will then need to expand its success in the Southeastern markets. The company must control costs, especially with respect to marketing programs and sales, in order to expand within the Southeastern markets. This will be possible by utilizing internal cash flow to fully fund expansion.
1.1 Objectives
The company has the following objectives:
- Co-operative marketing using Blair Mill advertising executions in the Atlanta metropolitan market
- To hire sales staff, both identified and unidentified, to implement a sales follow-up strategy.
- At least 4,800 employees total under management by year end.
- To reach break-even at the end of the second year by reducing the total loss to $100 000 in the second year and increasing market share.
- To shift to earnings by year three, and to accelerate gross margin contributions by building market maturity over infrastructure.
- To expand regionally using both sales and media personnel to penetrate new market segments while consolidating our service capabilities.
- To continue to achieve cost benefits through an expanding provider network, while maintaining quality patient care.
- To have more that 98,000 employees under management by year five.
1.2 Mission
Southeast Health Plans, Inc. provides small and medium-sized employers with a comprehensive benefits management program that allows them to manage their health benefits while giving employees access to high quality healthcare. Southeast will offer its clients, employees and employers, the best health care possible by combining self-insurance and stop-loss programs with efficient plan administration. Southeast will deliver a balance of quality care and freedom of choice at a fair price.
1.3 Keys to Success
These are your keys to success in the business.
- Marketing. Southeast Health Plans has the ability to sell directly through employers and independent insurance brokers and agents. Name recognition will be important among established programs. It is important to control media budgets and maintain closing ratios of 5% per annum for leads.
- High quality service. Services provided by Blair Mill administrators are among the best in small-employer services. Customers will be satisfied due to the value-added experience of the Southeast Health Plans, Inc. Management Team and their provider network.
It is important that clients feel satisfied with their service and plan cost in order to reduce client erosion as well as to fight competition. Renewals should be at least 85% of existing clients.