Benchmarks of Health Plan Administrative Costs

Posted on August 1, 2011 by Dr. David Edward Marcinko MBA MEd CMP™

2011 Edition‏

[By John Park]

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Recently, we began the release of our fourteenth annual edition of administrative performance benchmarks for health plans. It is the culmination of 515 health plan years of experience with all major sectors of the health plan industry. The attached brochure briefly describes our 2011 benchmarks.

First Universe Release

The first universe to be released was comprised of data of Blue Cross Blue Shield plans. Nearly 70% of all Blue Cross Blue Shield licensees participated this year.  A summary of the results for this universe is here:

http://www.sherlockco.com/docs/navigator/Navigator%20July%2011.pdf.

Results

In short, per member administrative expenses increased by only 1.0% in 2010 and only 1.8% when you adjust to back out changes in product mix.

This growth rate is very low by any standard.

Sherlock Company’s Benchmarks

Between the MLR provisions of the Accountable Care Act, which are intended to “create incentives for” health plans” to become more efficient,” and a weak overall economy, health plans face greater pressure to optimize their administrative costs. Sherlock Company’s benchmarks of administrative expenses enable your plan to quickly determine whether it is operating at best practice and to identify which functional areas provide the highest return on management’s efforts to improve performance.

Accordingly health plans serving more than one-half of all insured Americans are users of our benchmarks.

Assessment

Additional information can be found at http://www.sherlockco.com/seer.shtml

Sherlock Company

Douglas B. Sherlock, CFA

Senior Health Care Analyst

sherlock@sherlockco.com

Ph:  215-628-2289

Fax: 215-542-0690

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[Health] Plan Management Navigator

Posted on September 14, 2010 by Dr. David Edward Marcinko MBA MEd CMP™

September 2010

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By Douglas B. Sherlock, CFA

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In this edition of Plan Management Navigator, we write on issues that are especially timely for health plans in their current budgeting process. Topics are as follows:

Trends in Health Plan Business Process Outsourcing

This analysis is based on data excerpted from recent editions of the Sherlock Expense Evaluation Report. Outsourcing and the use of external contractors has been increasing, especially in the information systems functional area.

TPAs: A New Universe for SEER

For the first time, we will be publishing on the administrative expenses of Third Party Administrators. We believe that this analysis is unprecedented in its depth and granularity. This publication is helpful for TPAs, those that compete with them and all their business partners.

Dashboard Summary

This reports on results and trends from the three months ended July 2010 for non-public health plans. Because of the timing of the publication of this data, we would expect this to be a leading indicator to national results.

SEER Publication Schedule

In the challenging economic environment and with the advent of health care reform, health plans are trying to identify whether they operate at best practice and, to the degree that they vary from this, what functional areas are the most fruitful for the focus of management attention! This outlines the publication schedule for the peer group that best matches your organization.

Assessment 

By the way, in the next month or so, Navigator will be summarizing the results of the Sherlock universes of TPAs, Medicare plans and Medicaid plans. We also will have an interesting discussion on best practices for Blue Cross Blue Shield Plans and Independent / Provider – Sponsored plans. (Incidentally, the definition of “best practice” that we will employ may be found in the Early July 2010 edition of Plan Management Navigator).

Conclusion

Thank you for your continued interest in our research.

September 2010 Navigator[1]

Sherlock Company
Senior Health Care Analyst
sherlock@sherlockco.com
Ph:  215-628-2289
Fax: 215-542-0690

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Health Plan Management Navigator

Posted on July 11, 2010 by Dr. David Edward Marcinko MBA MEd CMP™

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July 2010 Edition

By Erin Sawchuk

erinsawchuk@sherlockco.com

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Dear ME-P Readers

Please find attached the early July 2010 Edition of our health Plan Management Navigator. In this month’s edition, we suggest an approach to quantifying best practice of administrative activities of health plans. Determining best practice for health plans is a knotty problem because of the complexity of the product and because some of what makes for best practice cannot be captured in the current year’s administrative expense line. We offer a solution that we hope to implement but we would be grateful for any insights you wish to share on this matter.

Financial and Operating Results

Navigator also summarizes some of the May financial and operating results of health plans reporting in our Dashboard. Operating earnings are weak on soft revenues and compressing margins. Enrollment trends in Medicare, Medicaid and ASO products are relative bright spots. Plans are adapting by reducing staffing ratios.

Link: Early July 2010 Navigator[1]

Web Casts

Please save 2:00 on July 16, and 2:00 on August 5 for two important web conferences. The first will summarize the results of this year’s SEER benchmarks for Independent / Provider-Sponsored plans. The second will summarize this year’s SEER benchmarks for Blue Cross Blue Shield Plans.

The Plan Management Navigators containing the respective peer group data will be sent to you a day or so before the web conference. There is no charge to participate, but we would be grateful if you would let us know in advance. Please reply back to me.

Assessment

Erin Sawchuk [Sherlock Company]

P.O. Box 413

Gwynedd, PA 19436

www.sherlockco.com

215-628-2289 – Phone

Conclusion

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Update on the Medicare Oriented Universe

Posted on October 3, 2009 by Dr. David Edward Marcinko MBA MEd CMP™

October Plan Management Navigator 

By Douglas B. Sherlock; MBA, CFAStetho-Claim

Please find attached the October 2009 edition of our Plan Management Navigator.

Medicare-Orientated Universe

In this month’s edition, we update ME-P and all readers on the results for the Medicare-Oriented universe, and provide summary functional area breakouts as well as expense trends. Holding constant the universe, and the product mix offered, administrative expense growth was higher than last year.

For example, eleven Medicare-Oriented plans serving 1.1 million beneficiaries participated in this year’s benchmarking study. In addition, the results from Blue Cross Blue Shield Plans and Independent / Provider-Sponsored Plans are also summarized. With these additional plans, we provide selected information on health plans serving 2.1 million Medicare beneficiaries, comprising approximately 22% of Medicare Advantage members during 2008.

Assessment

The analysis is based on materials from our Sherlock Expense Evaluation Report (SEER) for the Medicare-Oriented Plans. Additional information about SEER is available at www.sherlockco.com/seer.shtml or by contacting me.

Link: Navigator 10-09 

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