DELOITTE CONSULTING PRESENTS -...
Transcript of DELOITTE CONSULTING PRESENTS -...
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DELOITTE CONSULTING PRESENTS
Tanushree Chellam Inez Foong Anthony Lorubbio Carlos Gil Neel Nadkarni Nishant Kondamudi
Ecclestone Association, Montana
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AGENDA
¢ Background ¢ Proposed Solutions ¢ Changes Made
¢ Conclusion
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- Background Analysis Solution Benefits -
ECCLESTONE HEALTH OF MONTANA
¢ Core Administrative Processing System
¢ ICD-10 standards
¢ Capabilities – gauging operating level
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STAKEHOLDER ROLES
- Background Analysis Solution Benefits -
Board of Directors • Cost savings to
firm
Clients • Better products
Banking institutions • Better outlook for
EoM • Easier to obtain
loans
Government • Concerned about
loss of jobs • Compliance with
new regulations
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October 1, 2012
• Must meet 80% parity criteria in • Customer • Network • Medical • I/T
February 1, 2013
• Must meet 80% parity criteria in • Sales • Product • Billing • Claims
June 1, 2013
• Must meet 80% parity criteria in Leading Ecclestone plans
June 1, 2014
• ICD-10 Compliance
- Background Analysis Solution Benefits -
CRITICAL DEADLINES - UPDATED
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PROPOSED SOLUTIONS
Short Term: Functional Outsourcing
Long Term: Functional Outsourcing + Merger with Idaho
• Will allow EoM to meet deadlines on time with minimal cost and optimal improvement in Capabilities
- Background Analysis Solution Benefits -
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ASSUMPTIONS FOR SHORT AND LONG TERM PLAN ¢ Time taken to reach first internal mandate ≈ 8
months ¢ Idaho will agree to the merger. ¢ Worst case scenario still includes two month
buffer.
- Background Analysis Solution Benefits -
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Today 10-1-12 2-1-13 6-1-13 10-1-13
Only 3 out of 8 capabilities above 80% threshold.
First 80% deadline
Second 80% deadline Third 80% deadline ICD-10
Compliance deadline
- Background Analysis Solution Benefits -
ORIGINAL TIMELINE
Career transition assistance , emphasize openness and trust, support innovation, outsourcing starts.
12-6-12: Begin talks with Idaho for Partnership (8 months)
4-6-13: Finish Outsource
6-2-13: Finalize merger terms with Idaho
6-1-14
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6-1-13 8-1-13 10-1-13 2-1-14 4-1-14
Second Phase of Outsourcing
1: Analyze both Internal and vendor culture
2: Analyze cross-culture with Idaho
Checkpoint for merger
- Background Analysis Solution Benefits -
CULTURE TIMELINE
Risk: if cultural assimilation fails – analyze competing firms for egs
6-1-14
ICD-10
Risk: if cultural assimilation fails – Remediation
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ASSUMPTION
¢ Cultural transformation strategy financed from the savings through outsourcing
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ANALYZE CULTURE – PHASE 1 (INTERNAL + VENDOR)
¢ Due diligence ¢ Learn from success stories
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ANALYZE CULTURE – PHASE 2 (CROSS-CULTURE)
¢ 3-day Project Manager Swap � Happy hours
¢ Duplicate role outing � Reduce job insecurity
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MITIGATE CULTURAL RISKS
- Background Analysis Solution Benefits -
¢ Phase 1 (Internal + Vendor): � Analyze competing firms for role-model examples
¢ Phase 2 (Cross-culture): � Fall back: remediation – if proposed merged culture
not assimilating � Small initial investment – low cost of failure
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MITIGATING RISK IN 3 AREAS – ORIGINAL PLAN
¢ Outsourcing Risk
¢ Partnership Risk
¢ General Risk
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- Background Analysis Solution Benefits -
LONG-TERM PLAN
Innovative Change
Partner with Ecclestone
Idaho
Culture Component
Enhancements
EoM University
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PARTNER WITH ECCLESTONE IDAHO
¢ Opens doors to: � CAPEX Resources to
be used throughout company ¢ $2.3 million
¢ Good Fit between companies
¢ EoM university
- Background Analysis Solution Benefits -
• EoM • EoI
• EoM • EoI
Bad I/T Improved I/T
Low CAPEX
Higher CAPEX
*At time of merger
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BENEFITS OF OUR SOLUTION
¢ Improved product � Propelled by improvements in processes and structure
¢ Increase market share � Gain traction by merging with Idaho
¢ Attract more clients � Larger company therefore better able to handle
clients
¢ Better IT � Greater IT resources $
¢ Attract new talent
- Background Analysis Solution Benefits -
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CALL TO ACTION
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QUESTIONS
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CAPABILITY AREAS Functional Area Does EoM meet audit
criteria?
Sales Force and Broker Distribution Channel
Network Management – Provider Network
Product
Medical Benefits Management
Sales, Marketing & Underwriting Operations
Enrollment & Billing
Claims Processing
Customer & Provider Service
Network Management
Information Technology
- Background Analysis Solution Benefits -
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Savings after Merge
Montana IdahoTotal Organizational Capability Investment (millions) $17 $8.50Overall Lives 601,220 220,250Cost per person $28 $38.50
0
0.5
1
1.5
2
2.5
Savings (millions)
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Outsourcing model
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
2011 2012 2013 2014 2015
Current Operation costs
Outsourcing cost
Savings
Investment
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Projected Profitability
-15
-10
-5
0
5
10
15
20
25
30
35
40
2012 2013 2014 2015
Cost
Outsourcing Savings
Merger Savings
Total Organizational Capability Investment
Projected Profits (millions)
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FUNDS ALLOCATED TO CHANGE MANAGEMENT
¢ $1.5 million ¢ EoM University to support our forward-thinking technological
initiative => attract young talent in a sustainable way ¢ Internally, employees and externally, clients will be affected.
Change will happen over a 5 year period – many solutions in place to mitigate negative reactions to change by focusing on the benefits of the change and will serve as communication, training plan and change management.
¢ Build a guiding coalition. ¢ Strong communication strategy => brown bag lunches,
anonymous index card approach ¢ All employees should be involved => bottom-up projects ¢ Measure the progress of key soft factors by keeping track of
time, cost, quality, and flexibility. ¢ Reinforce the pertinence of the change vision and strategies -
CTA
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LONG TERM PARTNERSHIP
Divestiture
Due Diligence Integration
Strategy Target Screening
Transaction Execution
- Background Analysis Solution Benefits -
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TERMS OF MERGER
¢ Terms – � After thorough valuation analysis, the numbers
were negotiated between board of directors � Estimated increased CAPEX valuation: $2.3 million � Estimated increased cost of I/T: $6.1 million per
year (covered by EoI’s existing I/T budget)
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CULTURE COMPONENT ENHANCEMENT
¢ Allocate resources from Idaho partnership to team-building events
¢ Team-building events: � Brown-bag lunches � Monthly outings � Site visits to partner
company
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MENTORSHIP PROGRAM
¢ Option for retirees to use last 2 years of employment to capitalize on enhanced retirement benefits in exchange for knowledge transfer to new hires
06-02-15 06-02-17
Mentorship Program
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ANALYSIS OF OPTIONS
- Background Analysis Solution Benefits -
Remediate Current Systems
Implement Package
Functional Outsourcing
Affiliation or Merger
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STAKEHOLDER ROLE IN MERGER
- Background Analysis Solution Benefits -
Employees of EoM • Openly
communicate • Understand
reasons behind changes
Board of Directors • Promote
Innovative change
EoM Consumers • Use improved
online system • Critique, provide
feedback
Government • Advocate job
security – keep employment rate high
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STAKEHOLDERS
- Background Analysis Solution Benefits -
Stakeholder Concern
Employees of EoM Job security, salary, company culture stability
Board of Directors ROI, Merge Terms
EoM Consumers Product Quality
Government Employment
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CURRENT CULTURE
Weaknesses Strengths
Embrace change Commitment to Results
Openness & Trust Formalization
Structural/Consistency Control Focus on Consumer
Support Innovation
- Background Analysis Solution Benefits -
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FUNCTIONAL OUTSOURCING – VENDOR SELECTION
¢ Technoglobe � Based in India � Highly skilled employees � Low cost � Follow-the-sun � Good infrastructure � Tier 2 IT Outsourcing company
¢ Ensure that EoM is treated as an important client
- Background Analysis Solution Benefits -
“The biggest industry players made enormous strides in capabilities improvements because of the capital saved from outsourcing certain functional components”
- Chris Jameson, CEO
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EOM UNIVERSITY
¢ Supports forward-thinking technological initiative
¢ Sustainable Talent Acquisition � Attract young, tech-
driven talent
- Background Analysis Solution Benefits -
$8 Million, 2015
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MITIGATING OUTSOURCING RISK
¢ Maintain level of quality ¢ Maintain control over key functions ¢ Diversify outsourcing vendor ¢ Workforce reductions ¢ Communities of Practice (COP) ¢ Knowledge Transfer
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MITIGATING RISKS WITH PARTNERING
¢ Back up plans 1. Look into merging with other Ecclestone branches 2. Remediation
¢ Achieving Consistency between branches � Decision making � Client database management system
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GENERAL RISK
¢ Career Transition Assistance � Ensuring job placement for employees
¢ Transferring Knowledge in 2 ways: � Outsourcing � Retirements
¢ Culture Clash
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MITIGATING OUTSOURCING RISK
¢ Maintain level of quality ¢ Maintain control over key functions ¢ Diversify outsourcing vendor ¢ Workforce reductions ¢ Communities of Practice (COP) ¢ Knowledge Transfer
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MITIGATING RISKS WITH PARTNERING
¢ Back up plans 1. Look into merging with other Ecclestone branches 2. Remediation
¢ Achieving Consistency between branches � Decision making � Client database management system
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GENERAL RISK
¢ Career Transition Assistance � Ensuring job placement for employees
¢ Transferring Knowledge in 2 ways: � Outsourcing � Retirements
¢ Culture Clash