Blue Cross Blue Shield of Missouri is an insurance company that serves the state of Missouri. The company serves residents in approximately 75% of the state's area, with services concentrate in the southeastern portion (Blue Cross Blue Shield of Missouri). RightCHOICE Managed Care Inc. (RIT) operates as Blue Cross Blue Shield of Missouri in Missouri, and is a licensee of the Blue Cross and Blue Shield Association. Blue Cross Blue Shield of Missouri has over 1.1 million medical members and acts as an operating subsidiary of WellPoint Health Networks Inc. (Kansas City InfoZine). WellPoint Health Networks Inc. is the second-largest publicly traded health care company in the United States (Kansas City InfoZine), and serves close to 45 million members (Hoovers Online).
In the past, the marketing of Blue Cross Blue Shield of Missouri has faced severe criticism. A Market Conduct Examination Report by Health Care Financing Administration notes that Blue Cross Blue Shield of Missouri "utilizes an overall marketing, policy issuance and application process hostile to Missouri residents attempting to exercise their rights as provided for in the Health Insurance Portability and Accountability Act of 1996" (Health Care Financing Administration). Specific criticisms of the marketing policies of Blue Cross Blue Shield of Missouri not that the company "Withholds access to information regarding guaranteed available policies from consumers attempting to access information through (Blue Cross Blue Shield of Missouri)'s marketing website" (Health Care Financing Administration). Specifically, the organization charges that BCBSMo does not inform consumers of the "availability of BasicBlue coverage" on its website. This violates Federal Regulations that specify policy forms must be "actively marketed to... both eligible and other individuals" (cited in Health Care Financing Administration). Ultimately, notes the report, eligible consumers are denied "complete and equal marketing information" (Health Care Financing Administration).
These specific charges were made in a larger climate of consumer distrust about the motivations of large corporations, including those of health care plan administration. As such, these charges have likely increased consumer distrust of Blue Cross Blue Shield of Missouri.
Today, the health care coverage industry is often marred by an image of large companies as uncaring monoliths that seek only to turn a profit, at the expense of individual consumers. This public perception has likely only been increased by recent scandals at companies like Enron and WorldCom, where management deliberately misled consumers and investors. While these companies were not within the health care industry, these scandals do mark a general mistrust about the motivations of large corporations.
Similarly, heath care providers like Blue Cross Blue Shield of Missouri must consider the public impact that reports of denial of coverage, and class action lawsuits can create. Denial of coverage can increase public perception that health care plan administration values profit over health. Similarly class-action lawsuits can damage a company's image.
Given these factors, one of the key marketing problems facing Blue Cross Blue Shield is that of creating a public perception of the company as an organization that values members' health and welfare above that of profit. Marketing efforts at Blue Cross Blue Shield of Missouri (and the industry at large) must work diligently to overcome public perception of the health care coverage industry as uncaring about individual consumers and concerned with money over people.
Internal and External Factors
Overall, the managed care industry seems to be reaching a peak of its current cycle. As such, current prices are currently at their maximum in a ten-year cycle, creating a potential loss of revenue in coming years (Morrison). It appears, however, that WellPoint Health Networks Inc. (the parent company of Blue Cross Blue Shield of Missouri) will be able to compete effectively against industry competitors such as United Health Group, Cigna, Aetna, and Anthem. Of these, WellPoint Health Networks has the second largest industry market capitalization ($15,340 million), exceeded only by United Health group ($39,106 million), and followed closely by Aetna ($12,696 million) and Anthem ($12,202 million) (Morrison). Morrison argues that WellPoint Health Networks Inc. will be able to improve its administrative cost ratio, thus effectively weathering the impact of the decreasing medical loss ratio (medical costs divided by premiums) that is expected to worsen through 2007. Specifically, Morrison notes "WellPoint navigated the last downturn better than most of its competitors did, and we expect it to do so again."
Overall, WellPoint Health Networks Inc. is in a solid financial position. Morrison rates the company as "among the best managed-care companies," based largely on "conservative underwriting, profitable growth, a steadily improving administrative expense ratio, and a strong balance sheet."
One of WellPoint's greatest strengths is in the association with Blue Cross Blue Shield (BCBS) licenses. The Blue Cross name is "one of the most respected brands in managed care" (Morrison). The original mission of BCBS was to provide insurance of poor working Americans during the Depression, resulting in "valuable brand equity with consumer" (Morrison).
At the same time, WellPoint and Blue Cross Blue Shield of Missouri also have a number of weaknesses. Recent publicity surrounding a potential merger with Anthem may potentially reinforce a company image as a large, uncaring corporation. Similarly, a report by the Health Care Financing Administration has charged Blue Cross Blue Shield of Missouri with marketing that is "hostile to Missouri residents," reinforcing an image of a company more concerned with profits than the needs of consumers.
Today, WellPoint and Blue Cross Blue Shield of Missouri have an opportunity to establish an even large market share, given their predicted better-than-average ability to weather the current cycle within the managed care industry. If WellPoint manages to navigate the downturn of this cycle better than competitors, as predicted it will be in an excellent position. At the same time, the company has the opportunity to continue to reap the benefits of its association with the Blue Cross Blue Shield (BCBS) brand in order to further the company image as a caring, involved corporation.
Perhaps the greatest threat to WellPoint and Blue Cross Blue Shield of Missouri comes from a class-action lawsuit filed by physicians. This lawsuit could greatly damage the company's image, and cost the company in the order of $500 million (Morrison). Further, the proposed merger with Anthem may result in customer disruptions, and increased legislative action in the managed-care industry may increase costs (Morrison).
Analysis and Alternative Solutions
In order to overcome public perception of the health care coverage industry as uncaring about individual consumers and concerned with money over people, Blue Cross Blue Shield of Missouri and WellPoint must create a marketing solution that directly addresses this perception. This marketing solution must create a positive image of Blue Cross Blue Shield of Missouri as a caring provider with the best interests of consumers at heart. At the same time, the marketing solution must aim to decrease the negative connotations of being a large corporation, concerned with profit above human concerns of health and welfare.
It is a considerable challenge to overcome the public perception that Blue Cross Blue Shield of Missouri is large corporation that values finances over individual consumers. This is especially true in a the current climate where news of the proposed merger between Anthem and WellPoint continually reaches consumers, reinforcing the image of WellPoint (and thus Blue Cross Blue Shield of Missouri) as a large corporation.
Perhaps one of the most important recent public relations strategies encompassed by Blue Cross Blue Shield of Missouri is the company's association with the Council for Affordable Quality Healthcare (CAQH). CAQH is "a not-for-profit alliance of America's leading health plans and networks, committed to improving the quality of healthcare and reducing administrative burdens for physicians, patients and payers" (Blue Cross Blue Shield of Missouri). CAQH first emerged in 1999, and member organizations provide healthcare coverage for close to 100 million citizens of the United States (Blue Cross Blue Shield of Missouri).
The association of Blue Cross Blue Shield of Missouri with CAQH is important in creating a public perception of trust with the company. Through its association with CAQH, Blue Cross Blue Shield of Missouri clearly seeks to create a positive public image of a company that is concerned with the health and welfare of its clients. At the same time, this association is designed to reduce some of the negative associations that have dogged Blue Cross Blue Shield of Missouri, by creating an image of the corporation that proactively works to ensure that the needs of consumers are met.
Similarly, a recent contract between Blue Cross Blue Shield of Missouri Contracts and JPMorgan to provide Health Savings Accounts is a step towards creating better relations with customers. This contract allows Health Savings Accounts by JPMorgan to be directly available to Blue Cross Blue Shield of Missouri consumers. Notes Angela Braly, president and CEO of Blue Cross Blue Shield of Missouri, "Health savings accounts are an important part of our efforts to provide our members with affordable health benefit options" (cited in Yahoo Finance).
Clearly, the move to provide Health Savings Accounts and the association…