CareConnect, the start-up health insurance division of the New York-based North Shore-LIJ Health System, saw a 160% increase in membership and tripling of revenue in the past year—an early success that puts them right on track with where they want to be, says CareConnect President and CEO Alan J. Murray.
The provider-owned health insurer offers individual plans through the New York health insurance exchange as well as group plans for employers. Just 20 months into operation, CareConnect sees profitability on the horizon.
They expect to end the year with more than $200 million in revenue but will still be operating at a loss because like any startup, they have a fixed infrastructure.
“It will take a few more members in order for us to have revenue to cover that fixed infrastructure,” Murray says. “Within probably the next 18 months we should be crossing into the black. So I expect within three years of startup that CareConnect will be profitable.”
As a provider-owned plan, it’s not just about CareConnect being profitable, he notes. The medical loss ratio for CareConnect as an insurance company is also the revenue for North Shore-LIJ health system, which aligns them both financially and from a clinical perspective. “That allows us to be a lot more flexible in the financial structure in terms of how we incent each other to come up with the right model,” Murray says.
He describes their first year as a discovery year during which CareConnect and North Shore-LIJ built their integrated model and customer service approach. Since then, they have expanded their network, product lines and refined their model.
Murray attributes much of their leap in membership to their customer service.
“Word spreads very well about good customer service, the right price and the right integration, and that’s what’s happening,” he says.
He says the company did not rush into pricing or mass branding. “We wanted to make sure that the clinical integration between the North Shore-LIJ health system and CareConnect was at the very heart of what we did, and that takes time,” Murray says.
CareConnect made sure they stand out in customer service by designing the company around simplifying the customer experience. “When you call CareConnect, we do a crazy thing – we actually answer the phone,” Murray says.
The company has had an estimated 200,000 calls since they started, with an average answer time under 10 seconds, and customers speak directly to a human being, 24/7.
“Why do we do that? Because healthcare is complicated,” Murray says. “Why have people press buttons and try to find the answer themselves?” He adds that the customer service staff is highly trained, so 88% of calls are resolved by the person who picks up the phone.
Resolving customers’ problems quickly and up front prevents bigger problems downstream, Murray says. “So while it sounds like it's a resource-heavy model, I would actually argue that it's resource-light because it prevents multiple problems down the road.”
That, along with the company’s clinical integration and affordability, are the keys to CareConnect’s early success, Murray says.
From 2014-15, ConnectedCare's individual rates were flat and small group rates went down. For 2015-16, their individual rates are going up about 3.5% and their small group rates are going up about 2.5%, which is minimal compared to some of the increases around the country in the double digits.
“The reason for that is the product’s working,” Murray says. “The integration is working, our medical loss ratios are well in alignment with our expectations, and I would argue being managed better than the competition.”