Blue Cross Blue Shield Affiliate Case StudyBottom Line: NAVICENT architected and implemented an offshore sourcing strategy for a health insurer's customer service contact center that halved per contact costs while maintaining service and quality levels and improving organizational flexibility. Situation: Our client, one of the largest nonprofit entities in the U.S. and one of the nation's top 20 health plans, serving 2.6 million members and garnering $6 billion in annual revenue, was facing significant upward pressure on premiums resulting from rising medical costs and key competitors aggressively pursuing administrative efficiency improvements. As a result, our client adopted a strategy of moving administrative expense to top quartile performance. Solution: A review of other health insurers showed increasing utilization of offshore resources indicating their administrative costs as a percent of premium would continue to decrease potentially leading to pricing advantages. Significant barriers to both offshoring and outsourcing existed and were analyzed in turn including a turbulent regulatory environment, significant internal change management, and unique process control requirements. After screening candidate processes for "offshorability", provider servicing was selected as a leading candidate for offshoring. NAVICENT's Role: NAVICENT was engaged to support the analysis, vendor negotiation and implementation phases of this effort. After an outsourcing suitability analysis, the team built the business case for an offshore provider service center. NAVICENT developed the supplier negotiation strategy and managed the development of the agreement details. The team set up the vendor management procedures, supported the offshore implementation and remained involved until performance of the offshore center was fully stabilized. Results: Constructed a onshore-offshore solution with 1.4 MM contact per annum handled in the offshore center. Implemented an onshore "staging center" to catch and stabilize outsourced processes before migrating offshore. The project resulted in a 50% reduction in annual operating costs while maintaining service levels, and improving organizational flexibility. Nature of outsourcing agreement, allowed a shift to a variable cost structure -- reducing much of the business risk inherent in economic shifts and enhancing the clients flexibility to absorb controlled growth. Project pay back was achieved in less than 4 months and generated $500,000 in savings in the first 6 months of operation. |
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