1 Brad Bowlus President, CEO PacifiCare Health Plans.…a health and consumer services company making people’s lives better Commercial Growth and Product.

Presentation on theme: "1 Brad Bowlus President, CEO PacifiCare Health Plans.…a health and consumer services company making people’s lives better Commercial Growth and Product."— Presentation transcript:

1 1 Brad Bowlus President, CEO PacifiCare Health Plans.…a health and consumer services company making people’s lives better Commercial Growth and Product Strategy

2 2... Everything Matters! For The First Time In The Industry, “Consumerism” Will Drive The Marketplace.…a health and consumer services company making people’s lives better Brand New Day Member Consumer Participant Purchaser

3 3.…a health and consumer services company making people’s lives better Current Position - “Western US Total Solution” n 2.6M Commercial PHS Members n PPO Network Coverage Available Nationally n Prescription Solutions & PBM Available In All States CO - 218,000 / 18% / #3 AZ - 137,000 / 12% / #4 WA - 82,000 / 8% / #3 OR - 94,000 / 11% / #4 NV - 35,000 / 13% / #2 CA - 1,679,000 / 13% / #3 OK - 89,000 / 25% / #2 TX - 222,000 / 9% / #4 Commercial HMO Membership / HMO Market Share / HMO Rank WA OR CA NV AZ CO OK TX Source: Membership data from Company disclosure as of 6/30/01; market share data from Interstudy Publications HMO Directory. Excludes Guam membership.

4 4.…a health and consumer services company making people’s lives better Western Region Demographics 28% Of Total US Population In 8 States That Comprise PHS Primary Service Areas Fastest Growing Demographics In US Through 2015 Percentage Of Total US Population Source: US Census Bureau Population Growth Rate Through 2015 Non-PHS Operating Areas 72% 28% PHS Operating Areas

5 5.…a health and consumer services company making people’s lives better PacifiCare Strengths Expanding Gross Margins In All Markets Recognized As HMO & Retiree Market Leader Differentiated Contiguous West Coast Presence $11 billion In Concentrated Purchasing Power Integrated Disease And Medical Management Programs With Proven Results NCQA Leadership Position Within Industry First To Provide Outcome-Based Information (Quality Index™) Proven, Trusted Brand Among Consumers, Brokers And Providers

6 6.…a health and consumer services company making people’s lives better Positioned for “Single Source Solution” Alternative Medical Products With An Array Of Cost, Access, And Benefit Features Product Configurations Which Combine Clinical Quality And Consumer Accountability Cost And Quality Information Through Quality Index Comprehensive Specialty Product Offerings Enhanced Service And Expanded Functionality Consistent Set Of Baseline Services, Irrespective of Medical Choice

7 7.…a health and consumer services company making people’s lives better The Total Solution- Consumer Aligned Healthcare Framework Web-Based Decision Support/Consumer Information on Quality Multi-State Product Administration Spending Account Administration with Equity Carryover (FSA Debit, MSA) Women's Health Solution Features and Buy Up Products Integrated HRA & Disease/Medical Management Programs Pharmacy, Life/Disability, Dental, Vision, and Behavioral Products High/Low Managed Benefit Designs Baseline Products and Services (Available Across Core) Core Medical Products Cost LowHigh Modular Approach to Benefit Selection & Enrollment Alternative Funding (ASO) IndemnityPPO Narrow Network HMO Tiered Network HMO Current HMO Catastrophic Plan

8 8 Consumer Aligned Healthcare Consumer Ability To: –Select Plan On Basis Of Service, Provider, Benefits And Cost –Select A Plan Across A Spectrum Of Choices Balancing True Insurance Versus Consumption –Make Informed Choices About Treatment And Lifestyle Alternatives Front-End Decision Support HRA Quality Index™ Provider Directory On-Line Enrollment Benefit Selection Front-End Decision Support HRA Quality Index™ Provider Directory On-Line Enrollment Benefit Selection Array of Medical Choices- Cost, Access & Benefit Choice HMO PPO Catastrophic Indemnity Array of Medical Choices- Cost, Access & Benefit Choice HMO PPO Catastrophic Indemnity Front-End Decision Support On-Going Administrative And Care Support Specialty Offering’s Employer Paid & Endorsed Array of Medical Choices- Cost, Access & Benefit Choice On-Going Administrative And Care Support Disease Management Web Administration Multi-State Admin / Travel Assistance FSA On-Going Administrative And Care Support Disease Management Web Administration Multi-State Admin / Travel Assistance FSA Specialty Offering’s Employer Paid & Endorsed Complementary Medicine Women’s Health Pharmacy Life / STD/ LTD Behavioral Dental & Vision Specialty Offering’s Employer Paid & Endorsed Complementary Medicine Women’s Health Pharmacy Life / STD/ LTD Behavioral Dental & Vision

9 9.…a health and consumer services company making people’s lives better HMO Design First To Market With Narrow And Tiered Networks (CA) Narrow And Tiered Configurations, When Combined With “Benefit Buydown Plans”, Generate Year 1 Savings From 8% To 20% Couple Segmented Products With Quality Index™ Profile Information To Empower Consumers Emphasis On “Managed Benefit” Designs Versus “Managed Care” 2-Tier HMO Physicians + Hospitals Quality Cost Preferred Non- Preferred

10 10.…a health and consumer services company making people’s lives better Position Product On The Basis Of Service, Allowing For “Hassle-Free” Administration Total Employer Solution: Every Sale Of A New PPO Member Generates 2 HMO Members (Currently) Establish Flexible Funding Arrangements To Meet Needs Of Large Case Business (July, 2002) Rollout Of Small Group PPO In August, 2002 13+ Million PPO Members Enrolled With Competitors Operating In PHS Markets 2.5 Million PHS Commercial HMO membership PPO Design

11 11.…a health and consumer services company making people’s lives better Catastrophic Coverage Combined With A Spending Account Of Pretax Dollars And Surplus Rollover Lowest Option Plan Allowing Consumers To Make Choices On The Basis Of Service, Provider, And Benefits At The Time Of Service The PacifiCare Advantage: Total Risk Umbrella Network Access Supporting / Integrated Ancillaries Access To Medical & Disease Management Leadership In Quality Reporting Allows PHS To Differentiate From Competition Via Partnering With Consumer Product Rollout For 1/03 Effectives; Long Term Adoption (3-5 Years) Strategy Catastrophic

12 12.…a health and consumer services company making people’s lives better Commercial Segment Strategy Targeted Tactics And Growth By Defined Segments - National, Large Group, Small Group And Individual New Positioning As Employer “Total Solution” –Array Of Choices That Increase Consumer Engagement And Access –Management Of Benefit Designs, Disease Management, And Network Configuration to Address Long Term Medical Inflation –Web-Based Support Applications And Ease Of Administration –Integrated Specialty Company Offerings With Buy-up Alternatives –Integrated HRA & Disease Management Programs

13 13.…a health and consumer services company making people’s lives better Segment Strategy: National Accounts Market Opportunity: 13+ Million Enrollees In PHS Service Areas Position As “Best In Class Geographic Solution” Vs. “Slice Play” Capitalize On Strong Outcome Based Reputation In Segment Competitive Differentiation Based On West Coast Depth Attack 5,000+ Employee Accounts By Emphasizing Total Solution And Enhanced Outcomes Expansion Into Defined Contribution For 1/1/03 Effectives

14 14.…a health and consumer services company making people’s lives better Case Example - National Accounts 5,000+ Employer Case, With Operations Throughout US Sole Carrier Offering For Prior 15 Years Critical Decision: Single Source Carrier Vs. Best In Class Geographic Offering PacifiCare Value Proposition: Best In Class By Geography Based On Service, Access And Economics PacifiCare Marketed As West Coast Offering Based On Long- Term Cost Management & Service Result: PacifiCare Growth Of 15,000+ Members In Both HMO And PPO Products

15 15.…a health and consumer services company making people’s lives better Segment Strategy: Large Group Accounts Market Opportunity: 16+ Million Enrollees In PHS Service Areas Position As “Total Solution” Ancillary Products On Sponsored & Endorsed Basis Unique Multi-State Capabilities Multi-State Opportunities In PHS Primary Service Areas: –4,000+ Companies, 2 Million Employees, 4+ Million Members Expansion Into ASO, Defined Contribution For 1/1/03 Effectives “Turnkey” Approach For Employer Administration

16 16.…a health and consumer services company making people’s lives better Case Example - Large Group 500+ Employer Case, With Operations In Arizona, California, Oklahoma, and Oregon Multiple Carriers; Segmented Offering For Prior 5 Years Critical Decision: Single Source Carrier Vs. “Slice Play” PacifiCare Value Proposition: Single Source Carrier Offering Best In Class By Geography PacifiCare Marketed Based On Administration, Long-Term Cost Management & Service Result: PacifiCare Growth of 3,000+ Members In Both HMO, POS and Ancillary products

17 17.…a health and consumer services company making people’s lives better Segment Strategy: Individual And Small Group Market Opportunity: 12+ Million Enrollees In PHS Service Areas Position As “Single Source Solution” Automated Administration / Renewal Banded Underwriting Approach Maintain Affordability Using Benefit Design Multiple Choice Of Benefits And Price Points Voluntary Ancillary Coverages

18 18.…a health and consumer services company making people’s lives better Key Take Home “Western US Total Solution” “Total Solution” Product Line Now In Place Unique Position Based On Quality Outcome Based Information, Seamless Multi-State Administration And Integrated Disease And Medical Management Programs New & Experienced Market Leadership To Execute “One Company Vision” Significant Investment In Branding Well Positioned For Growth!