Marketing in a Changing Market

If you’ve found yourself struggling to write new business lately, take heart. The healthcare landscape continues to shift, making it harder and harder for TPAs to keep a strong foothold. Staying on top of the issues can help, but to get meaningful sales traction, you may have to change the way you do things.

Hot Topics
There are five market forces at work today affecting TPAs and the way they sell themselves: 1) soft market conditions, 2) a strong investment market, 3) PPOs, 4) competition from non-TPA players is increasing and 5) TPAs are starting to be viewed as commodities.

These dynamics not only make it difficult for you to compete, they force you to spend time defending others’ practices instead of promoting the valuable services you bring to the table. Here’s a closer look at the trends and how they affect you.

Soft Market Malaise
Stop loss partners are no longer getting the rate increases they expect, which creates the perception of a soft market. This scenario is much different than the most recent soft market of the mid- to late-90s, when TPAs wrote a lot of business as a result of stop loss under-pricing. You and your TPA colleagues are certainly not winning in the current soft market, but hardening of the market could make it even more difficult for you.

Loss Leader Losses
It was once hard to imagine how a strong financial market could be bad news for TPAs, but insurance carriers writing fully insured health policies have managed to pull it off. These deep-pocketed institutions are enjoying such good investment returns right now, cash is flowing freely, sometimes allowing them to treat health insurance policies as loss leaders or give big discounts to hang on to business. The result, independent TPAs who’s only source of revenue is their administrative fees face shrinking margins to remain competitive.

Costs Out of Control
Medical pricing schemes where costs are inflated so providers can claim to give discounts have created a house of cards destined to collapse. Claims are being overpaid and everyone knows it. Of all the health insurance players, TPAs, due to their flexibility, may be best-positioned to approach their medical providers with common-sense payer arrangements.

A Crowded Playing Field
Competition isn’t what it used to be. Today, in addition to traditional TPAs, you’re up against insurance carriers writing fully insured health policies as well as offering ASO (administrative service only) arrangements where the employer is self-insured, but an insurance carrier provides the administrative services—basically a TPA with a different acronym. Many clients go this route because of the network discounts, ignoring the fact that after you strip away co-pays, deductibles and everything else the carrier doesn’t pay, the discounts are negligible.

Becoming a Commodity
As a TPA, every vendor you bring in is an interchangeable piece of the total service pie. If your client is unhappy with their PBM for example, you can replace it with another. You may not have dreamed you could become one of those interchangeable pieces, but it’s happening now. Ironically, companies are fretting over administration fees even though they’re a small part of the overall health plan costs. Claims dollars are the big costs, and a good TPA will always help manage the overall cost of the plan. No other entity can achieve this at the same level as the TPA.

What Now?
Now that you’ve got the lay of the land, it’s time to get to work educating the market on your true value and unearthing new self-funded prospects who need to hear your story. All it takes is a little smart marketing to drive more and better-qualified opportunities through the door.

Except for a few of the big boys, TPAs don’t usually have large marketing budgets, if they have them at all. But don’t give up yet; even a small investment can yield big rewards if you stick to a sound plan. Start with these basics:

1. Replicate success. Examine your most profitable accounts and successful relationships to identify what makes them work, then look for prospects with similar characteristics. Use your experience with current clients to build a meaningful value proposition for new ones.
2. Do what you do best. Know your strengths and challenges and stick with what got you to the dance unless, of course, your points of differentiation no longer make the cut. In that case, you may want to rethink your strategy before spending hard-earned dollars on a less-than-compelling story.
3. Be relevant. Yes, your company’s history is important to you and your employees, but focus your external communications on how you benefit clients in the current market environment. Less about you, more about them.
4. Partner with the best. Look for outside vendors who offer your clients exceptional value and competitive pricing. If you can, pool your resources with those of other TPAs to increase your buying and negotiating power.
5. Get aggressive. More looks equal more business, pure and simple. Consider every avenue for reaching employers and brokers, including advertising, direct mail, trade shows and online marketing.
6. Be consistent and repetitive. One-time shots rarely produce the results you expected. A steady diet of recurring, targeted messages will warm up your audience so they’ll be more receptive to your offerings.

Don’t Go It Alone
The thought of getting serious about marketing can be a little overwhelming, especially if you’ve been able to get by without it. You know better than anyone, though, that the market has changed and it will take a different approach to keep you out front.

It stands to reason that you can accomplish a lot more as a group than you can on your own, which is why the Third Party Administrator Alliance (TPAA) was formed. Members of this national alliance of TPAs take advantage of lead generation programs, customizable marketing and health management tools, deep discounts with strategic partners, peer-to-peer dialogue and benchmarking. Whether you’re a seasoned marketing professional or a relative newcomer, the TPAA can give you cost-effective ways to address the shifting healthcare landscape, protect your market position and drive new business to your organization. Sound like a plan? Contact membership@theTPAA.com or visit www.theTPAA.com for membership information.