Background and Challenge

A major managed care organization saw the significant potential to serve Baby Boomers as they reach retirement age, but was having trouble diagnosing strategic opportunities for Medicare-based products. The health maintenance organization (HMO) asked L.E.K. Consulting to assess the nature and magnitude of Medicare opportunities in distinct consumer segments, which would serve as the foundation of a go-to-market strategy for new products targeting the senior population.

Approach and Recommendations

The L.E.K. team collaborated with the HMO to create a comprehensive review of the Medicare and pre-Medicare markets, and define strategic segments to target. Program elements included:

  • Gaining primary market insight via focus groups and an extensive survey research component
  • Analyzing the differing priorities, values and needs that define unique consumer subpopulations, and how these market segments are making healthcare choices during their later years
  • Conducting a comprehensive customer segmentation analysis to uncover new insight into the retirement population
  • Formulating a go-to-market strategy, including the development of novel product strategies leveraging the HMO’s unique assets

L.E.K. identified seven distinct populations based on segmentation analysis of criteria including common behaviors, attitudes and demographics. In addition, L.E.K. clearly characterized the expected changes in consumer requirements as Baby Boomers replace the WWII generation in the coming years. 

Results

The HMO used L.E.K.’s research and insight to introduce targeted products to previously underserved Medicare populations. The research also provided the HMO with the support and information to pursue a significant subpopulation that was previously considered to be outside of its core market. As a result, enrollment in its Medicare programs has reversed stagnant or declining market penetration and share in its markets. In fact, during the past two selling seasons, the plan has gained five-to-eight points of market share relative to its competitors in hyper-competitive markets, and has reestablished itself as an innovative, formidable leader in the Medicare space.