Case Detail

Case Summary

Key State Blue Cross and Blue Shield Plan: A Strategy for Winning in the Market through Customer-Focused Service

Case Number: 5-409-750, Year Published: 2010

HBS Number: KEL436

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Authors: Robert Dewar

Key Concepts

Health Care, Health Insurance, Provider Network, Market Focus, Customer Focus, Organization Design, Implementation of Strategy

Abstract

Key State Blue Cross and Blue Shield Plan (a disguised case of an actual BCBS Plan) is the merged product of three state plans. Initially burdened with a reputation of poor customer service, Key State’s executives decided to invest heavily in service improvement, eventually achieving superior levels. Key State’s high-quality customer service emerged as a true competitive advantage for its customers, who were primarily businesses and health benefits consultants who influenced corporate purchasers of health insurance. The Key State brand came to be synonymous with personal service, security, choice, and dependability.

But the health care insurance market was changing under Key State’s feet. Spiraling costs meant that high-quality service became less of a competitive advantage as employers were lured by low-cost, low-service providers. Many employers cut or dropped health care benefits entirely, swelling the ranks of the under- and uninsured, who in turn were extremely price-sensitive when shopping for health insurance on their own. Finally, the health care insurance market was being revolutionized by financial institutions willing to hold health benefit accounts and pay providers directly, thereby eliminating the need for Key State as a mediator.

Key State executives were aware of these changes but were challenged by the mindset, culture, and organizational design custom-fit to their business accounts. The case asks the reader to consider whether Key State has the right number of target markets, whether it should have one brand or several for its different target markets, what it should do for the uninsured, and how it should improve its brand experience in light of the industry's changing landscape. All of these decisions will have significant implications for the organizational design of Key State.

Learning Objectives

To better understand the challenges involved in a successful health insurance company to cope with a rapidly changing and unpredictable environment; to formulate a new strategy and a new organizational design to accomplish this adaptation.

Number of Pages: 28

Extended Case Information

Teaching Areas: Management, Marketing, Non Profit, Organizational Behavior, Strategy

Geographic: United States

Industry: Health Insurance

Organization Name: Key State Blue Cross and Blue Shield Plan (disguised)

Organization Department: Senior Management

Organization Size: Large

Decision Maker Position: CEO

Decision Maker Gender: Female

Year of Case: 2009