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The case details the circumstances that led Andrea anania, the Chief Information Officer of Cigna's HealthCare division, to take up IT systems migration projects. In 2002, Cigna faced the problems in their customer database system which resulted in misquoting their number of customers by extra 900000. Despite anania's,confidence the change in technology did not hold good and company lost 6% of its member alone in 2002.
The case details the circumstances that led Andrea anania, the Chief Information Officer of Cigna's HealthCare division, to take up IT systems migration projects. In 2002, Cigna faced the problems in their customer database system which resulted in misquoting their number of customers by extra 900000. Despite anania's,confidence the change in technology did not hold good and company lost 6% of its member alone in 2002.
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The case details the circumstances that led Andrea anania, the Chief Information Officer of Cigna's HealthCare division, to take up IT systems migration projects. In 2002, Cigna faced the problems in their customer database system which resulted in misquoting their number of customers by extra 900000. Despite anania's,confidence the change in technology did not hold good and company lost 6% of its member alone in 2002.
Copyright:
Attribution Non-Commercial (BY-NC)
Verfügbare Formate
Als DOCX, PDF, TXT herunterladen oder online auf Scribd lesen
The case gives a detailed account of the information technology (IT)
and customer relationship management (CRM) initiatives
implemented by the HealthCare division of Cigna Corporation, the third largest healthcare services provider in the US. The case details the circumstances that led Andrea Anania, the Chief Information Officer of Cigna's HealthCare division, to take up IT systems migration projects and how the hasty and poor CRM systems implementation affected the organization’s business operations and customer service. In 2002, Cigna faced the problems in their customer database system which resulted in misquoting their number of customers by extra 900000. They also faced the problem of customer service and profitability due to these reasons company’s membership fell from 13.3 million to 12.5 million and a net loss of US$398 million. The main reason for Cigna’s poor customer service and reduction in membership was failure of restructuring of its IT and CRM system at its HealthCare Division. To overcome this problem they adopt new technology AS400 from that of 20 year old computer system to support claims processing by PowerMHS software and ProClaim software. Despite Anania’s ,Chief Information Officer of Cigna, confidence the change in technology did not hold good and company lost 6% of its member alone in 2002. The reasons which Cigna’s top management came to count for this dissatisfaction were greater than expected cost of implementing the projects, misconception of the economic benefits from the project. Background of Cigna: Cigna was formed by merger of Philadelphia based Insurance Company of North America (INA) and Hartford based Connecticut General Corporation (CGC) in 1982.Cigna act as their chief operating companies and headquartered in Philadelphia. In 1984 Cigna acquired the American Foreign Insurance association (AFIA) to become one of the largest Insurance Company in the world and came into the Dental Health care market-The first insurance company to do so. In 1989 Cigna international financial services was founded to give health and life insurance to people living outside US. During same year company acquired the leading mental health care institution, Metropolitian Clinics of Counseling companies and named Cigna Behavioral Health, Inc. Cigna also acquired Equicor, one of the largest employees-benefits providers in US in 1990. In 1998, for the first time Cigna’s share price crossed US$200. At the end of 2000, Cigna sold its property casually domestic and international business to Bermuda based ACE Limited to focus on its global health, life, and pension business. They also started as in Asset Management Company. In 2002 Cigna entered in Chinese Insurance market. By 2004 Cigna had 3 operating divisions- Cigna Group Insurance, Cigna healthcare and Cigna International. These divisions provide accident & disability insurance, health & life insurance and retirement & investment services across US. Cigna again acquired a New Hampshire based healthcare company in 1997 which give company a major boost. They had an alliance with 3100 hospitals and 220, 000 physicians under its HMO (Health Maintenance Organisation) business. Note: HMO provides pre-paid medical services to its customers through a network of doctors and hospitals. All the member pay monthly premiums and receive coverage for all eligible medical costs. The doctors and hospitals, referred to as service providers and paid by the insurers.
Cigna Health care subsidiaries are:
• Connecticut General Life Insurance Company • Tel- Drug Inc • Cigna Behavioral Health Inc. • Intracorp • Cigna Health Corporation • Cigna Dental Health Inc. Products offered by Cigna healthcare: • Medical • Health • Dental • Pharmacy • Insurance products In 1998, Anania positioned as Chief Information officer in Cigna and Executive Vice-President of Systems of Cigna’s Healthcare along with data processing, telecommunication and development of information technology system. Implementing CRM system: In 1999, Cigna operates with old IT system which include separate units for enrollment, processing of claims and verification of eligibility. The processing and verification system had different system which are not even interconnected. Hence separate bills were produced for each product across each division. To rectify this problem Anania introduced integrated system that would 1)generate 1 bill across products and division, 2) process the medical claims, 3) provide case histories of all the customers, 4) facilitate exchange of information with customer. She planned to introduce 2 such system for HMO and other for indemnity business. Anania bring upon national toll-free number and Electronic Data Interchange (EDI) to receive and update claims made via Internet. To implement this Cap Gemini Ernst & Young (CGE&Y) were called in. CGE&Y implement Accelerated Solution Environment (ASE) tools to enhance decision making. The main aim was to speed up the processing of 120 million medical claims without much human intervention. AS400 include PowerMHS software to support claims of managed care and Proclaim software for indemnity claims. In 2000, some physicians filed a class action lawsuit against Cigna for late payment of claims. In 2001, Insurance Commissioner of Georgia, John W. Oxendine, imposed a fine of US$300,000 for delay of payment of claim, largest fine against HMO. During 2002, Cigna promised to give efficient customer services by the use of new IT System. It results in increase in customer base new as well as existing renewal policies with reaching a number of more than 13 million. Migration: Anania start with the migration process for more than 13 million customers would take too long so she decided to move groups of 3.5 million customers at a time to new platforms without testing the whole system for its integrity. By this several problems came which have no solution like front end application could not retrieve data from back end system easily, back end data was not filtered even the information did not appear correctly, problem regarding health coverage plans. The customer’s database was not updated because of which many employees lost their medical coverage. Due to this customer go for service centers to inquire about faulty services but because of lack of employees they were unable to get it. To tackle this problem Anania hired 1000 new employees but as they were not trained so the problem got further compounded. Due to poor customer service, many customers started turning away from Cigna to its competitors. The company lost nearly 1 million customers by end of 2002.Heavy competition forced Cigna to reduce the premiums on its health plan. According to a survey in Pennsylvania on 14 HMO it was found that customer dissatisfaction was highest at Cigna. Anania cited reason for this as lack of time for testing the system for the failure of the migration project. Launching of Mycigna.com: Anania started with web portal project aimed to make millions of health care customers easy and secure online transactions the portal was launched in June 2002 it helped customers to check their medical claim states , manage their health care and retirement accounts. This service was free for Cigna customers. The portal was built in collaboration with Yahoo and Sun Microsystems Inc ( sun). Yahoo enabled customer to assess mycigna.com directly through its my yahoo homepages. Anania decided to slow the pace of migration process and slowly transferred all customized data base toward new platforms without any major problem. The site provided information regarding various products available, at Cigna and helps the users to choose a suitable plan, select or change doctor’s online, talk to nurse’s online, order medications. Customers got accurate bills quickly and easily. In 2003 mycigna.com won the ‘Best in Show’ award in the benefits management category. In the same fiscal CIGNA earned net income of US $668 million on revenue of US $18.80 billion the increase in net income arose due to decreased cost and increased earnings at health care division. However customer retention was less than 70%. By 2004 Cigna decided to launched a new suite named ‘CIGNATURE-Your plan Your choice’. The suite enabled employers to designee a cost effective employee health care plan. By 2005 Cigna recorded customer retention rate at health care division increased to 84%. The CIGNATURE suite received favorable reviews from customers and was expected to attract many more customers LOOKING AHEAD: According to analysts, the company was now processing medical claim quickly and to a certain extent achieved its goal to reduce human intervention. However, management admits that the project had exceeded the original budget of US $1 billion. Cigna’s financial performance show negative statistics which shows a difficult phase for Cigna. According to another section of analysts Cigna had been moving in the right direction and as soon as migration will complete it would enable Cigna to compete strongly, giving rise to higher profit margin and stable growth in membership.