Amid a considerable expansion of Medicare plan choice and an increasingly complex Medicare market, online healthcare insurance marketplace GoHealth is making changes to its business model, focusing on proprietary technology, an embrace of more frequent plan shopping and switching, and a new definition of lifetime value (LTV).
Noting that there are over 5,000 Medicare Advantage plan options available across the U.S., and that the average beneficiary now has access to over 43 Medicare Advantage plans — up from 20 in 2018 — GoHealth CEO Vijay Kotte told investors on its fourth quarter 2022 earnings call Thursday (March 16) that plan shopping and switching is happening at a faster pace, to which the marketplace is responding with a focus on more experienced, tenured agents fielding inquiries, and exiting non-core areas like its platform support for third parties.
Kotte said, “Historically a beneficiary shopped two to three times and made one to two plan changes over their Medicare eligibility span. Those changes are happening more often. There’s a nearly 50/50 split between beneficiaries who shop minimally and beneficiaries who shop annually.”
He said Medicare beneficiaries now switch plans “as many as three to five times over the course of their eligibility as their needs change.”
Recapping the Medicare annual enrollment period (AEP) that ended in December, Kotte said GoHealth made several strategic and operational changes “and executed against three clearly defined goals during the second half of 2022” including improved cash flow from operations, maximizing efficiency in its business model, and prioritizing “more experienced high-quality sales agents over the volume of agents.”
As to GoHealth’s full “diversification” to its proprietary Encompass solution designed for better customer experience when shopping and comparing plans, Kotte called the change “critical to our ability to win because our industry is evolving. In an increasingly complex Medicare market, beneficiaries have challenges figuring out what health plan option works best for them as their needs change over time. They’re bombarded by marketing messages from numerous parties as soon as they become eligible for Medicare, and then again during every AEP thereafter.”
Given that highly competitive dynamic, GoHealth is embracing evolving consumer trends.
“We believe more beneficiaries should be shopping to make sure they’re in the most appropriate plan, and they need a trusted resource to help them,” he said, adding, “If beneficiaries are going to shop, we want them to shop with us regardless of whether we originally enrolled them in their plan.”
Under these changes, GoHealth is reinforcing Medicare customer experience in 2023 by compensating its agents not only on new enrollments and plan changes, “but also on high-quality personalized assessments that may not result in a sale.”
To tighten its strategic focus on the Medicare shopping experience, GoHealth is exiting its BPO Enterprise Services business, a move which he said will allow GoHealth to redirect dedicated agents to more high-value member services.
As part of this, the marketplace is also changing its definition of LTV away from a policy basis and into a customer-focused model, as he said, “our data shows that nearly 25% of our calls in each AEP are from beneficiaries we have served and/or enrolled in the previous year.”
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