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How outsourcing operations helped the largest CO-OP beat the odds

With 150,000 members, Health Republic tops market share on New York exchange
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FHP: How did you decide which benefits to include in your plans?

Michael FaganMichael Fagan (pictured right): A lot of this is based on both member feedback and what the marketplace demands. There were folks on the ground here who helped get the company up and running, who did market analysis and the research to determine what plans and benefits should look like.

For example, we offer 24/7 access to physicians in some of our plans. It's a great benefit to our members letting them pick up the phone if they think they have the flu or are traveling to Florida but left their prescription at home. Something that typically they could otherwise go to an ER for, they can instead talk to a doctor to find a solution. We really feel as though it's a great benefit to our members.

Since we're a CO-OP, our goal is to use resources as wisely as possible because we can reinvest whatever margin we have into our members. We're not sending it back to stockholders. If someone can appropriately speak to a physician and get the kind of treatment they need, we'll actually save money because they didn't have to go to an emergency department.

FHP: As a small CO-OP, how are you able to offer affordable prices and compete with the big, established insurers in the market?

Friedman: We're still a start-up. We're not a huge Blue Cross plan or a UnitedHealth. We must innovate and meet unmet needs in the market and drive a lot more choice and competition than was there before.

We're all about the member. The products that we create meet the needs of the member, and we're driven to fill the unmet market needs that are there. We have a totally different perspective--and we're just thrilled with the receptivity of New Yorkers.

As a CO-OP, we're member-driven. Members make up 51 percent of our board, which makes a difference in terms of our philosophy. We constantly look for ways to innovate and listen to our membership. We're looking to launch member workgroups on various relevant subjects to get a better understanding of what's important to our members and incorporate that into our offerings.

FHP: What makes Health Republic so successful in the New York exchange market?

Friedman: We have a unique, dynamic business model that continues to evolve--and we do have extremely low loans from The federal government. That's how we started up. But now that we're operating, the large size that we've achieved has enabled us to scale our business model. We've been really smart in terms of how we've created our market entry business model. We have very large membership--and we outsourced most major operational areas, from billing and enrollment and claims payment to medical management to having a contract with MagnaCare for broad networks.

We had 130 employees in 2014, and we'll have about 200 employees in 2015. Think of it as an executive headquarters function; we provide very deep, robust oversight and integration of most of the line operating departments. For instance, we have leaders of operations and claims payment and information technology and call centers and member experiences, and they oversee all of the work as if it was within Health Republic.

One example: We might have five different call centers, but our vice president of member experience can access, in real-time, any of the member calls that are coming in to gain a first-hand understanding of member questions and issues, so we can constantly be improving the member experience. We don't actually own the call centers, but we have a line of sight at all times for the work they're doing, and we can control their quality and performance tracking. We are responsible for the total member experience and satisfaction.

Editor's note: This interview has been edited for length and clarity.