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Nuts & Bolts - Case Study : eHealth Finds Fulfillment With 'Personal Trainer'

March 2014 By Heather Fletcher
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Many fitness routines concentrate on strengthening core muscles before worrying about the rest of the body. eHealth, a Mountain View, Calif.-based online marketplace for individual and family health insurance, concentrates on its core strengths and hires the corporate equivalent of personal trainers for the parts that need more help.

"We are not fulfillment experts," says Gary Matalucci, eHealth's VP of customer care. "And, as our volume has increased, I think we looked to find efficiencies leveraging, whether it's technology, scale or relationships with other vendors, to help with areas that aren't our areas of core expertise."

That's partly what led eHealth to hire Boston-based storage and information management company Iron Mountain on Aug. 16, 2011. Matalucci says the primary motivator for eHealth finding such ways to save money was the Affordable Care Act, which was signed into law on Mar. 23, 2010.

eHealth is an agent and a broker, and Matalucci says the ACA effectively reduces the company's commissions (bit.ly/1bn7HmW). With smaller margins, he says, "that led us to really dig into all of our operational areas to try to find expense savings. And this was one of those."

In 2011, eHealth had two full-time employees who gathered thousands of applications filled out online by consumers who chose to manually sign and mail in the forms along with their premiums. (Matalucci says most insurance plan members pick electronic payment and signature options, which eHealth transmits directly to one of more than 180 insurance companies in the 50 states and Washington, D.C.)

"So those are the applications that Iron Mountain is printing and then mailing to our customers … for the customer to review … and then, importantly, sign it, attach a check, then mail it back to us," Matalucci says.

Now, the process only requires a manager's supervision, which he says requires less time than it did to oversee the two full-time employees.

Not only did the switch to automation increase efficiency, Matalucci says it reduced production and fulfillment costs. In 2011, eHealth paid 46 cents per unit to send out applications. As of presstime, the company reports spending 26 cents a unit, saving 20 cents. Follow-up letters, once priced at 12 cents, now cost a dime. Iron Mountain's bulk mailings also save eHealth an average of 28 cents per application and 4 cents on each follow-up letter.

 

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