Improving Underwriting Performance | Lean Healthcare Insurance | Change Management

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Reducing Backlog and Improving Underwriting Performance

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Client: A large health insurance company with 236,000 members located in the Mountain West
Industry: Insurance, Healthcare
Service: Change Management

Challenge:

Reduce backlog of applications in Individual Underwriting quickly.
Provide a sustainable solution.
Increase employee ownership of results.

Solutions:

Combined leadership responsibilities to provide end-to-end process focus.
Created a visual scorecard, reviewed daily, that provided real time data on performance, current status, and targets.
Created an Associate on Point (AOP) position, rotated among employees, which led 15-minute, pre-shift “Daily Huddles” to discuss the previous day’s volume vs. target, issues for the day, etc.
Ensured the Team celebrated real successes, daily.
Moved incoming calls to Customer Service as the first point of contact, thereby allowing Underwriting to focus on what they did best, process incoming applications.
Partnered with IT to get faster resolution to system issues.

Results:

Productivity (applications completed/day) rose 85% in less than two months.
Backlog dropped by 2/3rds and is holding at that level.
40% of the ongoing backlog is directly linked to application quality problems that lie within the customer’s processes (and cannot be resolved within the Underwriting group alone).
90% of the original backlog was aged more than 90 days; now, none is older than 30 days.

For more than a year prior to April 2011, this large health insurer located in the Mountain West Region, had seen a growing backlog of applications in the Individual Underwriting department. Agents and potential customers alike were unhappy, and the company put a priority on solving the problem before its reputation suffered.

The insurer gave its improvement partner from Guidon the authority to make any changes necessary to provide a quick but sustainable solution to the backlog issue. Within two months, a number of new practices were instituted for Individual Underwriting including:

Changes in Leadership practices. The reporting structure was changed so that the existing “siloed” work teams reported to just one leader instead of two. This created an end-to-end leadership and process focus that better positioned the team to proactively address process issues and needs. Also, supervisors were required to start spending 60-70% of their day on the production floor. This provided for greater focus, visibility and prioritization of process needs.
Changes in daily management. The two biggest changes in how the work was managed day-to-day were (a) assigning a different person each day to be the central point of contact for all work issues (called the Associate On Point, AOP), and (b) the start of pre-shift “Daily Huddles.” In these 15-minute “stand-up” huddles, the AOP would use a simple scorecard process to compare the previous day’s results to targets, and have the team discuss the current day’s throughput requirements, staffing, and potential barriers.
Expanding internal department partnerships with agents and IT. By connecting more closely with field agents and the internal IT specialists, the team was able to provide real-time process updates and system support requirements where it was needed the most. By appointing the AOP to be the primary point of contact and empowering the team in day-to-day process decisions, Underwriting turned a chaotic situation into a smoothly functioning process.

Over a two-month period, the Underwriting team made an 85% gain in productivity. Within a month of launch, the backlog had dropped by 1/3rd, reaching its lowest level in the history of the organization. And it continued to drop another 1/3rd in the following month. The current backlog level on any given day is holding steady at about 1/3rd of the original level, but that’s not the whole story:

Almost 40% of the ongoing backlog was determined to be the responsibility of the customers (linked to incomplete or inaccurate information on applications).
Originally, 90% of the application backlog represented applications that were 90 days or older. Today, none of the applications are more than 30 days old.