Background information. A large national MCO recently entered a major Southwestern metropolitan market. The managed care plan anticipated that, with an intensive advertising campaign and sales effort, it would have 75,000 subscribers after two years. It planned on charging a premium of $1,800 per subscriber. Marketing and personnel costs directly related to this effort were anticipated to be $250 per subscriber. Before the MCO’s entry into the market, two of the extensive tertiary facilities in the region began to offer their own managed care plans in a PHO arrangement with their medical staff. The result was aggressive discounting of the managed care premiums. The national MCO chain dropped its premium to $1,400 per subscriber. Direct costs remained the same, yet because of the competition, the national MCO was only able to enroll 45,000 subscribers.
However, was their effort a success? For this essay, calculate the following values and use them as part of an argument to justify whether their efforts were successful:
- Calculation #1: What was the variance because of the failure to get the gross marketing contribution?
- Calculation #2: What was the variance due to the lack of enrollment success?
Assignment Instructions: Write a paper thoroughly exploring whether the MCO’s enrollment campaign was a success. Be sure to support your analysis using examples and insights from your textbook and additional research conducted throughout the course.
In your paper, integrate at least four peer-reviewed sources along with their citations and references. Your paper must be APA formatted and include at least 1500 words.
Your goal for this activity is to provide a summary involving:
- The biggest or most important point from the course you found interesting and enjoyed.
- If you could take one idea from the course, back to your work, what would it be? Why?
- One lesson you wish others to learn from your experience in the course.
How to solve
HCM 625 California Intercontinental University MCO Variance Analysis
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In this assignment, we will analyze whether the MCO’s enrollment campaign was a success. We will calculate two variances – the variance due to the failure to get the gross marketing contribution and the variance due to the lack of enrollment success. These calculations will help us determine the overall success of the MCO’s efforts. Additionally, we will integrate at least four peer-reviewed sources to support our analysis.
Answer to Question 1:
To determine the variance because of the failure to get the gross marketing contribution, we need to compare the expected gross marketing contribution with the actual gross marketing contribution. The expected gross marketing contribution can be calculated as follows:
Expected Gross Marketing Contribution = (Number of Subscribers) x (Premium per Subscriber) – (Marketing and Personnel Costs per Subscriber)
For the MCO, the expected gross marketing contribution would have been:
(Expected Number of Subscribers) x (Premium per Subscriber) – (Marketing and Personnel Costs per Subscriber)
= 75,000 x $1,800 – $250
= $135,000,000 – $250
However, due to the competition and aggressive discounting, the MCO was only able to enroll 45,000 subscribers. Hence, the actual gross marketing contribution was:
(Actual Number of Subscribers) x (Premium per Subscriber) – (Marketing and Personnel Costs per Subscriber)
= 45,000 x $1,800 – $250
= $81,000,000 – $250
The variance because of the failure to get the gross marketing contribution can now be calculated as follows:
Variance = Expected Gross Marketing Contribution – Actual Gross Marketing Contribution
= $134,999,750 – $80,999,750
The variance because of the failure to get the gross marketing contribution is $54,000,000.
Answer to Question 2:
The biggest or most important point from the course that I found interesting and enjoyed was the concept of strategic marketing in the healthcare industry. Learning how marketing strategies can influence the success of healthcare organizations was eye-opening. It made me realize the significance of effective marketing in attracting and retaining patients.
If I could take one idea from the course back to my work, it would be the importance of conducting market research. Understanding the needs and preferences of patients and identifying market trends can help healthcare organizations tailor their services to meet the demands of the target population. This would enable better patient satisfaction and increased enrollment rates.
One lesson I wish others to learn from my experience in the course is the need for continuous evaluation and adaptation of marketing strategies. In a dynamic healthcare industry, it is crucial to regularly assess the effectiveness of marketing campaigns and make necessary adjustments based on market feedback. This ensures that the organization remains competitive and responsive to changing patient expectations.
Overall, this course has deepened my understanding of the role of marketing in healthcare and has equipped me with valuable insights that I can apply in my profession. The concepts learned will undoubtedly contribute to my professional growth and the success of my future endeavors.