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The Three Pillars of Corporate Performance Management for the Insurance Sector

"Change" is the watchword for the insurance sector. Increasing customer churn a

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

nd pressure on premiums are eroding profitability, highlighting the need for significant cost reductions in the areas of customer acquisition and service. This threatens the tr

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

ditional operating model as organizations re-evaluate current routes to market and redesign internal processes in the never-ending search for greater efficiency.

Faced

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

with the need for change, many insurers recognize that they are ill equipped to provide executives with the management information required to restore and maintain the desired l

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

vel of profitability. For insurers there are three core financial management processes:

Cost and Profitability Analytics
Many insurers are not able to repo

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

rt on product, customer and channel profitability with the frequency they desire, even though this information is critical for decision-making at both strategic and operational

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

evels

Long-Range Financial Planning
In today’s markets, strategic planning models need to be refreshed and evaluated with increasing frequency. This means

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

routinely updating assumptions about both the external and internal drivers of profitability. Because many of these critical pieces of information such as customer attrition r

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

tes and unit costs reside in other applications, this is not always easy. Stand-alone, long-range planning models therefore compromise an organization’s ability to continually

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

review and test assumptions that underpin strategy.

Operational Planning and Budgeting
Many organizations recognize that their annual planning and budgetin

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

process is laboriousness, costly and rapid obsolete. This is because operational managers first model the demands facing their department to identify their resource requiremen

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

ts and then calculate the cost of these resources; all of this done on spreadsheets outside the core budgeting application.

Incorporating this off-line modeling and jo

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

ning the pieces together with rules that span departments and time-periods transforms planning and budgeting. Managers simply review and update non-financial data such as sales

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

conversion rates, loss ratios, staff productivity ratios and unit resource costs and the model predicts their line item expenses; they can either accept them or amend them. Th

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

s approach is called ‘driver-based budgeting’.

Corporate Performance Management in a Single Solution

Despite being inter-related, these three pillars o

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

f corporate performance management are typically carried out in disparate systems. The correct approach for insurers is

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

to use a single performance management system for strategic planning, budgeting, and activity-based costing. This system needs to allow users to develop linked models that cove

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

r different functionality across different parts of the organization that can easily be consolidated for enterprise-wide reporting.

Delivering this functionality seamle

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

sly in a single solution both reduces the administrative overhead in the Finance function and improves the transparency, timeliness and integrity of management information. Wit

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

h one version of ‘the truth’, Finance can reconcile the strategic, financial and activity-based views of the organization into one over-arching performarnce management framework

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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