The U.S. government's plans for health-insurance reform combined with public outcry over spiraling insurance costs and general economic worries has put health-insurance companies in a perilous position when it comes to spending on meetings.
When Joann Chmura, CMP, CMM, finally got the go-ahead for Connecticare Inc.'s annual Producer Advisory Conference last June, she had just three months to pull it together—and a budget that had been slashed by a third, or $70,000. She normally had a year to organize the long-standing event for about 50 top brokers and guests, but the uncertain times and a membership loss left the Bridgeport, Conn.–based managed-healthcare company unwilling to commit until getting quarterly sales figures.
Wait and See
Connecticare is not alone. The U.S. government's plans for health-insurance reform combined with public outcry over spiraling insurance costs and general economic worries has put health-insurance companies in a perilous position when it comes to spending on meetings.
Much like financial services companies dealing with spending issues after taking funds from the Troubled Asset Relief Program, health insurers need to rethink "how to keep to the objective and be strategic, without looking to the world like they are crazily spending," says Wendy Spivak, principal/founder of The Castle Group, an event-management company in Boston, who works with several health-insurance clients.
Chmura is acutely aware of that: She was laid off from her position as relationshipmanager at Connecticare in January, and is expecting to work for the company on a basis while planning her next move. She says that many health-insurance companies have shelved any programs that could give the impression of an incentive or networking event, while others are keeping a low profile and putting together events on the fly.
Kari Vrba, vice president, business planning and industry relations, engagement and events at Carlson Marketing in Minneapolis, is seeing these companies look for new ways to get information out to their key audiences. For example, Carlson recently had one client cancel a large meeting, opting instead for a road-show event where they reached the same audience but at the local level. "We planned this 57-city road show in 31 days," Vrba says, adding that this isn't unusual these days. "In some cases, meetings may change in scope, destination, size, or budget, even after venues have been contracted."
When companies do travel, they're choosing destinations with low profiles. In previous years, Connecticare had taken top producers offshore, to the Bahamas or Bermuda, but the 2009 meeting was held in Fort Lauderdale, Fla. "We were considering some other locations for 2009, but we couldn't do something that visible," Chmura says.
The Castle Group has also seen companies increasingly concerned with appearances, especially in Massachusetts, where health-insurance spending is center stage. Deborah Spencer, The Castle Group's director of operations, says that even the branding for one meeting she worked on was deemed "too nice" by a client.
"I've never had that happen in my life," Spencer says. "We had to redo the whole thing to make it look more homegrown."
Because of this increased scrutiny, procurement is also getting more involved, Wendy Spivak notes. "Cost containment and procurement issues are going to be huge," she believes. "A lot of companies that may not have had an official procurement system will have to bid things out more. They may have had a vendor that they'd worked with for years, but they may not be able to use them any longer—they may have to go to an RFP process."
All of this is having a huge impact on lead times for meetings. For 2010, Connecticare has already pushed the annual conference—which has been held for nine years running—out of June 2010, and may even move the program to 2011. Decisions will be made on the fly, based on quarterly sales results, Chmura believes. "They're waiting until the last possible minute to plan anything," she says.
When the decision is made, Chmura expects she'll get three months from start to finish to put together a meeting for 100 people.
And she is confident she can make it happen. "Patterns can be flexible and location can be flexible, as long as it's not something participants would do on their own," she explains. "The challenge becomes more difficult if you have a group that's not as flexible."
Her peers in health-insurance companies are having the same experience, Chmura says. "If they're doing particularly well in a quarter, they're going to say, ‘OK, let's do this, and let's figure out how to make it cost-effective.' They still want the high level they had in the past—they want it to look and feel the way it always has—but with a shorter lead time."
Sandra Daniel, president and CEO of the FIRE Light Group, a Madison, Wis.–based incentive agency, agrees. "What I have seen is that the decision is made to cut back on meetings and/or incentive programs, but then business needs end up trumping those decisions and they end up having those meetings," she says. "As planners step up to the plate and make the last-minute meetings happen, they are setting a precedent for the future. Now that they have demonstrated it can be done, it will become an expectation."
The other thing that's here to stay is the intense scrutiny on this industry.
"I can absolutely see the general population saying, ‘My rates just went up 32 percent—I can't believe they're sending people to Europe," says Spivak of The Castle Group. "I think health insurers accurately perceive themselves to be under a larger microscope than, say, software companies, because there is this consumer trickle-down effect."