Businessmodel of Centene

Customer Segments

Centene provides a range of customers with various healthcare services and products. Its customers can be categorised as follows:

• Individual Customers, comprising general consumers, focusing on under-insured and uninsured individuals;
• Government and Public Bodies, comprising state programs, correctional facilities, and other government-owned oganisations;
• Healthcare and Medical Organisations, comprising healthcare organisations and facilities; and
• Commercial Entities, including medium and large enterprises across multiple sectors and employer groups. Centene serves its individual customers through government subsidised programs, such as Medicaid, the State Children’s Health Insurance Program, Long Term Care, Foster Care, and the Supplemental Security Income Program. The Company recently stated that its Medicare Advantage plans were targeted principally at seniors from lower socio-economic backgrounds.

Centene serves a broad domestic customer base in the US. It does not appear to offer services to international customers.

Value Propositions

Centene provides value to its customers in the following ways:

• Its industry standing and reputation, with the Company established as a reliable provider of medical and healthcare services, having been recognised for its comprehensiveness and improved outcomes by several bodies;
• Its community and social responsibility activities, with the Community participating in various community outreach programs, collaborating with charitable organisations, and operating in a sustainable way;
• Its broad domestic reach and cooperation with government programs, with the Company serving customers across the US through multiple US government subsidised programs;
• Its experienced specialist personnel, with the Company employing expert staff across its two operating segments, with executives that have experience in dealing with government programs; and
• Its data-driven service approach, with the Company ensure effective outreach procedures for new members by using predictive modeling technology. ### Channels

Centene operates a website at www.centene.com through which it provides information on its services, plans, and activities. The Company, however, does not operate an online sales channel or customer portal.

Centene serves its customers through its locally-based in-house sales and service teams, which assist customers in accessing care, coordinating referrals to related health and social services, and addressing member concerns and questions. Centene is required by various insurance and regulatory authorities to have offices in the service areas where its provide benefits. This includes offices and locations in each of the Company’s 23 operating states across the US, as well as a network of claims processing facilities.

Centene also provides education and outreach programs through specialist teams, seeking to inform and assist members in accessing quality, appropriate healthcare services. The Company also seeks to increase its Medicaid membership in its operating states through alliances with key providers, outreach efforts, development and implementation of community-specific products and acquisitions.

Customer Relationships

Centene does not provide any products or services to its customers on a self-service basis. Instead, the Company serves its customers directly through its sales, customer service, and support staff. These members of staff work closely with customers, providing personalised assistance and advice with regard to appropriate courses of action. The Company seeks to establish longstanding relationships with its customers under fixed-term and flexible contracts.

Centene provides ongoing support to its customers, who are able to access personal assistance from support staff either over the phone or via an online contact form. The Company also provides a range of resources to customers through its website, including educational resources and news articles. Customers are also able to interact with the Company directly through its social media accounts, including Facebook, Twitter, LinkedIn, and YouTube.

Key Activities

Centene is a diversified healthcare company that provides programs and services to government sponsored healthcare programs, and provides education and outreach programs to inform and assist its members in accessing appropriate healthcare services.

Centene’s activities are divided into two operating segments: Managed Care, which provides health plan coverage to individuals, through government subsidised programs, including Medicaid, the State Children’s Health Insurance Program, Long Term Care, Foster Care, dual-eligible individuals, and the Supplemental Security Income Program, also known as the Aged, Blind or Disabled Program; and Specialty Services, which comprises the operations of various Centene companies that offer a range of healthcare services and products to state programs, correctional facilities, healthcare organisations, employer groups and other commercial organisations.

Key Partners

Centene works in conjunction with a number of partner companies and organisations across multiple business segments. These partners include:

• Joint Venture Partners, comprising a range of companies and organisations with which the Company collaborate on projects and provides joint services through mutually-owned entities;
• Social and Non-Profit Partners, comprising a range of charitable organisations and non-profits with which the Company collaborates on social and community projects;
• State Government and Medical Partners, comprising a range of government bodies and agencies with which the Company cooperates on medical programs;
• Education Partners, comprising universities and research companies with which the Company collaborates on educational programs and training. In recent years, Centene has launched a number of partnerships. This includes a partnership with MHM Services to serve Massachusetts’ state correctional system, a deal with Webster University under which team members of Centene can receive a corporate partner tuition rates for undergraduate and graduate programs, and tie-up with a children’s author to develop its own children’s book series on topics such as obesity prevention and healthy eating, asthma, diabetes, foster care, smoking, anti-bullying and heart health.

Key Resources

Centene’s key resources are its various operating licences, its relationships with government programs, its IT and communications infrastructure, its partnerships, its sales and distribution channels, and its personnel.

Centene’s operations are dependent on licences it owns, and that its subsidiaries own, that permit Centene companies to operate as health maintenance organisations, third party administrators, utilisation review organisations, pharmacies, direct care providers and/or insurance companies in their respective states. The Company is also dependent on its access to various government-subsidised health programs, such as Medicaid and Long Term Care.

Cost Structure

Centene incurs costs in relation to the payment of various licensing and professional fees, the maintenance of its IT and communications infrastructure, its compliance with government regulations and guidelines, the management of its partnerships, the payment of medical expenses, the operation of its sales and distribution channels, and the retention of its personnel.

In 2015 Centene accrued total operating costs in the amount of $22.06 billion. The majority of these costs relate to medical costs, which amounted to $17.24 billion for the year. The Company’s cost of services totalled $1.62 billion and its general and administrative expenses amounted to $1.83 billion. This included the payment of salaries and benefits to the Company’s workforce of 18,200 employees.

Revenue Streams

Centene generates revenue through the provision of various medical and healthcare services, principally its activities as an insurer. The Company typically collects fixed premium fees from its members each month, pursuant to its state contracts. The Company derives revenue through its specialty services, which are divided into a number of business lines:

• Pharmacy solutions;
• Health, Triage, Wellness, and Disease Management Services;
• Vision Services;
• Dental Services;
• Care Management Software;
• Correctional Healthcare Services;
• In-Home Health Services; and
• Integrated Long-Term Care. In 2015 Centene generated $22.76 billion in total revenue, up substantially in the $16.56 billion recorded by the Company in 2014. The majority of the Company’s revenue was generated through premiums collected in relation to its core Managed Care services, which amounted to $19.39 billion. The Company’s service revenue for the year totaled $1.88 billion.