Delta Dental Plan of Massachusetts
Delta Dental Plan of Massachusetts (DDPM) is New England's largest dental care insurer. Its mission is to ensure access to affordable quality dental care for all residents in the region. Its corporate culture is one of caring for the well-being and professional growth of employees. The company has few environmental problems, and employs sophisticated and comprehensive quality management systems.
At the time of the SmithOBrien audit, DDPM was facing stiff competition, within a price-sensitive industry. The socio-economic demographics of the U.S. consumer market for dental insurance were also rapidly changing. The organization's ability to hold onto its leadership position rested, in part, on its ability to attract and retain a mix of highly talented managers that reflected the diverse demographics and life experiences of consumers and could readily understand their needs.
In 1995, DDPM engaged SmithOBrien to assess the degree to which the organization fulfilled its mission and its mission's alignment with the current goals of increasing year-end fund balance, improving efficiency, strengthening its close personal relationships with dental care providers and consumers, and furthering its community involvement initiatives - considered essential to the organization's growth and market leadership.
Quality Management Systems
DDPM did an excellent job of continuous improvement, based on understanding its customers' needs. However, the cost of staying close to its customers was high. To remain financially secure, yet still competitive, we recommended:
- Annually quantifying the cost of quality systems metrics and adding to management's performance indicators their ability to contain or reduce the costs of satisfying consumers' and providers' most important needs.
This would enable DDPM to better balance the cost of continuous improvement with known and latent demands for customer service.
By reducing employee turnover, the organization would improve the quality of customer service and increase its fund balance, by freeing-up cash and management and departmental time for more value-added activities. If only half of the turnover costs of overtime, temporary help, and outsourcing were recovered, DDPM's fund balance for 1995 would increase 7%. We recommended:
- Increasing professional development and career opportunities for the customer service employees
- Creating a "feeder pool" for area companies in need of experienced, well-trained customer service employees. By demonstrating its support for continuous employment, the organization could increase job satisfaction, reduce turnover, and generate a new - albeit small - income stream, which would offset its recruitment costs, from companies sourcing skilled employees from DDPM.
- Expanding its diversity program to include succession planning for management, along with explicit diversity goals for each department, as well as the board of directors
We calculated that employee turnover in the claims processing area, a source of often well-paid, but stressful and dead-end positions professionally, cost DDPM at least $315,000 annually.
DDPM's investment in a client-server computer system to process claims and payments, while reducing paper use and improving operating efficiencies, was (found by the audit team) to be constrained by an overabundance of different paper forms. We, therefore, recommended:
- Creating and piloting, with select dental care providers, an open-standards, Intranet-based Electronic Data Interchange (EDI) system, which as a longer-term strategy would provide greater efficiency and more usable market data for both the company and its providers.
A seamless link to the company's sales force in the field and to providers would reduce the organization's order/payment processing, and archival space costs. Though electronic data processing would require fewer employees in some departments, the remaining employees would benefit from new, marketable skills and more stimulating work - thus complimenting our prior recommendation for professional development. Furthermore, the organization's use of an EDI system would be a significant step towards a nearly paperless organization, a major contribution towards protecting the natural environment.
- Consolidating the number of community involvement activities, while expanding their scope, and prioritizing the groups, causes and activities that contributed most to the organization's business goals
By eliminating redundant planning and management of employee volunteerism and philanthropy, DDPM would nearly halve its administrative costs, which we calculated to be 44 cents for every dollar of cash and professional time, contributed to community activities -- nearly twice that of comparable organizations.
The audit results led to changes in DDPM's diversity strategy, with specific goals and recruitment plans for every department and its management, and the board of directors. To further increase diversity at the highest levels, the organization's senior officials and board of directors developed succession plans."SmithOBrien's team of consultants has evident industry experience and knowledge. They were able to quickly understand our business and worked closely with me and my management team, as well as other employees. Through working [with SmithOBrien], we have acquired knowledge of the financial and competitive implications of operating even more responsible than we have in the past. Most importantly, the Audit result has re-energized and re-focused the entire organization around our corporate mission, resulting in clearer internal and external communication and beneficial changes to our products and services."
Chief Executive Officer