CASE # 12
GERMANY HEALTH INSURANCE
Barmer GEK, Germany’s
largest public health insurer, has a successful history spanning 130 years and
has been named one of the top 100 brands in Germany. When its new CEO, Dr.
Christoph Straub, took office in 2011, he quickly realized the need for action
despite the company’s relatively good financial health. The company was still
dealing with the post merger integration of Barmer and GEK in 2010 and needed
to adapt to a fast-changing and increasingly competitive market. It was losing
ground to competitors in both market share and key financial benchmarks. Barmer
GEK was suffering from overhead structures that kept it from delivering
market-leading customer service and being cost efficient, even as competitors
were improving their service offerings in a market where prices are fixed.
Facing this fundamental challenge, Barmer GEK decided to launch a major
transformation effort. The goal of the transformation was to fundamentally
improve the customer experience, with customer satisfaction as a benchmark of
success. At the same time, Barmer GEK needed to improve its cost position and
make tough choices to align its operations to better meet customer needs. As
part of the first step in the transformation, the company launched a delayering
program that streamlined management layers, leading to significant savings and
notable side benefits including enhanced accountability, better decision
making, and an increased customer focus. Delayering laid the path to win in the
medium term through fundamental changes to the company’s business and operating
model in order to set up the company for long-term success. The company
launched ambitious efforts to change the way things were traditionally done: A Better Client-Service Model: Barmer
GEK is reducing the number of its branches by 50 percent, while transitioning
to larger and more attractive service centers throughout Germany. More than 90
percent of customers will still be able to reach a service center within 20
minutes. To reach rural areas, mobile branches that can visit homes were
created. Improved Customer Access: Because
Barmer GEK wanted to make it easier for customers to access the company, it
invested significantly in online services and full-service call centers. This
led to a direct reduction in the number of customers who need to visit branches
while maintaining high levels of customer satisfaction. Organization Simplification: A pillar of Barmer GEK’s
transformation is the centralization and specialization of claim processing. By
moving from 80 regional hubs to 40 specialized processing centers, the company
is now using specialized administrators—who are more effective and efficient
than under the old staffing model—and increased sharing of best practices. Although
Barmer GEK has strategically reduced its workforce in some areas—through proven
concepts such as specialization and centralization of core processes—it has
invested heavily in areas that are aligned with delivering value to the
customer, increasing the number of customer-facing employees across the board.
These changes have made Barmer GEK competitive on cost, with expected annual
savings exceeding €300 million, as the company continues on its journey to
deliver exceptional value to customers. Beyond being described in the German
press as a “bold move,” the transformation has laid the groundwork for the
successful future of the company.