PESTLE ANALYSIS

POLITICAL  Implementation of Universal Health Care Act of 2019 in

the Philippines (Threat)

 The newly passed Sin Tax Reform bill increased taxes on

all tobacco and alcohol projects providing a new injection
of funding that enabled the Philippine government to
enroll more people in universal health care. (Threat)

ECONOMIC  Strengthening healthcare access among all Filipinos

through more hubs, clinics, and medical establishments.
(Opportunity)
 Entrants of Businesses Thriving During Coronovirus
(Cleaning Services, Delivery Services and E-commerce
Businesses). (Opportunity)
 Economic Slowdown due to Pandemic. (Threat)
 Medical trend rates in the Philippines have edged up for
2020 to 8.5% from 7.8% in 2019 and projected to
continue increasing for 2021. (Threat)
 Company Layoffs, Retrenchments and Closure due to
COVID 19 pandemic. (Threat)
SOCIAL  Almost 50% of Filipinos does not have HMO coverage
can be potential clients. (Opportunity)
 More Medical Specialists were accepting HMOs.
(Opportunity)
 Most of the hospitals were accredited by HMOs.
(Opportunity)
 More customized and complex product offerings of Life
and Health Insurance Industry. (Threat)
 Increasing rivalry among major competitors. (Threat)

TECHNOLOGICAL  Boost /Demand of Telemedicine and other Health care

applications (aide app, now serving) in the Philippines.
(Opportunity)

 The rise of selling platforms such as Shopee and Lazada.

Healthcare packages/plan of Carehealth made available
thru these platforms (Opportunity)
 ENVIRONMENTAL NOT APPLICABLE

Immediate Industry and Competitive Environment (Porter’s Analysis)

HMOs in the Philippines began to appear in the 1980s but it was first known in the US in
the wake of the HMO Act of 1973. Most of the HMOs in the Philippines were attached to
insurance companies. It usually covered employed Filipinos under employer-funded schemes
and they only have fewer individual members.

In year 2020, the industry’s bottom line soared high by 463.75 percent to P 5.85 billion as
sales rise during the said year amid the Covid 19 pandemic. The market is topped by Maxicare
Corporation with 35.79 % share in the market while Intellicare and Medicard is 26.89% and
17.75%, respectively. The HMO industry is becoming an increasingly important part of the
health care system in the Philippines specially this time of pandemic where in it lessen the
burden of the individuals in their health-related expenses.

1. Rivalry of Players: Rate (High)

The HMO industry currently oligopolistic because it is dominated by the 3 major players
namely Maxicare Corporation, Intellicare and Medicard capturing 80% of the industry revenue.
It is a high concentration ratio where in their share is large enough to influence the market prices.
Data in the last year shows that there are basically three main players in the industry.
Maxicare Corporation tops the industry with 36% market share. The next company, which is
quite far to the top HMO is Intellicare. In the last year report of the industry’s performance,
Intellicare reach 27% of the market share. Closely to Intellicare is the Medicard, which has 18%
of the market share. It is noticeable that all the Big 3 are on the uptrend. CareHealth Plus is being
inferior with the two, having only 0.39% market share in the HMO industry.
 All these players, even during this pandemic, have an increase of sales. These
considerations comprised the total assessment of the rivalry of players as HIGH.

2. Potential for New Entrants: Rate (High)

Tighter rules in setting up HMO company were implemented by Insurance Commission

and AHMOPI since Implementing Rules and Regulation of Executive Order 192 was put in
place. This started the difficulties in companies entering the HMO industry.

With the current crisis, new entrants in the HMO market today could snatch million pesos
of revenues from the existing top HMO companies if those said top HMOs do not move faster to
provide plans and services in the setting consumers want. Maxicare Corporation, the top HMO
company in the Philippines, continuously integrated innovations on its products and services. It
1
has allowed customizing of programs to ably cater to what is needed and desired by the market.
Customers nowadays can easily choose what HMO company they will prefer. They are
interested in getting more complex services, online or in retail settings if it is more affordable
and convenient.

The threat is that if you are planning to enter the HMO industry, you must be up to date
when it comes to technological aspect which is the trend today and must have a customer-
oriented services especially now that people are more aware and conscious with their health.
New entrants can regard their global reach, customer insights, commitment to transparency and
trusted brand as critical assets to capture and dominate the HMO industry.

As mentioned, customer insights are one factor for a successful entrant because customer
loyalty is a problem in this industry. There is really nothing holding the customers from getting
another provider. If it provides convenient service, better coverage, and cheaper package – the
customer would gladly embrace it. The threat for new entrants, however, revolves around how
deep their financial muscle is, how they can get the services of major health institutions and how
they can provide competitive yet correct pricing considering that they do not have the spread yet
to counter the risk.
3. Bargaining Power of Buyers: Rate (Moderate)

The bargaining power of buyers in this industry is moderate. It means that there are only
few factors that consumers can put the HMOs in pressure in terms of their pricing, product
quality and customer service. One factor is that more than 90% of the members are from
corporate accounts that mostly came from the key industries such as BPO, Manufacturing, Real
Estate, Hospitality and Restaurants and Financial Intermediaries industries.

Another reason for a bargaining power of buyers is the same if not homogenous product of
the industry. Plans or products in HMOs only vary in MBL limit and hospital network but most
of them have the same product and plan offerings such as the accredited hospitals and medical
doctors. Due to the existence of the internet, buyers can easily compare the offerings and
performance of different HMOs. They are also keener and more intelligent on weighing its
features. But individuals do not have opportunity to foresee or determine sickness that will come
along the way and the perfect example is this COVID 19 pandemic. The importance of HMO
products has been highlighted. HMOs gained more industry attention and interest from the
people because of their ability to manage health care costs. Due to COVID 19 pandemic, the
HMO industry keeps in step with all initiatives to support government and private sector. They
cover COVID 19 to date, from real-time Reverse Transcription Polymerase Chain Reaction (RT-
PCR) of symptomatic individuals to confinement of SAR-CoV-2 infected patients up to the plan
holder’s Maximum Benefit Limit. As a result, it seems as though the bargaining power of buyers
is moderate.

4. Bargaining Power of Suppliers: Rate (Moderate)

The bargaining power of supplier in the HMO industry depends on the network of the
company. There is no inventory in this industry, the only logical “suppliers” we are referring to
are the medical doctors, nurses, and hospitals. Hospital Industry is getting significant numbers of
business from HMO industry even though they are highly dependent with them. More than 20%
of hospitals’ revenue came from HMO related activities. Shortage of Hospitals and Nurses is not
really an issue because there are also increase in diagnostic clinics which are accredited by the
HMOs. In terms of doctors and nurses, we can say that there is a shortage especially during this
time of pandemic. Philippines is the world’s top source of nurses but there is a fact that
Philippine hospitals are understaffed. The Philippines’ average nurse to population is one to
5,000. But in some geographically isolated areas, it is one to 20,000 and conditions got worse
when the pandemic hit and COVID 19 positive nurses needed to be quarantined. Last April, the
World Health Organization expressed alarm at the situation, as about 13 per cent of the country’s
COVID-19 cases were healthcare workers, compared with the region’s average of two to three
per cent. A year later, 141 health workers in the Philippines have lost their lives in the line of
duty, according to Department of Health statistics .2 Schools for Nurses and Doctors were delayed
also because of the pandemic.

HMO companies nowadays focus on backward integration specifically in outpatient

services and diagnostic services.

Given the factors above, the bargaining power of suppliers is foreseen to be MODERATE.

5. Potential for Substitute: Rate (Low)

In Health Maintenance Organizations, substitutes have no significant. The only substitute

that we could possibly consider as substitute is personal savings or paying the medical bills from
our own pockets. Unlike availing HMO coverage, the members can be at peace knowing that her
medical expenses can be covered by her annual premium that she paid for. It can be less
expensive and more practical. The challenge though, since 2019 only 4 million Filipinos out of
the over 100Million population are enrolled in a HMO program, is how to convince majority of
the population to plan well their health care needs. As to date, almost 50% of the households are
still paying their medical expenses from their own pocket or savings based on Philippine
Statistics Authority.

Being so, and given with the factors to consider, we see that there is a LOW potential for
substitute.
A. Threats and Opportunities

There is a total of fourteen foreseen opportunities and threats influenced by political,

economic, social, technological, legal, and environmental factors in the external environment of
the company. All these factors shall be considered as opportunities relevant to the company as
the company engages in providing health care services.

These external opportunities are (1) Boost /Demand of Telemedicine and other Health care
applications (aide app, now serving) in the Philippines, (2) The rise of online selling platforms
such as Shopee and Lazada. Healthcare packages/plan of HMOs made available thru these
platforms, (3) Entrants of Businesses Thriving During Coronavirus (Cleaning Services, Delivery
Services and E-commerce Businesses), (4) Almost 50% of Filipinos does not have HMO
coverage can be potential clients, (5) More Medical Specialists were accepting HMOs, (6) Most
of the hospitals were accredited by HMOs, and (7) Strengthening healthcare access among all
Filipinos through more hubs, clinics and medical establishments.

These opportunities have direct relations to the company’s way of doing business and supports
its mission and vision to produce affordable and quality healthcare plan for the Filipino citizens.

Likewise, all six identified threats in this section are going to be considered in the
formulation of strategies for the company. To name a few identified threats that are going to be
considered due to its direct relations to the company’s mission and vision are (1) Implementation
of Universal Health Care Act of 2019 in the Philippines, (2)The newly passed Sin Tax Reform
bill increased taxes on all tobacco and alcohol projects providing a new injection of funding that
enabled the Philippine government to enroll more people in universal health care., (3) Economic
Slowdown due to Pandemic, (4) Medical trend rates in the Philippines have edged up for 2020 to
8.5% from 7.8% in 2019 and projected to continue increasing for 2021, (5) Company Layoffs
and Retrenchments due to COVID 19 pandemic, (6) More customized and complex product
offerings of Health Insurance Industry. (7) Increasing rivalry among major competitors
especially this COVID 19 pandemic.

The purpose of identifying all opportunities and threats, although not all will be considered
for use in the strategy formulation, is to measure the company’s current standing in the HMO
industry in comparison to its competitors.

1. External Opportunities

Opportunity 1: Boost /Demand of Telemedicine and other Health care applications (aide
app, now serving) in the Philippines.

Importance Weight: 7%

The role of telemedicine happened during the pandemic, especially in our country where
there is a challenge in the healthcare system. When quarantine restrictions implemented in the
country, Telemedicine gave an alternative comfort to the Filipinos. It became popular for
patients to keep track of their health. Telemedicine is an alternative health care option for
patients and doctors without having worry about commuting, lining up at hospitals, potentially
being exposed to COVID 19 and other infectious diseases. Telemedicine is defined by the World
Health Organization (WHO) as “the delivery of health-care services, where distance is a critical
factor, by all health-care professionals using information and communications technologies for
the exchange of valid information for diagnosis, treatment and prevention of disease and injuries,
research and evaluation, and for the continuing education of health-care providers, all in the
interests of advancing the health of individuals and their communities.”3.

Since the Telemedicine is the new health care for the new normal, HMOs would take this
as an opportunity for a new offering that they can include in their healthcare plans.

Responsiveness Rating: 3
 The company’s responsiveness rating is 3 because CPHI’s tie ups with telemedicine and
other medical mobile applications are still on planning stage.

Opportunity 2: The rise of online selling platforms such as Shopee and Lazada. Healthcare
packages/plan of HMOs made available thru these platforms.

Importance Weight: 7%

Amidst the COVID 19 pandemic, Online shopping in the Philippines is thriving. Two top
players dominating the ecommerce industry are Shoppee and Lazada. When we talk about
convenience especially with the lockdowns and quarantine restriction, Online shopping wins the
hearts of many Filipinos.

Responsiveness Rating: 4

The responsiveness rating of the company is 4 because currently they are offering their
healthcare packages in Lazada and Shoppee.

Opportunity 3: Entrants of Businesses thriving during Coronavirus (Cleaning Services,

Delivery Services and E-commerce Businesses)

Importance Weight: 6%

A lot of companies were suffering due to this pandemic. But there are businesses who did
well. Examples of those companies are delivery services, online shopping services and cleaning
services. Those companies can be a new potential client for the HMOs.

Responsiveness Rating: 3

CareHealth Plus eyes to market those said thriving businesses and since the company has
affordable programs and the aforementioned businesses were mostly small businesses, it has a
big chance to close a deal with them.
Opportunity 4: Almost 50% of Filipinos does not have HMO coverage can be potential
clients.

Importance Weight: 6%

According to the statistics, almost 50% of the Filipinos are still using their own money
with their health expenditure.5

Responsiveness Rating: 4

CareHealth Plus offers one of the best packages for single, freelancer, self-employed and
other individuals such as OptimumCare Program, Quantum Gold, Quantum Care Program,
Valueplus Program and many more. Given the high unemployment rate in the Philippines, most
of the HMO members are from the corporate world that is why CareHealth Plus took an initiative
to create programs for those who are not employed by a company and engaged in their own
businesses.

Opportunity 5: More Medical Specialists were accepting HMOs

Importance Weight: 5%

Patients’ trust in their doctors is important. It is related to having a longer relationship with
the doctors and trusting their health care management to them. Doctors save lives and their
importance goes beyond that. They can make a difference by helping patients minimize pain,
recover from sickness and even learning to live while with a disabling injury. During this
pandemic, we have seen the vital role of the doctors. They are the one who always at risk during
this tough time. We weighted this opportunity as 5% because of these factors. Potential members
will consider availing HMO plans if they know that the company has a lot of accredited
competitive doctors.

Responsiveness Rating: 3
 The company’s responsiveness rating is 3 since CareHealth Plus has only 6,100 accredited
doctors.

Opportunity 6: Most of the hospitals were accredited by HMOs

Importance Weight: 5%

Hospitals complement and amplify the effectiveness of many other parts of the health
system, providing continuous availability of services for acute and complex conditions. They
concentrate scarce resources within well-planned referral networks to respond efficiently to
population health needs.

Hospitals are also an essential part of health system development. Currently, external
pressures, health systems shortcomings and hospital sector deficiencies are driving a new vision
for hospitals in many parts of the world. In this vision, they have a key role to play to support
other healthcare providers and for community outreach and home-based services and are
essential in a well-functioning referral network.

Hospitals matter to people and often mark central points in their lives. They also matter to
health systems by being instrumental for care coordination and integration. They often provide a
setting for education of doctors, nurses and other health-care professionals and are a critical base
for clinical research.7

Given these factors, we weighted this opportunity as 9% as it affects the mindset of the
consumers in availing HMO packages.

Responsiveness Rating: 3

CareHealth Plus has 1,075 accredited hospitals and clinics. They are still in process of
negotiating with the most trusted hospitals and clinics in the Philippines.
Opportunity 7: Strengthening healthcare access among all Filipinos through more hubs,
clinics and medical establishments.

Importance Weight: 7%

In response with the COVID 19 pandemic, WHO continues to promote convenient health
care access among Filipinos with the use of innovated technologies such as computer website
and mobile phone applications. They also strengthen the implementation of One Hospital
Command Center (OHCC) which is located at Philippine International Convention Center
(PICC). OHCC is one of the factors that strengthening health care access among Filipinos by
playing a central coordinating role in optimizing the use of critical care services in the hospitals
and relevant facilities with the use of telephone call. We weighted this opportunity as 7%
because due to the quarantine restrictions and physical distancing protocols and also fear of
having infected, Filipinos are more interested in remote access of health care services.

Responsiveness Rating: 3

Currently, Members of CareHealth Plus can now access or avail health care services
through telephone call. We rated the response of CPSHI with this opportunity as 3 because they
still lack convenient access in their services.

2. External Threats

Threat 1: Implementation of Universal Health Care Act of 2019 in the Philippines

Importance Weight: 5%

President Rodrigo Duterte signed a Universal Health Care (UHC) Bill into law (Republic
Act No. 11223) last year 2019 that automatically enrolls all Filipino citizens in the National
Health Insurance Program and prescribes complementary reforms in the health system. This
gives citizens access to the full continuum of health services they need, while protecting them
from enduring financial hardship as a result. 6 We weighted this threat as 7% because it can affect
the HMO industry because Filipinos will become dependent in the UHC Bill. Since UHC Bill is
less expensive and they will be automatic enrolled, Filipinos will be now hesitant to avail HMO
products/packages.

Responsiveness Rating: 2

The responsiveness rating of the company is 2.

The company still needs to improve their marketing style and product development to
attract Filipinos especially those who are not employed, to avail their plans which is worth their
money since they will be receiving less expensive access of their health services, they need
through UHC Bill.

Threat 2: The newly passed Sin Tax Reform bill increased taxes on all tobacco and alcohol
projects providing a new injection of funding that enabled the Philippine government to
enroll more people in universal health care.

Importance Weight: 5%

The Sin Tax Reform proposed to increase the tax rate of cigarettes to at least 3 pesos per
stick or 60 pesos per pack. As a result, additional funding for Universal Healthcare Act will be
provided. With this reason, we weighted this threat as 5% because it will strengthen the power of
Universal Healthcare Act that can make the people depend on the said program.

Responsiveness Rating: 2

The responsiveness rating of the company is 2.

Since this threat is connected with the Universal Healthcare Act, we also rated the response
of the company to 2 because this is actually out of their control.

Threat 3: Economic Slowdown and Community Quarantines due to increase of COVID 19

cases.

Importance Weight: 11%

 The coronavirus pandemic continues to affect many lives, livelihoods, and industries
worldwide. According to DOH report as of July 30, 2021, Philippines has infected more than 1.4
million individuals and claimed lives of more than 27,000 people. Since there is no clear sign of
the virus being contained just yet, especially with the new strained of virus called Delta Variant,
the government continues to impose stricter quarantine guidelines. This means that the economy
will undergo again in contractions as many businesses and industries will be non-operational,
aside from the identified essential sectors, unless business operations can be done online and
their workforce is well-equipped and capable of performing their respective tasks from their
homes. As for HMO industry, the quarantine restrictions restrict them to do their presentations to
the companies and especially other potential individual clients in which it results in low
productivity. Virtual Presentation may do but face to face interaction with the clients are proven
more effective. Also, Companies, HMOs’ largest percentage of accounts, that stopped their
operations might suffer increase in expenses and tighten their budget which can lead to
unrenewed HMO plans.

We gave an importance weight of 11 percent the threats implicated by economic

slowdown and quarantine restriction as it affects HMO activities specifically in marketing and
promotion.

Responsiveness Rating: 3

The company has no control over the economic slowdown and quarantine restrictions, all it
can do is to maximize efforts in servicing and communicating to the existing members and
potential clients.

Its responsiveness rating is 3. Currently, employees with vital role in the operations of the
company are locked in in the office to make sure of their safety while performing quality service
with their clients.

Threat 4: Medical trend rates in the Philippines have edged up for 2020 to 8.5% from 7.8% in
2019 and projected to continue increasing for 2021.

Importance Weight: 11%

 According to the survey of Willis Towers Watson, private medical care in the Philippines
is largely dominated by an HMO model, which accounts for 80% of plans. While the frequency
of inpatient and outpatient claims has definitely decreased in 2020, the average amounts per
inpatient and outpatient claims are rising. In addition, various physician organizations negotiated
with HMO associations and were granted a 50% increase in fees commencing May 27, 2020,
ostensibly to cover the cost of PPE. This cost increase is expected to remain in place for the
duration of the pandemic. Physician fees are roughly 30% of total spend.

Overall this helps explain why trend rates in the Philippines have edged up for 2020 to
8.5% from 7.8% in 2019 and are projected to continue increasing for 2021, although continued
delay in treatment in 2020 could mean an even larger increase in 2021 than projected.8

The rising of COVID 19 cases that leads to increase of medical trend is a threat and has a
big impact in HMO industry specially the increase in claim cost.

Due to the current crisis, there is an increase in medical claims driven by COVID 19
diagnostics, care and treatment. The rise in medical costs also reflects the increased unit cost of
care due to providers passing on the cost of personal protective equipment (PPE) needed to
safely perform services in their bills as well as the higher cost of supply imports due to exchange
rate fluctuations.

We gave this threat an importance weight of 11% as it is very relevant.

Responsiveness Rating: 3

The increase of the medical cost due to inflation is uncontrollable specially this time of
crisis. In response of that, the company also increase their premium in a reasonable price.

Threat 5: Company Layoffs, Retrenchments and Closure due to COVID 19 pandemic

Importance Weight: 11%

 According to the AHMOPI, at least 95% of the country’s six million HMO members are
on corporate plans, but these are almost always integrated into the National Health Insurance
Program (PhilHealth), with employers contributing to premiums for their employees. 9 In line
with this the company layoffs, retrenchments, and closure is a big impact to HMO’s sales. In
recent DOLE’s job displacement report, a total of additional 133, 315 workers were displaced.
Last year, at least 428,701 workers lost their jobs while 4,577,027 workers were caught in a “no
work, no pay” situation.10 Probably, as a result of that, a lot of corporate accounts in the HMOs
were discontinued.

With the foreseen factor stated above, we gave this threat an importance weight of 11% as
it is very relevant.

Responsiveness Rating: 4

Despite of the companies’ retrenchment and closure, the company maintains to closed
deals to other companies and even government agencies. The company has also the most
recommended programs for individuals that can offer to those who are not employed. That’s why
the company’s response to this threat is 4.

Threat 6: More customized and complex product offerings of Life and Health Insurance
Industry

Importance Weight: 4%

The importance of Health and Life Insurance were also appreciated during this time of
crisis. Health Insurance is a type of insurance that covers medical expenses that arise due to an
illness. These expenses could be related to hospitalization costs, cost of medicines or doctor
consultation fees. As the definition of the insurance says, it is likely same with the HMO. The
only difference between the HMO and health insurance is the network size of healthcare
providers being offered, the flexibility of coverage, and monthly fee amount and terms. As to
date, a lot of Health Insurance companies offered more comprehensive programs that can make
individuals with budgeted income availed it rather than an HMO. Some of the features that HMO
does not have are death benefits, cash transferrable and a lot of medical features you can add
with your plan.

Before, Filipinos are hesitant in getting HMO plans and Insurance. They rely their medical
expenses on their own pocket. But due to pandemic, a lot of people were conscious about their
future expenses and as well as the fear of death that’s why Life Insurance is also booming. It is a
contract between a policy owner and an insurer, where the insurer agrees to pay an insured's
designated beneficiary a benefit upon the occurrence of the insured individual's death or other
event, covered by the policy such as terminal or critical illness occurs. 11 There are Life Insurance
companies who also offer investment in their plans. With those said factors, this is a threat to
HMOs because the interest of the people will divide with Life and Health insurance.

We gave this threat an importance weight of 4% as it is very relevant.

Responsiveness Rating: 3

The company’s responsive rating is 3 since it offers more affordable programs rather than
insurance plan. But the company should still do their research and development about their plans
to make it worthy to the people to purchase.

Threat 7: Increasing rivalry among major competitors especially this COVID 19 pandemic.

Importance Weight: 11%

Maxicare Corporation, Intellicare and Medicard are the top 3 players in the HMO industry.
The said big players have extensive network of hospitals and doctors for everyone’s
convenience. They provide more comprehensive health programs that cater intensive medical
care services for its members. When it comes to innovation and technology, the top 3 HMOs
continuously integrating up to date technology in promoting and offering their products.

Responsiveness Rating: 2

The company’s responsiveness rating to the increasing rivalry among major competitors is
2 as it failed to match the same level of competitiveness among the 3 big players of the industry.
B. EFE Matrix

With an overall score of 3.04, Carehealth Plus has average or minor weakness position in
the real estate industry having poor responsiveness rating by exploiting opportunities in
overcoming the threats in its external environment.

The following table 14 shows the external factor evaluation matrix describing the weights
and responsiveness ratings on the external opportunities and threats presented in the external
environment analysis.

Table 11:
External Factor Evaluation Matrix
Importance Responsiveness Weighted
External Factors
Weight Rating Score
Opportunities
Boost /Demand of Telemedicine and
other Health care applications (aide 0.07 3 0.21
app, now serving) in the Philippines.
The rise of online selling platforms
such as Shopee and Lazada.
0.07 4 0.28
Healthcare packages/plan of HMOs
made available thru these platforms.
Entrants of Businesses thriving during
Coronavirus (Cleaning Services,
0.06 3 0.18
Delivery Services and E-commerce
Businesses)
Almost 50% of Filipinos does not
have HMO coverage can be potential 0.06 4 0.24
clients.
More Medical Specialists were
0.05 3 0.15
accepting HMOs
Most of the hospitals were accredited
0.05 3 0.15
by HMOs
Strengthening healthcare access
among all Filipinos through more
0.07 3 0.21
hubs, clinics, and medical
establishments.
Threats
Implementation of Universal Health
0.05 2 0.10
Care Act of 2019 in the Philippines
The newly passed Sin Tax Reform bill
increased taxes on all tobacco and
alcohol projects providing a new
0.04 2 0.08
injection of funding that enabled the
Philippine government to enroll more
people in universal health care
Economic Slowdown due to Pandemic 0.11 3 0.33
Medical trend rates in the Philippines
have edged up for 2020 to 8.5% from 0.11
3 0.33
7.8% in 2019 and projected to
continue increasing for 2021.
Company Layoffs and Retrenchments
0.11 4 0.44
due to COVID 19 pandemic
More customized and complex
product offerings of Life and Health 0.04 3 0.12
Insurance Industry
Increasing rivalry among major
competitors especially this COVID 19 0.11 2 0.22
pandemic.
Total 1.0 3.04

Legend:
Weight : The External Opportunities and Threats shall be weighted 0.00 to
1.00 according to importance with 1.00 being the most important
while 0.00 being the least important.
Responsiveness : The External Opportunities and Threats shall be rated 1.00 to
Rating 4.00 according to its responsiveness with 4.00 as “Superior”,
3.00 as “Above Average, 2.00 as “Average”, and 1.00 as “Poor”.

COMPETITOR ANALYSIS – COMPETITIVE PROFILE MATRIX

CAREHEALTH PLUS PROFILE MATRIX

Note:

1. The rating values are as follows: 1 = Major Weakness, 2 = Minor Weakness, 3 =

Strength, 4 = Major Strength.
 2. As indicated by the Total weighted score of 2.9, CareHealth is weakest, while Maxicare
weighted score 3.75 is the strongest.
3. Only 7 Critical Success Factors are included for simplicity.

CareHealth ValueCare
Maxicare
Plus
Critical Success Factors Weight Rating Score Rating Score Rating Score
Customer Loyalty 0.12 3 0.36 4 0.48 4 0.48
Financial Position 0.12 3 0.36 4 0.48 4 0.48
Management 0.11 3 0.33 4 0.44 4 0.44
Marketing Strategy 0.20 3 0.60 4 0.80 3 0.60
Service/Plans/Programs
0.15 3 0.45 4 0.60 4 0.60
Competitiveness
Technological Innovation 0.20 1 0.20 4 0.80 3 0.60
Commission/Incentive
Plan for Agents & Sales 0.10 4 0.4 3 0.30 3 0.30
Force
TOTAL 1 20 2.7 27 3.9 25 3.5

Company 2 is strongest when it comes to Customer Loyalty, Service Program, Marketing

Strategy, Technological Innovation and Commission / Incentive Plan for Employees, while
Company 1 is strongest when it comes to Commission/Incentive Plan for Agents and Sales Force
and Company 3 is also strong when it comes to Customer Loyalty and Service Program.

A word on interpretation: Just because one firm receives a 3.79 rating and another receives a
3.39 rating in a Competitive Profile Matrix, it does not follow that the second firm is 25 percent
better than the second. Numbers reveal the relative strengths of firms, but their implied precision
is an illusion. The aim is not to arrive at a single number, but rather to assimilate and evaluate
information in a meaningful way that aids in decision making.

CareHealth Plus is inferior with two other HMO Companies which are in tough competition with
each other in the market in terms of the following: Years of service, Premium of the
Plans/Programs, medical availment services, marketing strategy, customer choice, technological
innovation, financial position, and commission/incentives plan for agents & sales force.

The aim of CareHealth Plus is to be on top in HMO Industry and to deliver satisfaction towards
its members/customers and competitive plans/programs that may cover them in all healthcare
aspects.

Critical Success Factor 1: Customer Loyalty

Importance Weight: 12%

Health care is very important, and HMOs have a vital role on it. Customer Loyalty is a
customer’s willingness to interact with or buy from a specific company on an ongoing basis.
Loyalty can stem from many things, but in general a loyal customer will associate favorable
experiences with a brand therefore increasing their likelihood to make repeat purchases with that
business. Loyal customers spend 67% more on products and services than new customers. Even
though your most loyal customers only make up 20% of your audience, they provide up to 80%
of your revenue.12 Since HMOs offer homogenous product, customer loyalty is very relevant
that’s why we gave it an importance weight of 12%.

CSF 1 Weight, Rating, and Score: Customer Loyalty

CPSHI MAXICARE VALUECARE
Critical Success Factor Weight Rating Score Rating Score Rating Score
Customer Loyalty 0.12 3 0.36 4 0.48 4 0.48

Customer Loyalty of Maxicare and Valuecare are already established because they are two
of the most trusted HMO in the Philippines. Their companies are already pioneer in the industry
specially in giving world class services in terms of health care. Maxicare and Valuecare were
both given ratings of 4.

In the contrary, CareHealth Plus is still in the process of establishing their brand name in
the industry. The company just started their operations in the year 2015. In this case, it was given
a rating of 3.

Critical Success Factor 2: Financial Position

Importance Weight: 12%

This factor was given an importance weight of 12 percent because financial position of a
company . It is the state of and the relationships among various financial data found on a firm’s
balance sheet (for example: a company with valued and relatively liquid assets, combined with a
small amount of debt compared to owner’s equity, is generally described as being strong
financial position or financial condition). (Sources: (1) copyright 2012, Campbell R. Harvey. all
rights reserved, (2) Farlex Financial Dictionary, copyright 2012 Farlex, Inc. all rights reserved,
and (3) Wall Street Words: An A-to-Z Guide to Investment Terms for Today’s Investor by David
L. Scott, copyright 2002 by Houghton Mifflin Company, published by Houghton Mifflin
Company, all rights reserved)

CSF 2 Weight, Rating, and Score: Financial Position

CPSHI MAXICARE VALUECARE
Critical Success Factor Weight Rating Score Rating Score Rating Score
Financial Position 0.12 3 0.36 4 0.48 4 0.48

Critical Success Factor 3: Management

Importance Weight: 11%

 This factor was given an importance weight of 11 percent because management has always
been a core aspect of every business.

Good management can bring the company profit and reputation while poor management
can just throw the company out of the competition.

Management is the process of guiding the development, maintenance, and allocation of

resources to attain organizational goals. Management is dynamic by nature and evolves to meet
needs and constraints in the organization’s internal and external environments. In a global
marketplace where the rate of change is rapidly increasing, flexibility and adaptability are crucial
to the managerial process. (Source: https://opentextbc.ca/businessopenstax/chapter/the-role-of-
management/)

CSF 3 Weight, Rating, and Score: Management

CPSHI MAXICARE VALUECARE
Critical Success Factor Weight Rating Score Rating Score Rating Score
Management 0.11 3 0.33 4 0.44 4 0.44

CPSHI garnered rating of a 3 while Maxicare and Valuecare were both rated as 4.
Carehealth Plus is known as a family-oriented company which made their working environment
promising and attractive to job seekers. But having a formal organizational structure is needed
that’s why we rated them as a 3. The company still have no definite and standard organizational
structure. This company failure resulted to conflicts arises in poor structures when people seek to
exert control within the organization when they may not have the authority. Because the
company lacks the strength of a well-defined hierarchy, managerial duties suffer. Maxicare and
Valuecare are both pioneer in the HMO industry and they already established strong
management which leads their company to a success.

Critical Success Factor 4: Marketing Strategy

Importance Weight: 20%

This factor was given an importance weight of 20 percent because marketing strategy is a
business’ overall game plan for reaching prospects and turning them into clients or customers.
Marketing strategy usually contains of what offering does the company deliver, whom the
company will deliver it, how it will be delivered and who are the competitors. In the industry of
HMO, it is very important to have an excellent and concrete marketing strategy since there is an
evidence that more consumers are still not aware of HMO plans. (Source:
https://www.acrwebsite.org/volumes/12058)

Table:
CSF 4 Weight, Rating, and Score: Marketing Strategy
CAREHEALTH MAXICARE VALUECARE
Critical Success Factor Weight Rating Score Rating Score Rating Score
Marketing Strategy 0.20 3 0.60 4 0.80 3 0.60

CPSHI has garnered a rating of 3 while Maxicare was rated 4 and Valuecare was rated 3.
CareHealth Plus is rated 3, it still uses the traditional platform where they promote using
brochure, flyers, presentation to companies and word of mouth which set them back for not
utilizing the modern technology and maximizing the use of social media. Valuecare is also rated
as 3 because their marketing promotion still needs an improvement while Maxicare, as top HMO
company today, is rated as 4 because they are most active in terms of marketing and sales
activities It utilizes mixed media such as newspaper, billboards, print ads and social media sites.

Critical Success Factor 5: Service/Plans/Programs’ Competitiveness

Importance Weight: 15%

This factor was given an importance weight of 15 percent because this is one of the major
considerations of the clients. HMOs offer a homogeneous product which means that their
programs’ will only varies from its features. As the Philippine addresses the COVID 19 crisis,
the demand for HMO products is increasing.

Table:
CSF 5 Weight, Rating, and Score: Service/Plans/Programs Competitiveness
CAREHEALTH MAXICARE VALUECARE
Weigh
Critical Success Factor Rating Score Rating Score Rating Score
t
Service/Plans/Programs
0.15 3 0.45 4 0.60 4 0.60
Competitiveness

CPSHI has garnered a rating of 3 while Maxicare was rated 4 and Valuecare was rated 4.
Critical Success Factor 6: Technological Innovation

Importance Weight: 20%

This factor was given an importance weight of 20 percent because technological

innovations and advancements are helping the industry to deliver its services at its finest.

Table:
CSF 6 Weight, Rating, and Score: Technological Innovation
CAREHEALTH MAXICARE VALUECARE
Critical Success Factor Weight Rating Score Rating Score Rating Score
Technological Innovation 0.20 2 0.40 4 0.80 3 0.60

CareHealth Plus has a rating of 2 while Maxicare was rated 4 and Valuecare was rated 3.

CPSHI still needs to improve their technological strategy. The company lacks of
innovations and advancements in terms of the way they offer their plans in the market and the
way their members access or claims their services. Valuecare has garnered a rating of 3 because
they have fully automated system that is patient friendly and efficient. They also have interactive
website which caters the members’ enrollment, hospital and doctor research and utilization of
inquiry and approval system. Like Valuecare, Maxicare also invested new technologies that will
make it easier for their members to get affordable medical attention whenever they need it. They
launched Maxicare Healthpods in the year 2018. It is a system where it provides paperless
queuing system and an application that connects users to either a doctor or coordinator. Maxicare
Health Pods allow for a fully automated system where its members can simply go to the Health
Pod to either consult with a doctor or get a Letter of Authorization (LOA) for further tests and
other services in an accredited medical facility. These Maxicare Healthpods were installed in
most of the affiliated clinis and hospitals of Maxicare. The company was rated as 4 because they
maximize the utilization of all the technological advancements that they must cater to its
members. (Source: https://pointwest.com.ph/article/maxicare-health-pods-customer-service/)

Critical Success Factor 7: Commission/Incentive Plan for Agents & Sales Force

Importance Weight: 10%

This factor is given an importance weight of 10 percent as Sales Agents have a vital role in
achieving the goals of the HMO companies most specially increasing profits.

CAREHEALTH MAXICARE VALUECARE

Weigh
Critical Success Factor Rating Score Rating Score Rating Score
t
Commission/Incentive Plan for
0.10 4 0.40 3 0.30 3 0.30
Agents & Sales Force

CPSHI has garnered a rating of 4 while Maxicare was rated 3 and Valuecare was rated 3.

C. Strategic Issues Based on External Environment

CareHealth Plus System International Inc. must become aware of the political, economic,
social, technological, legal, and environmental external factors that affects the HMO industry
wherein makes it vulnerable to its negative effects if not addressed.

The company, through its business development and research and development arms, must
be able to anticipate adverse and favorable effects of each external factor to dominate its market.

The company lacks in many aspects and some of these are the (1) technological
innovations, (2) accredited doctors, (3) accredited hospitals, (4), (5) marketing promotions (6)
competitor’s rivalry, to name a few.
 Furthermore, based on the result of competitor’s profile matrix, the company needs to work
on its strategies by considering in their planning sessions the 8 key success factors in the HMO
industry which are (1) customer loyalty (2) financial position, (3) management, (4) marketing
strategy, (5) service/plans/programs competitiveness, (6) technological innovation, and (7)
commission/incentive plan for agents & sales force. Among these 7 CSF’s, the company got
lowest rating in 1 category which is technological innovations.

Overall, based on all opportunities, threats, and critical success factors presented, the
company lacks in competitive marketing style, market research, and integration of technological
innovations, because they failed to recognize and addressed these external factors which is
important in establishing competitive advantage in the HMO industry.
https://www.insularlife.com.ph/news/philhealth-vs-hmo-vs-health-insurance-what-s-the-difference-595

https://www.philamlife.com/en/live-better/health/health-insurance-vs-hmo-know-the-difference-and-
similarity.html