Cigna Healthcare Organization
By
Jeremiah Spillers
In 1982 Cigna was formed by a merger between Connecticut General Life Insurance Company (CG) and INA Corporation. In 2002 Cigna was alleged in violation of the Securities Exchange Act for earnings manipulation. Because of their violation with the SEC they had a plummet in stock. In 2011 as a result, to bounce back their corporation Cigna purchased HealthSpring Inc. for $3.8 billion to jump-start its business selling Medicare plans from 46,000 Medicare Advantage members to almost 400,000 Medicare Advantage members. Now Cigna is a healthcare organization that is committed to providing total health and wellness 24/7. In January 2010, Cigna received the JD Power award for customer service for all of its call centers for the fourth time in a row. They are a global entity that is on a mission to improve the health, well-being, and peace of mind of those they serve by making health care simple, affordable, and predictable. They allow receiving care to be easily accessible by giving the customer the availability of choosing the option when, how, and where they would like to receive it. This organization relies on one goal and that is to provide its customers with comprehensive health care coverage with “no surprises.” Cigna has 74,000 employees that work with their patients, customers, clients along with the community to help drive their overall mission.
Cigna’s SWOT analysis is represented by first looking at their Strengths they have a Successful track record of developing new products – product innovation. They have 17 million global customers along with medicare prescription drug plans in all 50 states. They are known for having Good Returns on Capital Expenditure – Cigna is relatively successful at the execution of new projects and generates good returns on capital expenditure by building new revenue streams. Cigna is known to have a strong distribution network – Over the years Cigna has built a reliable distribution network that can reach the majority of its potential market. They also have a Successful track record of integrating complimentary firms through mergers & acquisitions. In addition to that Cigna has 22 million U.S. customers covered by Group Disability & Life and they have successfully integrated a number of technology companies in the past few years to streamline its operations and to build a reliable supply chain. Cigna has a “Power of We” mindset — a global workforce of over 70,000 dedicated to providing personalized solutions and advancing the whole-person health, important to Cigna’s overall mission and vision. Lastly on their strengths, although their Headquarters are in Bloomfield, NY, they have a worldwide reach with offices all over North America, Europe, and Asia. Superb Performance in New Markets – Cigna has built expertise in entering new markets and making a success them. The expansion has helped the organization to build a new revenue stream and diversify the economic cycle risk in the markets it operates in. Strong Free Cash Flow – Cigna has strong free cash flows that provide resources in the hand of the company to expand into new projects.
In terms of the Weaknesses of Cigna, There are gaps in the product range sold by the company. This lack of choice can give a new competitor a foothold in the market. There is Limited success outside core business – Even though Cigna is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture. They are Not highly successful at integrating firms with different work cultures. As mentioned earlier even though Cigna is successful at integrating small companies it has its share of failure to merge firms that have different work cultures. The high attrition rate in the workforce – compared to other organizations in the industry, Cigna has a higher attrition rate and has to spend a lot more, when compared to its competitors, on the training and development of its employees. Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Cigna needs to put more money in technology to integrate the processes across the board. Right now the investment in technologies is not at par with the vision of the company. Investment in Research and Development is below the fastest growing players in the industry. Even though Cigna is spending above the industry average on Research and Development, it has not been able to compete with the leading players in the industry in terms of innovation. It has come across as a mature firm looking forward to bring out products based on tested features in the market.
Moving on to Opportunities for Cigna, their Economic uptick and an increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Cigna to capture new customers and increase its market share. The market development will lead to dilution of the competitor’s advantage and enable Cigna to increase its competitiveness compare to the other competitors. New trends in consumer behavior can open up new markets for Cigna. It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too. New environmental policies – The new opportunities will create a level playing field for all the players in the industry. It represents a great opportunity for Cigna to drive home its advantage in new technology and gain market share in the new product category. Another opportunity that Cigna has when it comes to moving forward is the Organization’s core competencies can be a success in similar other products field. A comparative example could be – GE healthcare research helped it in developing better Oil drilling machines. Additionally, Decreasing the cost of transportation because of lower shipping prices can also bring down the cost of Cigna’s products thus providing an opportunity to the company, either to boost its profitability or pass on the benefits to the customers to gain market share.
The threats Cigna Face are an Increasing trend toward isolationism in the American economy can lead to a similar reaction from other government thus negatively impacting international sales. Growing strengths of local distributors also present a threat in some markets as the competition is paying higher margins to the local distributors. Imitation of the counterfeit and low-quality product is also a threat to Cigna’s product especially in the emerging markets and low-income markets. Intense competition, Stable profitability has increased the number of players in the industry over the last two years which has put downward pressure on not only profitability but also on overall sales. No regular supply of innovative products – Over the years the company has developed numerous products but those are often responses to the development by other players. Secondly, the supply of new products is not regular thus leading to high and low swings in the sales number over a period of time. Liability laws in different countries are different and Cigna may be exposed to various liability claims given change in policies in those markets.
Looking at Cigna’s Overall assessment it seems as if they come off as a large health organization that has multiple strengths such as having a Successful track record of integrating complimentary firms through mergers & acquisitions. It has successfully integrated a number of technology companies in the past few years to streamline its operations and to build a reliable supply chain. Along with this strength they have also been able to have a Superb Performance in New Markets, Cigna has built expertise at entering new markets and making a success of them. The expansion has helped the organization to build a new revenue stream and diversify the economic cycle risk in the markets it operates in. With these strengths, however, does come the opportunity for weaknesses and Cigna has a few of those as well. To name one There are gaps in the product range sold by the company. This lack of choice can give a new competitor a foothold in the market. Another weakness would be that The high attrition rate in the workforce – compared to other organizations in the industry, Cigna has a higher attrition rate and has to spend a lot more, when compared to its competitors, on the training and development of its employees. Need more investment in new technologies. As a continually growing company, Cigna has all the abilities, opportunities, along with resources to continue to be a huge healthcare contender in the future.
Resources
Company Profile. (n.d.). Retrieved September 25, 2020, from https://www.cigna.com/about-us/company-profile/
King, R. (2020, September 09). Cigna plans to expand its ACA exchange presence in 2021. Retrieved September 25, 2020, from https://www.fiercehealthcare.com/payer/cigna-will-expand-aca-presence-by-27-2021
Healthcare Finance. (n.d.). Retrieved September 25, 2020, from https://www.healthcarefinancenews.com/
Cigna and Dignity Health Sign New Deal to Serve Patients. (n.d.). Retrieved September 25, 2020, from https://finance.yahoo.com/news/cigna-dignity-health-sign-deal-134701511.html
Research, Z. (2020, August 29). Cigna (CI) Up 1.5% Since Last Earnings Report: Can It Continue? Retrieved September 25, 2020, from https://www.zacks.com/stock/news/1049610/cigna-ci-up-15-since-last-earnings-report-can-it-continue
Yasiejko, C., Feeley, J., & *, N. (2020, August 31). In Anthem-Cigna Failed Merger ‘Soap Opera,’ Judge Hands Damages to Neither. Retrieved September 25, 2020, from https://www.insurancejournal.com/news/national/2020/08/31/580851.htm
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