Sherlock Company: Informed Solutions for Health Plan Finance

Sherlock Company

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Health Plan Operational &
Financial Research

Health Plan
Cost and Activity Benchmarks

Services

PULSE
Dashboard for Health Plan Financial Management

In the same way that the Sherlock Expense Evaluation Reports provides benchmarks of health plan operational costs and activities, PULSE provides benchmarks for health plan costs of capital. PULSE is reliable, and has been published continuously since 1991.

Bellwether Universe of Health Plans

The statistically focused research publication is focused on some of the largest of the health plans, those that are traded in the public equity markets. Notwithstanding their size, their national presence and because they participate in the same customer, provider and operational cost markets as other plans, they are bellwethers for the industry as whole. Collectively, the publicly traded health plans serve more than 140 million members and so represent a compelling sample for the health plan industry as a whole.

Capital Cost Focus

Published weekly for timeliness, PULSE reports on such capital cost metrics as price per member, price to sales, price earnings multiples and price to operating earnings multiples. We offer succinct commentary on the trends, noting especially the relative importance of market sentiment versus changes in performance. To assure broad usefulness, earnings and other financial attributes are intelligently rendered to eliminate the effects of non-recurring or unusual costs such as reserve adjustments.

Operational Trend Focus

It also reports on trends in membership, prices, revenues and earnings growth. It shows trends in medical loss ratios, administrative expense to premium ratios and balance sheet ratios. These ratios parallel those in all health plans regardless of their size or corporate form.

Insights to the Relationship between Capital Costs and Operational Trends

Because of Sherlock Company's unique understanding of health plan operations, we endeavor to link capital costs to operational performance. Thus, one especially illuminating exhibit shows the interaction between operating performance trends and valuation metrics. Since operating performance and capital costs are highly correlated, we show the correlations in each publications. So, for instance, PULSE publishes the regression line (along with R2 and P-Value) for the relationship between Price to Sales and Operating Profit Margin, along with other similar analyses. In each of these, we also identify the individual firms so that readers can identify outliers.

Statistical Tables

This section includes a four-page printed spreadsheet with detailed financial data for every public HMO company. Financial data reported each month includes:

In-depth Analysis

PULSE looks at a key topic affecting the health plan industry through a detailed analysis. Analyses are generally eight pages in length. Some of these analyses include:

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