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APR 2017 · TELETECH ACQUIRES CONNEXTIONS FOR $80 MILLIONHEALTHCARE · THE PEOPLE BEHIND THE PLATFORM
Company / Healthcare

Connextions put a human in the loop.

Health insurance had a translation problem. Connextions paired trained agents with its own software, building a business that TeleTech bought for $80 million.

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In August 2011, a Connextions executive stood before a Charlotte news conference and supplied an unusual measure of business momentum: people per hour. “We’re hiring at a rate of 10 people per hour,” Todd Baxter said. The company was filling seats for work that sounded ordinary: answering questions, explaining insurance and helping people choose coverage. Yet the hiring suggested something more interesting. In a business built around policies, the scarce resource was someone who could explain one.

The brief / 3 things to know
  • Paired bConnected software with trained healthcare agents.
  • Served insurers, providers and pharmacy benefit managers.
  • Sold to TeleTech in 2017; integration included two center closures.

Connextions occupied the space between a health insurer’s offer and a consumer’s understanding. Its customers bought help acquiring members, keeping them and answering their questions. Consumers encountered the people doing that work by phone and through other channels. The company’s product was partly software, partly conversation, and inseparable from the training that made the conversation useful.

A customer-service company finds its subject

Founded in 1992, Connextions had served businesses including Federal Express and Mercedes Benz before healthcare became its defining market. Jack LeFort, identified as founder, chairman and chief executive in its 2006 investment announcement, brought in New Mountain Capital that October. The investment amount was undisclosed. The stated opportunity was consumer-directed healthcare: a market in which individuals would shoulder more decisions about coverage and care.

That shift gave customer service a different job. A consumer buying insurance needed help interpreting a complicated purchase. An enrolled member still needed to understand benefits, find suitable resources and use the plan. Each confusing encounter could become another call or a reason to leave. For a carrier, better explanations had commercial value long after a sale.

In 2007, Connextions bought bConnected Software near Boulder, Colorado. The acquisition joined its service operation to a healthcare software business supplying real-time information and operational tools. Contemporary coverage named UnitedHealth Group and Cedars-Sinai Medical Center among Connextions’ clients. Its expertise lay in helping healthcare organizations manage individual consumer relationships, rather than delivering medical treatment.

An operating model, in three moves
01ChooseExplain options.
Support enrollment.
02UseMake benefits
easier to navigate.
03StayFollow up.
Support retention.
The sale starts a relationship. The service has to keep up. Editorial schematic of Connextions’ offering.

The software remembered to call back

bConnected became the organizing layer. It supported interactions across channels and helped agents work through enrollment and follow-up. Think of the difference between a phone number printed on a brochure and an operation designed to make the next contact happen. One waits for the customer to solve the problem of getting help. The other schedules another chance to explain.

An Optum member-engagement brochure made that machinery visible. Its sample bConnected sequence began with an initial contact, followed by a microsite within 24 hours. Calls, postcards and a letter or email followed on a defined timetable. The final call attempt came 60 days after the second touch; the lead closed after 90 days. It was an example, adjustable to consumer preferences, rather than a universal prescription.

The business sold organizations a combination of technology and managed services. Long-term client contracts were part of its appeal to TeleTech. The practical alternative was to assemble the capabilities internally: software, licensed staff, training, supervision and outreach. For a health plan, the attraction was buying an operating capability that already understood its market.

Optum’s bConnected example: eight consumer contacts, from initial outreach and a microsite to calls, postcards and email.
Even the postcard had a job. A bConnected follow-up example from Optum’s Member Engagement Solutions brochure, page 6. Original product documentation.

You cannot download an insurance agent

The less glamorous invention was a labor pipeline. Connextions offered a free College of Insurance program to prepare applicants for state insurance exams. In Jeffersonville, its July 2011 announcement covered 750 additional jobs, with more than one-third intended as year-round positions and the remainder seasonal. Many would support Medicare’s annual enrollment period. Training and scheduling were central to the product.

Central Florida had its own announcement: 1,200 additional positions, including work at a seasonal expansion site. North Carolina’s expansion called for more than 800 jobs in Charlotte and another 400 in Concord. These were announced hiring plans, not a permanent employee census. They reveal a business whose capacity had to expand around the calendar.

The company also made a deliberate geographic choice. Its 2011 expansion announcements emphasized a workforce entirely in the United States. Familiarity with the American healthcare system was part of the sales argument. That positioning distinguished its offer from outsourcing judged mainly by labor cost. The implied wager was that relevant knowledge could make the interaction worth more.

In a business built around policies, the scarce resource was someone who could explain one.From this profile

The $80 million deal had moving costs

OptumHealth announced an agreement to acquire Connextions in August 2011. By April 2017, the company was changing hands again. TeleTech paid $80 million in cash to acquire it from OptumHealth, adding approximately 2,000 employees across U.S. centers. TeleTech expected roughly $115 million in additional annual revenue. That figure was a forecast of contribution, rather than a newly reported standalone revenue result.

The buyer wanted healthcare relationships and operating capabilities. It also announced an intention to integrate and restructure the business. The subsequent filing puts a price on that work: $13.6 million in planned restructuring and integration charges during 2017, including severance, center closures, employee hiring, training, licensing and IT integration. Two acquired delivery centers closed that year.

Those closures show where the acquisition required physical change. They do not establish that the service model had failed. Moving a technology-enabled workforce means rebuilding the conditions under which people can work: seats, systems, licenses and expertise. A platform can travel faster than the organization that makes it useful.

Two costs. Two different measures.
$80mCash acquisition price
April 2017
$13.6mPlanned restructuring and
integration charges in 2017
Buying the operation and moving it were separate jobs. Figures describe different accounting measures and are not a combined deal price.

Copy the handoff, then budget for the humans

For another service business, the useful lesson is specific: connect the initial sale to a defined follow-up process, and train the people responsible for the next conversation. Connextions made those handoffs part of its offer. A buyer assessing a similar service should ask how staff become qualified, how seasonal demand is covered and how information follows the customer.

This approach depends on problems valuable enough to justify repeated human attention. It becomes harder to support when transactions are simple, customer value is low or outreach overwhelms the person it is meant to help. These are economic limits implied by the model. Adding calls alone would reproduce its expense without necessarily reproducing its usefulness.

The former Connextions website now redirects to TTEC’s healthcare business. The name’s independent chapter has ended, but the underlying work remains recognizable: helping people make sense of a plan, then helping them use it. That was the connection the company built its business around.