I agree with Bob on MDF. I think there’s a lot of potential in this new area and you will see later on that several other small companies will start jumping in. I think it’s important to get in early and grab market share. With the funding increase resulted from the MMA, there’s enough opportunity (provided one can carefully manage the cost and risk) to start serving in those so-called underserved market. Once they start getting 2000-3000 patient/member, they will be able to operate comfortably (at least break even). Seniors definitely will think a lot before changing but if MDF give amazing service then we can expect them getting some members and those members will be loyal to MDF (as they are also reluctant to change unless the preposition is very compelling)
What I also think MDF needs is a good contingency plan and also a good exit plan. Learn from previous mistakes. If they can’t get enough members to operate efficiently and profitably after a certain amount of time, they need to execute their contingency plan (whether it be aggressive marketing, lower price or improve service) . then if it still doesn’t work, they need to have it ready to close it or sold it with minimal loss (if possible)
I am confident however that this time, MDF won’t need to exercise those options, but it’s always good to have some plan to protect the existing profitable business (PSN).
I’m hoping that once the HMO is up and running, they will start signing up members at a minimum rate of 300-500 per month on the first year. And increasing the range to 500-1000 members in the second and third year. With totaling about 25,000 additional members within 4-5 years. I think this is very achievable.
Stan
