PacifiCare's African American Health Solutions (AAHS)

Christine Hamilton, Karen Knight, and Brenda Haden had all played an instrumental role in helping develop PacifiCare’s African American Health Solutions (AAHS), a program focused on improving the health outcomes of African Americans by providing culturally sensitive health education, health improvement opportunities, and access to high quality health care services. By early 2006, approximately two years after the program’s inception, the initiative had made significant headway in its two primary markets of Dallas, Texas and Los Angeles, California. In the new year, however, AAHS would face new challenges. Limited information was captured and tracked regarding the program’s potential effect on the level of risk in the company’s portfolio, and little was known about the profitability of the target community. As AAHS gained more exposure, the initiative had to validate that it was making a positive contribution to the company. It was also becoming increasingly clear that competition for the business of African Americans was intensifying among health insurance providers, with companies such as Kaiser and Aetna seeking to reach these communities in ways similar to PacifiCare. In 2006, AAHS had to more clearly define its purpose in the face of this growing competition. Finally, the initiative needed to decide on a customer acquisition approach. Was it really a goodwill program designed primarily to educate and inform African Americans? Or, was AAHS a powerful acquisition tool that should be integrated more directly into PacifiCare’s mainstream customer acquisition strategy? The team feared that the initiative potentially could be marginalized if it gravitated too far toward community services. On the other hand, the team was concerned about the potentially negative repercussions of pursuing more aggressive acquisition techniques. Note: While this case reflects actual events that occurred at PacifiCare, the names of most company representatives have been disguised for the purposes of confidentiality.