P • U • L • S • E - Newsletter

In the same way that the Sherlock Benchmarks provide analysis of health plan operational costs and activities, PULSE provides analysis for health plan costs of capital. It is also reliable - having been published continuously since 1991.

A sample can be found here.

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:

  • Valuation Ratios - including Price / Earnings, Price / Future Expected Earnings, Price-to-Sales, Price per Member, Price to Net Worth
  • Operating Statistics - such as revenue, premiums PMPM, membership, operating earnings, net earnings and earnings per share
  • Operating Ratios - including medical loss ratios, administrative expense to premium ratios and operating margin
  • Balance Sheet Data - such as long-term debt, equity, working capital, intangibles
  • Balance Sheet Ratios - consisting of debt to capital, return on equity, net worth per share, days of claims payable

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:

  • Annual Health Plan Pricing Survey - Every year we survey every health plan in the U.S. about premium and medical loss expectations for the following year.
  • Economies of Scale - What do the Sherlock Benchmark Analyses tell us about the virtues of business combinations, outsourcing and management contracts. We analyze both PMPM costs and staffing ratios.