Mission Critical
Wealthy Torontonians are buying into Wellpoint’s private health care, but will it fly in Alberta?
CINDY WAXER
March 13, 2008

For Wellpoint Health Services, selling private health care to well-heeled Torontonians in an era of eight-hour emergency-room waits has been a relatively straightforward procedure. Nestled in the chi-chi Yorkville neighbourhood, WHS offers a variety of medical services at prices ranging from $299 for a urine analysis to $4,500 for a head-to-toe diagnostics package. But now, the company is facing a major challenge: how to introduce its services to Alberta in the face of limited company resources and public resistance to out-of-pocket health care.

Since opening its doors in August, 2005, WHS has signed up large clients such as Sobeys and Interac, and revenues reached approximately $15 million last year. Still, while Torontonians have gradually warmed to the idea of high-priced private health care, the CEO of WHS, Dr. Sanjeev Sharma, says that selling the idea in Alberta won’t be easy.

Despite perceptions that Alberta is a haven for private health care, members of the province’s medical community have warned Sharma that much of the public still views it as queue-jumping. As such, establishing a presence there will be an uphill climb for WHS, raising the question of whether the firm would benefit from partnering with a locally based facility–a decision that is “a real tough call,” says Sharma–especially since a quick start-up is a top priority.

All of which makes it difficult for WHS to weigh issues such as customer acquisition costs and financing options. While the firm has no present need to reach out to investors, Sharma says the company does need to decide whether to “take on more debt or issue more equity” to subsidize its dreams of winning over health-conscious Albertans.

THE BRIEF

FOUNDED 2005, Toronto

CEO Dr. Sanjeev Sharma, 35

Business plan A private health care facility whose services include everything from cardiac care to nutritional counselling

Customers 1,000 clients, including major corporations that contract medical services for their senior execs

Employees 40

The experts weigh in…

John Sterling,

CEO, ROI CAPITAL

Before moving into a new market, Sterling recommends WHS craft “a really good business plan” that maps out its expansion goals. This will force the company to ask some weighty questions, such as: Should we plan for slow and profitable growth, or should we aim to get ahead rapidly? Solving these issues will determine the type of financing required to succeed in Alberta.

Kevin Dee,

CEO, EAGLE PROFESSIONAL RESOURCES

According to Dee, WHS has three options: build, buy or partner. If building seems best, WHS should rely on local talent to help make its mark in uncharted territory. The second option, acquiring a local player, might cost big bucks, but it would provide WHS with an instant base of clients. Partnering with a competitor would reduce the legwork needed to educate the public on private health care, albeit in exchange for profit-sharing.

Darren Stallman,

DIRECTOR OF CLIENT SERVICES, THE CUNDARI GROUP

Stallman suggests a four-pronged approach. For starters, he recommends WHS appoint a “brand ambassador” to communicate the company’s offerings. Secondly, WHS should “allow potential customers to sample its services,” to kick-start word-of-mouth marketing. Thirdly, he advises the company to gather testimonials from satisfied customers. And finally, he suggests that WHS leverage partnerships with health advocacy associations, to facilitate the public’s shift toward private health care.