WellPoint is the largest health insurance provider in the US with 34 million members. Through strategic acquisitions, WellPoint has expanded its market presence and product offerings. The document analyzes WellPoint's strategy, business model, and competitive environment. It recommends WellPoint aggressively target national accounts, Medicare participants, and early retirees to continue its growth trajectory.

1. Introduction
In the evolving insurance industry, WellPoint stands on top with an astounding 34 million members.
Through strategic growth choices and strong leadership, WellPoint is positioning itself as the national
leader in Healthcare for decades to come. The focus of this report will be to analyze WellPoint,
evaluate its strategy, and to make strategic recommendations to ensure longevity.
WellPoint’s Growth
WellPoint Inc was born from the acquisition of WellPoint Health Networks Inc by Anthem Inc. Post
acquisition, WellPoint became the largest healthcare provider in the country with 28 million customers.
WellPoint offers a wide array of products and services in 14 different states as a licensed Blue
Cross/Blue Shield (BCBS) agent, and offers UniCare service for those who do not have BCBS
available.
Since WellPoint Inc.’s conception in 2004, it has continued to grow through acquisitions. Recent
acquisitions include WellChoice out of New York, and Lumeno’s out of Virginia. With these recent
acquisitions and capitalizing on opportunities, WellPoint has penetrated the market to deliver
shareholders unprecedented results. Of all of the people insured, 1/10 of those are affiliated with
WellPoint. Shown below is the family of WellPoint companies.
WellPoint Family of Companies
Anthem BCBS Anthem Dental OneNation Benefit
Administrators
Blue Cross of California Anthem Life Insurance Co. PrecisonRX
BCBS of Georgia Anthem Prescription Mgmt UniCare
BCBS of Missouri Anthem Vision United Government Services
BCBS of Wisconsin HealthCore WellPoint Behavioral Health
Empire BCBS (New York) HealthLink WellPoint Dental Services
Lumenos Health Management Corp. WellPoint Pharmacy Mgmt
AdminaStar Federal Golden West Dental & WellPoint Worker’s
Vision Compensation Managed Care
Services
Anthem Behavioral Health Meridian Resource Co. Wellchoice New Jersey
Current News
Currently WellPoint maintains it’s dominance in the industry with just over 34.2 million subscribers,
with 1.3 million of those coming from the new Medicare Part D Plan. Lawsuits have plagued WellPoint
in recent times. Most recently a former female executive has filed suit against the firm claiming gender
biasness, and termination due to ‘whistleblowing’ on questionable business practices. The employee

2. questioned whether special deals provided to dentists under the Connecticut Medicaid Program were
legal. WellPoint Spokesman Jim Kappel reaffirmed the stellar reputation among industry analysts on
WellPoint’s corporate culture practices of embracing diversity and treating associates fairly.
Other lawsuits include the investigation of whether WellPoint systematically would eliminate BCBS
members’ coverage due to expensive or high risk diagnosis.
CEO Larry Glasscock recently spoke at the Goldman Sachs 27th Annual Global Healthcare Conference
on June 14, 2006. Glasscock stated, “We are very much disciplined at not giving up profit margin for
membership.”
WellPoint continues to be considered an industry favorite with 2006 awards including top CFO of the
Year in managed care for David Colby (3rd straight year) and 2nd Best Company by BusinessWeek.
Other recent recognitions include placing in the top 50 companies to work for according to
DiversityInc.
WellPoint’s Business Foundation
Vision
WellPoint’s goal is to provide affordable quality healthcare while meeting the needs of their diverse
customers. They want to be a company that people can trust. WellPoint states their vision is to
“transform health care and become the most valued company in our industry”. The result will be:
Improved health, health care quality and affordability
Increased member satisfaction and enrollment
Superior returns to shareholders
Enhanced opportunities for associates
A highly trusted and respected national organization
Mission
WellPoint’s mission is “to improve the lives of the people we serve and the health of our
communities.” The company carries out this mission by creating many different health benefits and
financial services to meet the needs of their diverse customer base, and by being involved in the
communities through foundations and corporate social responsibility programs.
Values
WellPoint has five core values that guide them and these are:
Customer First
actively pursue ways to improve quality and service
Lead through innovation
continuous change to provide products and services to meet customer needs

3. One Company, One Team
treat everyone in the company with respect, dignity, and common
courtesy
Personal Accountability for Excellence
establish and meet high-performance expectations
Integrity
always act ethically, honestly, and fairly
The Business Strategy
WellPoint is the nation’s leader in health benefits. The company serves approximately 34 million
medical members. Therefore, WellPoint must tailor its business strategy to fit the needs of all members
while fulfilling company goals. The business strategy is as follows:
Good health care is important to all consumers, which must be locally delivered and consumed. The
right health plan needs to have local market presence and resources to understand and meet the needs
of consumers and health care professionals.
Affordable health care is essential to all consumers. WellPoint works hard to keep their health care
coverage affordable by improving health, heath care quality, and by leveraging WellPoint’s scale to
enhance services, improve operations, and better achieve efficiency.
Members of a health care plan want to choose from a diversified product portfolio. WellPoint allows
their members to choose what works best for them and their family in an open market.
Growth primarily comes from having a diversified customer base. In order for WellPoint to maintain
growth, they continually reassure customers the safety of their health plans. Their consistent, steady
performance provides each customer with the security that their particular health plan can be
completely relied on for all health care expenses.
WellPoint has established a business strategy that satisfies all members, employees, health care
professionals, associates, and shareholders. The company can continue to be the leader in health
benefits by upholding the current strategy
Strategic and Financial Objectives
Expects to yield net earnings per share of: $1.14 in the 2Q, and $4.63 for the year
Seek out new markets of entry through acquisition and corporate growth
Aggressively pursue large National accounts
Seek to insure the uninsured
Lower SGA costs
Maintain and improve strong brand recognition
Concentrate brand awareness on a local scale
Utilize Economies of Scale to continue lowering costs from suppliers

4. Insurance Industry
The healthcare industry is the largest in the nation, accounting for over $1 trillion goods and services
each year. Coordinately it is also the largest employer, with 1 out of 9 Americans employed by such.
Health Insurance Industry Characteristics
Market Cap 5.08 Billion
Size- Employees 8.98 K
Quarterly Revenue Growth 21.9%
The Insurance industry is growing in terms of revenue, but shrinking in the total number of firms.
WellPoint and United HealthCare in particular have been very aggressive in acquiring smaller firms.
Shown below is the United States population divided based on insurance indicators. The corresponding
graph depicts national opinion on health insurance companies.
Commonweath Survey 02/2006 The Harris Poll 2005
Although nearly ½ of polled Americans were not satisfied with the level of customer service provided
by Health Insurance companies, it had rose 16% favorable from the year prior. As larger firms compete
aggressively for market share it appears that quality of service delivered is also increasing.
The Five Forces
New Market Entrants
Credibility essential

5. Too expensive to compete nationally
Economics of Scale will force entity to be more expensive
Supplier Power
Generic drug options is forcing name brands to lower costs
General Healthcare costs still on the rise but slowing down in comparison to previous years.
Physicals/Hospitals also in highly competitive industries. Prefer strategic partnerships
Hospital Consolidations limit options, raising costs.
Buyer Power
Generally based on employers’ choice
Cost is increased w/o group participation
Several Markets bordering monopoly (Indiana 95% WellPoint customers)
Competitive Rivalry
Strong industry rivals
Industry growth based on acquisition
Product offerings similar
Shareholder expectation drives constant innovation
Substitute Products
Comparable Options Available
Health Savings Account
Self Insure
Government Aid
Competitors
WellPoint competes head on with a few large firms in several markets. United Healthcare Group
(UNH) is following a similar acquisition strategy as WellPoint. Most recently, with it’s approved
acquisition of PacifiCare Health Systems Inc for $9.2 billion.

6. Other notable contenders include Aetna Inc. (AET) who was the first to offer full service health
insurance on a national front. CIGNA (CI), who operates a variety of products on a global scale, is also
a considerable threat.
WellPoint UnitedHealth Aetna CIGNA
Group
(WLP) (AET) (CI)
(UHG)
Fortune 500 Rank #38 #37 #91 #130
Total Subscribers 34 M 18M 15.4 M 10 M

7. High
Profit
Low
Few Locations Many Locations
Geographic Coverage
WellPoint’s Key Success Factors/Core Compencies
WellPoint’s core business is the 14 Blue Cross/Blue Shield it facilitates. BCBS is the nation’s largest
form of insurance with 1/3 insured being a BCBS member. Also a strong link is made between
insurance regulation and BCBS due to the high volume of members, including federal/state employees.
BCBS is also federally funded for the task of Medicare and Medicaid payments.
Also due to recent legislation and a strong push by the current President, Health Care Spending
Accounts are projected to be on the rise. Since WellPoint acquired Lumenos’, which specializes in
private investments, it is prepared to handle future market demands.
Due to the large subscriber base, WellPoint has unprecedented bargaining power with physicals and
health care facilities to ensure the lowest cost of services.
With the breadth of products WellPoint offers it can consult all benefits into one carrier. A 2003 Limra
study pointed out that, ¾ employees preferred to consolidate their coverages to one carrier. Having

8. multiple coverage also increases the 80% annual persistency rate (i.e. lose 20% of your clients). With
multiple options as well, bargaining strength is increased.
Strengths Weaknesses
Strong bargaining power per customer base High cost of SGA
Wide array of products and services Synergy of previous mergers not optimized
“non-core” investments may distract
which leads to higher retention management
Untimely physician payments
Strong brand recognition
BCBS provider for 14 states
Economics of Scale on Operations
Opportunities Threats
45 million uninsured Competitors more efficient operating
National Employee Accounts principles
Acquisitions of smaller firms Lawsuits
Capitalize on competitors dissatisfied Spikes in health care costs (Centers for
customers (generally nearly 50%) Medicare and Medicaid project $100 billion
increase in drug costs by 2010)
Strategy in Action
WellPoint’s plan for future growth is to target the uninsured, elderly, and large national accounts. "If
you go back five or seven years, we didn't have a product to sell national accounts," CFO Dave Colby
said. "They could go to our competitors and deal with one entity." In the last 5 quarters WellPoint has
acquired 1.5 million new members via National Accounts. Bringing the total to 9.3 million and Colby
believes that there is room for growth. National Accounts are derived from employers which represents
over ½ the insurance market.
WellPoint feels that 30 out of the 45 million uninsured could be potential members. Including Medicare
eligible members who have yet to sign up, as well as the youth who may not feel they need it.
WellPoint has implemented the following programs to cater to lower income Americans.
Blue Access Value Plan – Low monthly premiums catered towards the most common health care
services. Targeted towards: Early retirees and healthy lifestyles who are looking for cost-effective
benefits
BeneFits – Offered to small businesses including part time labor.
Tonik – 3 plan options and the sign up process is done entirely online. Targets 19-29 year old market
(which is the most likely to be uninsured)
Currently sitting at 1.3 million new Medicare Plan D members, WellPoint is projecting to have 2
million new customers from the program by year’s end. WellPoint is anticipating the swelling of the
elderly demographic.

9. A purely financial strategy came with a $50 million investment into 2 high end luxury resorts and spas.
WellPoint Chief Financial Officer David Colby said the company's stake in the luxury centers is a
chance to promote wellness and disease prevention. He added that WellPoint expects the resorts to be a
profitable venture. "Looking at the health-care marketplace and given our mission and definitely our
goal of promoting healthy living and well-being, this is certainly very consistent of our goals," "We
want to keep people healthy," he said. "Well-being is good in our business.”
In May of 2006, WellPoint agreed to acquire Ohio based HMO QualChoice Health plan, to acquire
more of the Medicaid market share. Qualchoice offers 68,000 new members to the WellPoint family.
The deal is expected to close in the later part of 2006.
$8 million were spent in 2005 on educating insured/elderly consumers, community clinics, and Latino
outreach programs.
Strategic Assessment
WellPoint’s strategy has provided continued value in shareholders eyes, with stock prices up 38% in
2005. Revenue growth for 1Q of 2006 was 24.5%, higher than the industry average of 21.9%. Cost
management has lead to an impressive Debt/Equity ratio of .30 for the 1Q of 2006, and 11.2% earnings
growth.
National Accounts have grown tremendously with 16% of members being enrolled since the beginning
of 2005. With the acquisition of Wellchoice, WellPoint now has greater strategic access to Fortune 500
firms in the New York area.
84% of groups purchasing BeneFits plans did not offer employees any insurance prior. 78% of Tonik
participants were previously uninsured. In the last 2 years; 753,000 uninsured purchased WellPoint
policies, and 378,000 of these were in 2005 alone.
WellPoint has successfully managed to implement a strong corporate strategy. It continues to reach out
to uninsured Americans with attractive packages, while at the same time increasing profits. Even with
aggressive expansion, WellPoint has nearly $20 billion in cash and investments.
Strategic Recommendations
Aggressively pursue National Accounts. With over 50% of the insured Americans depending on
employers for coverage, equates to an additional 115 million Americans nationwide.
Implement awareness programs to attract more Medicare Plan D participants. With the Federal
Government subsidizing 74.5% of overall costs, the additional 40 million potentially eligible
participants can be an extremely lucrative customer segment. Participants on average are expected to
save 37% on total health care costs.
A strong push for Blue Value Access Plan to early retirees will ensure corporate growth in the 70
million baby boomers that will turn 65 over the next 20 years.
Additional acquisitions of smaller firms should be considered. Financial and Strategic goals can be met
to service customers in new markets.
WellPoint needs to continue to lower SGA costs per better integration of acquired companies. $375
million can be utilized in synergies from the 2004 merger to today.