Case Interview Workshops

#1- Fit Interviews & Profitability

The Johns Hopkins Business & Consulting Club

2014/10/1

The JHBCC as a resource for you to:

Learn, practice, and network
The JHBCC aims to introduce the Johns Hopkins community to the world of
business and consulting by helping students and staff:

Develop business knowledge and consulting skills through

workshops, seminars, and bootcamps

Network with experienced professionals and established firms

via case competitions and infosessions

Build valuable experiences in leadership, teamwork, &

communication

2014/10/1

JHBCC

Overview

Fit

Profitability

The JHBCC welcomes everyone!

APDs, Masters, Undergrads
200

PhDs
MDs
MBAs

Post-Docs
Masters
Undergraduates

PhDs
Post-Docs

50
2010

2014/10/1

2014

JHBCC

Overview

Fit

Profitability

The JHBCC brings you memorable

experiences and lasting friendships:
Current and past members have continued to support each other as well as the
large Johns Hopkins community:

2014/10/1

JHBCC

Overview

Fit

Profitability

Alumni
Network

The JHBCC has accumulated a huge

alumni network in the industry

2010

2014/10/1

JHBCC

2014

Overview

Fit

Profitability

The JHBCC Timeline of Events:

Stay tuned!
1. Bi-weekly Case Study Workshops (Fall & Spring)

2. Fall Mini-Case Competition (November 7, 2014)

3. Business and Consulting Bootcamp (February 2015)
4. Spring Biotech Case Competition (April 2015)
5. Recruiting Info-sessions (Fall & Spring)

2014/10/1

JHBCC

Overview

Fit

Profitability

The JHBCC Timeline of Events:

Stay tuned!
1. Case Study Workshops (Fall & Spring)
Date

Style

Topic

Room

Sept. 10th, 2014

Tutorial

General/Fit & Profitability

SPH W2008

Sept. 24th, 2014

Tutorial

Business Situation

SPH W2008

Oct. 8th, 2014

Tutorial

Business Situation

SPH W2008

Oct. 22nd, 2014

Tutorial

M&A

SPH W2008

Nov. 5th, 2014

Demonstration

Profitability

SPH E9519

Nov. 19th, 2014

Demonstration

Business Situation

SPH E9519

Dec. 3rd, 2014

Demonstration

M&A

SPH E9519

2014/10/1

Case Interviews: Types of Questions

1. Growth:
a. Top-line (revenue) growth
b. Bottom-line (profitability) growth

2. Business Situations
a.
b.
c.
d.
e.

New products or services

Market entry
Competition
Pricing and valuation
Operations

3. Merger & Acquisitions

2014/10/1

JHBCC

Overview

Fit

Profitability

Case Interviews: Typical Format

1. Establishing Background:
1. Interviewer introduces case
5 min

2. Understanding objectives

3. Clarifying questions

2. Structuring Approach:

3-4 min

1. MECE

3. Analysis

15-20 min

1. Quantitative
2. Qualitative

4. Recommendation

1-3 min

*Interviews can also be interviewer-led or interviewee-led

2014/10/1

JHBCC

Overview

Fit

Profitability

Structuring & Analysis:

Strategic Options
Growing
Revenue

Expand into
New
Markets

Existing Rev.
Streams

Achieving
Better Price

2014/10/1

Sell more
(new & old)

JHBCC

Better
Product Mix

Overview

Sell to new
customers

Fit

Profitability

Develop
new
offerings

10

Structuring & Analysis:

Areas to Explore
1. Market & Competitive Landscape:
a.

Existing market share

b.

Growth rate comparisons

c.

Competitive advantages or disadvantages

2. Customers
a.

Customer preferences (price, quality, feature, channel etc)

b.

Segmentation and growth rates

3. Products
a.

Product mix (compared with competitors)

b.

Performance and trends

4. Company
a.

Capability & resources

b.

Intangibles (brand considerations, management preferences etc)

2014/10/1

JHBCC

Overview

Fit

Profitability

11

Example Profitability Case:

Magma Health

2014/10/1

JHBCC

Overview

Fit

Profitability

12

Establishing Background:
Case Information
Our client, Magna Health, insures patients and provides health care services.
Employers pay a fixed premium to Magna for coverage of all necessary health
services for their employees.

Magna currently has 300,000 patients enrolled in its plan. It has 300 salaried
physician employees who provide services to patients in 6 centers. These
physicians represent a wide range of specialty areas, but not all areas. When a
patient needs medical treatment in a specialty area not covered by a Magna
physician, they are referred outside of the Magna network for care, and Magna
pays all referral costs on a fee-for-service basis.
Over the past six months, Magna has been experiencing declining profitability.
Magnas CEO has retained McKinsey to help determine what is causing the
problem and how Magna might fix it.
How can Magna Health improve its financial situation?

2014/10/1

JHBCC

Overview

Fit

Profitability

13

Establishing Background:
Case Information
Our client, Magna Health, insures patients and provides health care services.
Employers pay a fixed premium to Magna for coverage of all necessary health
services for their employees.

Magna currently has 300,000 patients enrolled in its plan. It has 300 salaried
physician employees who provide services to patients in 6 centers. These
physicians represent a wide range of specialty areas, but not all areas. When a
patient needs medical treatment in a specialty area not covered by a Magna
physician, they are referred outside of the Magna network for care, and Magna
pays all referral costs on a fee-for-service basis.
Over the past six months, Magna has been experiencing declining profitability.
Magnas CEO has retained McKinsey to help determine what is causing the
problem and how Magna might fix it.
How can Magna Health improve its financial situation?

2014/10/1

JHBCC

Overview

Fit

Profitability

14

Establishing Background:
Clarifying questions
A. Clarify terminology
What is premium?
A: The specified amount of payment required periodically by an insurer to provide
coverage under a given insurance plan for a defined period of time.

B. Clarify objectives
Is there a specific profitability goal that our client wants to achieve? By when?
A: No, at this time the CEO just wants to see how they can improve ASAP.

C. Clarify scope
Is our client in the U.S.? Should we only consider the domestic market?

A: Yes, you can just focus on our current operations, which is in the Midwest.

2014/10/1

JHBCC

Overview

Fit

Profitability

15

Structuring Your Approach

Question 1. What key areas would you want to explore in order to
understand Magnas decline in profitability?

2014/10/1

JHBCC

Overview

Fit

Profitability

16

Identify Key Insights:

Find the root cause/problems
Question 2. After reviewing the basics of Magnas business, your
team believes that one of the root causes of Magnas financial
problems is how it manages medical costs, particularly the cost of
referrals to specialists outside its physician network.
Your team has gathered the following information on Magna and
its primary competitor, Sunshine HMO:
Number of
patients

Average cost of referral

(per member per month)

Magna Health

300,000

$20

Sunshine HMO

500,000

$15

What are the most likely reasons that the average cost of referral
at Magna is higher than at Sunshine?
2014/10/1

JHBCC

Overview

Fit

Profitability

17

Quantitative Analysis:
Determining the scale/impact of the findings
Question 3. Magnas CEO has a hypothesis that Magna is paying too
much in cardiology referral costs for its patient population. He asks
the McKinsey team to look at Magnas cardiac patient population
more closely and tell him how many referrals he should expect on an
annual basis. Assume the following:
Magna has 300,000 patients in any one year

20% of its patients are age 65 or older

In the U.S. patients with serious heart disease visit specialists
(cardiologists) on average 5 times per year

2014/10/1

JHBCC

Overview

Fit

Profitability

18

Qualitative Analysis:
Understanding the HOW and the WHY
Question 4. When the team tells Magnas CEO that based on Magnas
patient population he should expect about 210,000 cardiology referrals
a year he exclaims, We currently pay for 300,000 annual cardiology
referrals for our patient population!
Why might Magnas annual cardiology referrals be significantly
higher than U.S. averages?

2014/10/1

JHBCC

Overview

Fit

Profitability

19

Developing Your Recommendation:

Synthesize and Structure
Question 5. After some additional investigation, your team decides that
changing the behavior of Magnas primary care physicians has potential
to reduce cardiac referral costs while maintaining high quality care.
What should the client do?

Question 6. The CEO of our client is meeting with us in about 10 minutes,

why dont you summarize what you know and make a recommendation to
him when he comes in.

2014/10/1

JHBCC

Overview

Fit

Profitability

20