June 25, 2018
SAN
DIEGO — Payers are watching all around them as the healthcare industry shifts.
Digital and mobile health tools are becoming more commonplace, data and
analysis are prized and more companies — some of them giant names — are mulling
skipping insurers altogether and contracting directly with providers.
These
themes dominated the talk at the annual America’s Health Insurance Plans
conference in San Diego, along with further embrace of population health
measures, market consolidation and a growing need to focus on customer service.
Here's
a round-up of key takeaways.
The
elephant in the room
Some
of the biggest news to make waves at the conference came before it even began,
when Amazon, J.P. Morgan and Berkshire Hathaway announced they had chosen the
CEO for the company they are forming to address employee healthcare costs.
Their
pick, surgery professor and author Atul Gawande, had been booked months earlier
to speak about end-of-life care. While he declined to discuss the new role in
any detail, he expressed excitement and said he’s up for the challenge. “We
will come to a place where we can get scalable solutions that change the
practice of medicine anywhere,” he said, adding: “It’s a long road but it
clearly is possible.”
Barak
Richman, business and law professor at Duke University, said elsewhere at the
conference that the buzz from the three companies’ initial announcement told
him people are looking toward outside actors to disrupt healthcare. With their
previous successes in other industries, Amazon, JPM and BH have a chance to
shake up the system. “There’s so much enthusiasm and so much intrigue behind
it, even though they haven’t done anything yet,” he said.
The
new initiative could still use help from within the existing healthcare
infrastructure, however. Emmet O’Gara, EVP of Total Population Management
at HMS, told Healthcare Dive his product and others with more niche
capabilities might appeal to outside companies that don’t want to reinvent the
wheel. He sees an engagement opportunity and the potential to gain by running
toward the new company rather than away from it, he said.
Looking
to Apple, Netflix as models
Health
insurers are becoming painfully aware that new forms of competition require
them to put more focus on making patients feel like valued customers.
This
shift is coming from a broad move in the industry from wholesale to retail, and
from consumer experiences outside of healthcare. People are seeing banks,
hotels and myriad other businesses mold an experience exclusively for them, and
they’re starting to expect the same from health plans, Kaveh Safavi, senior
managing director of Accenture’s global health practice, told Healthcare Dive.
Payers
have regulations controlling how much they can charge for premiums, so they’re
more likely to attract customers with outstanding service than with great
deals. “In our business, you probably can’t extract a higher price, but you can
extract loyalty and market share,” he said.
Blue
Cross Blue Shield of Rhode Island has taken the retail concept to heart, and
developed three retail locations giving them a physical presence within five
miles of 70% of their customers, said Christina Pitney, who manages strategy
and strategic partnerships at Blue Cross & Blue Shield of Rhode Island.
“We
actually designed around Apple and thinking about the simple experience you
have with Apple,” she said.
Kathleen
Elmore, managing director at Engagsys, said she looks to Netflix for
inspiration, particularly its capabilities in personalization, which can help
consumers inundated with options. Netflix can prompt a user to pick up right
where they left off in watching a TV show and can find other shows they may
like. For healthcare, that could mean encouraging a patient to schedule
follow-up appointments and refill medications, as well as showing them what
other types of services they could benefit from.
Consumers
are dynamic and unique. “It’s a constantly evolving process of refreshing those
practices and figure out what works,” she said.
That
requires gathering and analyzing a lot of data. O’Gara said a tool Total
Population Management recently rolled out called Elli can run models to
determine the best time and method for engaging someone without bothering them.
Some people prefer a text or an email, others want to have an in-person visit.
“I don’t want to be a number and get a cookiecutter approach,” he said.
Doing
all of that correctly can create a powerful asset — brand loyalty. Health plans
need to understand what value they bring to customers, Katie Catlender, head of
customer experience for Blue Cross Blue Shield Massachusetts, said. “We all
know as consumers that the reason we’re loyal to certain brands is the things they
do for us,” she said.
Mark
Nathan, CEO of Zipari, which advises payers on consumer engagement, told
Healthcare Dive that of the more than 250 payers he’s met with in the past
year, more than 90% have some kind of customer experience project underway. “What
I find interesting . . . is that with the ACA everybody became focused on
the end market, of course, and consumerism was really important,” he said. “So
everyone started investing in consumerism.”
Now,
that shift is happening in the group market as well, he added.
Consolidation
has broad implications
M&A
activity continues unabated in healthcare. Payers are watching some of the
major deals, including the CVS bid for Aetna, but also the myriad mergers among
providers. AHIP CEO Matt Eyles said consolidation among hospitals and physician
practices is troubling, sometimes amounting to “charging more money for the
same service with just a new logo on the entrance.” He added, however, that he
would not “exclude payers from those hard conversations.”
Richman
said horizontal mergers like those between hospitals isn’t new. The vast
majority of hospital markets are highly concentrated, and that drives up
prices. “I think really without much doubt at all it’s a bad thing,” he said.
He
felt the same way about the ultimately failed mergers in the payer market
between Cigna and Anthem and between Aetna and Humana. Vertical mergers like
CVS-Aetna, however, have more of a chance cut costs and improve care. “We might
be on the verge of a new architecture, a new model for the delivery system, and
this is what I’m actually quite hopeful of,” he said.
Safavi
said payer markets are prime for disruption because while the cost of doing
business continues to increase, customers aren’t paying more for the services.
This provides an on-ramp for small startups without legacy costs and will force
established companies to rethink their business model.
But
there are numerous partnership options that don’t reach to the level of mergers
and acquisitions. Some payer companies are trying to incorporate provider
services as well. Others find a niche service they can do very well and sell
that to what might otherwise by strictly rival companies.
“The
payer side is moving into a quadrant where there’s a lot more vulnerability,”
Safavi said.
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