Traditional health insurers often rely on control and scale to keep threats at bay. It’s worked for decades and to some degree continues to work today. But this approach has also stifled innovation and often does not help, and sometimes hurts, the people we are trying to serve.
Stress fractures are now appearing in the control paradigm:
- Increasing pressure to share claims data from pretty much every stakeholder that is not an insurer
- Increasingly accessible rich, real-time data driven by social, mobile, digital, clinical and other types of modern data
- Increasing direct relationships that bypass the insurer
- Increasing shift of cost to providers, employers and third party vendors
- Increasing transparency on pricing and quality
- Increasingly visible examples on social media of insurers letting down patients by withholding care and treatment
- Increasingly visible examples of insurers letting down employers by not acting on opportunities to lower cost and waste
Witness the emergence of new insurers and the growth of innovative TPAs focused on the consumer, aggressive moves by leading edge consumer-centric employers to wrest back control from insurers, providers taking on more total and partial capitation and in doing so lessening the role of the insurer, outside consumer-savvy entrants buying their way into the game like Walmart and CVS, and of course there is the NPS issue for insurers – as consumers increasingly demand to be served, a market force for change is hitting like a freight train. So what now?
Imagine the insurer as sitting in the center of a vast network. Most connections in the network run through that insurer node. In this world, the insurer sits smack in the middle of multiple value chains. Now, imagine that connections begin to bypass that central node, enabled by technology. That means any node can reach any other node in the network directly. Once that happens, that central node is no longer central … it becomes an unnecessary step – a friction point to be taken out of the value chain. This is what’s beginning to happen today.
So staying with the network metaphor for a moment, how does an insurer add value to the network when it is just another node? Given their existing assets, relationships, and know-how, what role can they play better than anyone else in the system? I believe insurers could become the knowledge creators of the system – it represents a higher order function than the data layer, information layer or relationship layer in networks.
So how do they do this? Here are a few ideas.
Open up the data
- The strategic value in data is not the data. The strategic value is the deep meaning and knowledge that can be extracted from it and deployed in meaningful, value-generating ways. Protect the data and nobody will benefit, including insurers.
- There are a lot of creative data scientists – the community of data scientists is large and growing, so insurers need to figure out how to tap into that network. There are some amazing data scientists out there, most do not work at insurers.
Put the individual in the center
- Value begins and ends with the person in healthcare, period. Healthcare is all about improving health and that only exists in relation to the person. So we need to stop tweaking existing products and services – they were never built to serve the person as the core source of value. Our current consumer tools are terrible. Our current understanding of the consumer is terrible. Our current experience with the health plan when we need them most is terrible. Time to innovate, fast.
Take strategic bets with partners
- Insurers like to do pilots, I mean, they really like to do pilots. But if everything is a pilot, the tough issues will never be solved, like culture change, people training, process transformation, and technology integration. Pilots should be part of a portfolio strategy, but an entire portfolio built on pilots is chaotic not strategic.
Build evidence-based healthcare
- If an insurer empowers its best people (and its partners) to innovate, the results would likely blow away everyone’s expectations – including the insurer and the employee. The huge advantage of leveraging the deep knowledge stored in the minds of its people is that they know the current state of the business in exquisite detail and how to drive real-world improvements better than anyone else in the world. Knowing when something works and when it doesn’t is called evidence. Evidence is the foundation for knowledge. There is a reason medicine is build on evidence-based medicine and not data-driven medicine or insights-driven medicine. So let’s get to evidence-based healthcare, data-driven healthcare is not enough.
Invest in tech the right way
- Some insurers believe they can replicate what vendors are offering. That may be true, but even if they could, I would bet that they cannot do it better, faster and cheaper than working with a top-notch vendor. So stop the not invented here mentality. That’s the perspective of dinosaurs. Get on the technology wave. Don’t overpay for custom solutions either – custom one-off solutions are a waste and will just have to be written off later.
Insurers need to quickly find a new strategic moat, or risk the ecosystem flowing right past them and making them obsolete. Some insurers already see this and are making an aggressive push to become a health solutions company focused on the consumer, seeing the traditional insurer component of their business as legacy. What do you think? Is the strategic moat collapsing? Is the knowledge layer of the healthcare ecosystem the right space for them to play? How fast is it coming? Is there hope for a new kind of insurer to lead the way?
