With the Affordable Care Act beginning to be implemented, Health Insurance companies are witnessing a slow but steady change in their business environment. Starting 2014, the influx of new ‘uninsured’ customers has made business leaders rethink their member acquisition and retention strategies.
Regulatory changes like Medical Loss Ratio mandates are forcing a reduction in administrative spends, while business model changes are forcing payers to invest in systems for the changing business model. Against this backdrop, some of the new and continuing challenges that are plaguing this sector are:
- For a typical payer, about 20% of its medical spend is on 1% of its customer base, while 50% of its healthy customer base incurs only 3% of its medical spend
- Temkin Customer Experience ratings place the Health Insurance industry at the very bottom in the terms of delivering customer experience
- Consumer Union surveys reveal that consumers dread shopping for Health Insurance
Customer expectations are increasingly being shaped by their experiences in consuming services across a wide range of industries. For payers to deliver on these expectations, they need to:
- Create and manage customized experiences
- Unify experience(s) across channels
- Optimize business processes with end points
- Implement flexible business architecture
Payer CIOs are at the center of this change, given that their business partners will be seeking their leadership in transforming traditional payers into health information organizations. By leveraging technologies like SMAC (Social, Mobility, Analytics and Cloud Computing), CIOs can change organizational capability to deliver these information-based products and services.
Social collaboration is expanding the means through which consumers gather information and interact with businesses. Mobile device usage is changing the way organizations attract, acquire and engage customers. In addition, mobility is allowing the virtualization of last-mile sales channels through the use of multichannel technologies. Analytics and Big Data are helping organizations predict customer behavior using data from multiple sources – application systems, social media, web, etc. Finally, cloud computing is well on its way to offer the flexibility of delivering these applications at scale.
Building organizational capability on emerging technologies is always a challenge as there are competing visions, standards, and options that are not adequately mature. Innovative CIOs are leveraging partners to build out the initial use cases while internal teams learn on those projects. Partners who are able to combine payer domain expertise while simultaneously bringing in best practices from other industries (such as financial services and retail) that have delivered superior customer experience, and eventually garnered an advantage over traditional partners.
The other key challenge is to deliver on current business, while building for the changing model. CIOs need to relook their strategies on ‘Run the Business’ applications; examine mechanisms to reduce costs through managed services. Managed services and portfolio optimization are constructs which will enable CIOs to reallocate their budgets for funding transformational initiatives. Vendors, with expertise in helping organizations control expenses and also invest the realized savings in the creation of new capabilities, will be partners of choice. As payer CIOs drive their organizational transformations, choosing the right partner on this journey will be the key to the success of their initiatives.