"We think health care is moving toward the individual, but to do that, plans are evolving toward digital businesses, both on the front end with members and providers and on the back end," says Steve Krupa.
The future of health plans can be summed up in a single word – digitization.
"When I talk with my colleagues who are in digital practice in financial services or retail and they look at what we are doing in health care, they are like, `Wow, you guys are 10 to 15 years behind,'" said Marcia Macphearson, partner of health and life science for Oliver Wyman. Macphearson shared her insights on December 8 during the virtual roundtable "The Health Plan of the Future: What Insurers and Member Can Expect in 2022." Steve Krupa, CEO of HealthEdge, agreed that the industry has some catching up to do.
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"We think health care is moving toward the individual, but to do that, plans are evolving toward digital businesses, both on the front end with members and providers and on the back end," he said. "The critical investment cycle that plans will be going through over the next 10 or 20 years is digitizing more and more components of their business so their consumers and providers feel like they are working with a modern digital company like we see in other industries."
Krupa points to such companies as Amazon and Disney+ for inspiration.
"The coolest thing about Amazon is that they can manage transactions for micro-pennies of cost," he said. "They can put new products out seamlessly and easily, and they can develop relationships with suppliers quickly and easily. That is the essence of digital infrastructure, which plans have in good shape in some places but that they need to retrofit in other places." The challenge is to bring about this digitization within the constraints of the health care industry, said Jake Sattelmair, co-founder and CEO of Wellframe, whose acquisition by HealthEdge was announced on Wednesday.
"There is a lot to learn from other industries, but there also are things about health care that are different when you think about personalization and the experience you are trying to deliver," he said. "You typically are talking to someone during a vulnerable period of their life where there is a lot of emotional fragility along with the clinical and financial realities of managing conditions and engaging with the health care system."
The objective is to combine high-touch with high-tech.
"We see a lot of companies thinking about using digital to extend human relationships and support to enable a personalized experience that addresses both the emotional needs of people and their clinical and informational ones and can capture some of the complexity that people are navigating," Sattelmair said.
Health plans are making strides toward that objective in some areas but are lagging in others. "They have pieces of their infrastructure that are very legacy-oriented, which reduces a lot of their flexibility in terms of how to behave like a digital company," Krupa said. "For example, it shouldn't have been hard for health plans to completely adapt to new COVID requirements around pre-authorization and telemedicine, but we know they had trouble configuring their claims administration and payment integrity systems to enable that flow to happen. It was actually quite expensive.
"If Disney+ wanted to offer a new movie tomorrow, they have a system to deliver it to the consumer very quickly. Depending on the health plan, you will see various parts of their infrastructure being what I consider to be digital and other parts of their infrastructure where it is burdensome and they have a high reliance on service companies and human intervention."
The drive toward digital is attracting investors from both inside and outside the industry.
"The flood of capital tells you that it has become a mainstream idea that health care is going to go through a digital change," he said. "There is an overfunding that takes place, just as it took place in ecommerce and in media. There will be great returns for many of those investments, and there also will be difficult times for many of those investments based on who is able to execute on the opportunity and who is not."
These investments eventually will speed the digitization process.
"Many of the things we had always talked about are going to come about through this competitive market and this funding," Krupa said. "There will be some great new companies that come out of it, I'm sure, and there also will be some disappointed investors who maybe jumped into a space they didn't quite understand."
Even as technology brings significant change to the industry, the focus ultimately will remain on people.
"They have made big investments in recent years and made big strides toward consumerism," Macphearson said. "They have invested in mobile and digital apps in the core aspects of their business. Where they are pushing into now and what I think is really important for consumerism is moving beyond the traditional financial aspects and moving into more care navigation and care coordination.
"In the next 18 to 24 months, you are going to continue to see health plans focus on those types of analytics that will lead to better efficiency or better personalization."
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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
