Last week Leonard Fuld published a LinkedIn post entitled Blue Cross Marries Uber – in 2030. In it Lenny outlines a future scenario in which health care services are arranged on-demand through smart devices like transportation is currently through Uber. Bells and whistles such as the ability to rate the service provider (in this case EMTs) and vitals monitoring are part of this not-so futuristic scenario.
Lenny based this scenario on conversations he had with random passers-by in Boston’s financial district, many of whom were in the demographic group commonly known as millennials.
Millennials expect a positive customer experience, even in healthcare
That a picture of health care on a mobile platform would emerge from conversations with millennials is not at all surprising. In a world in which many employers are disengaging themselves from employee health care and individual purchasing of coverage is enabled by public and private exchanges, health care providers and insurers have recognized they have to compete to get the business of health care consumers who are – for the first time – proactively shopping for the best deals they can find.
Central to the provider and insurer strategies emerging in this newly competitive market is the notion of Customer Experience: the idea being you win consumers and their loyalty in a competitive health care market not by providing competent services – that’s just table stakes – but by providing consumers with an experience that is either positive/pleasant or at least minimally inconvenient. This is what’s behind the recent proliferation of retail clinics like CVS’s Minute Clinic – locations in which simple health care issues can be effectively addressed quickly and conveniently – no more tedious and interminable waits in an uncomfortable waiting room for treatment of a bad cold or a sprained ankle.
As millennials have grown up with mobile technology and are used to it, there’s an expectation that they are going to demand it across the entire spectrum of day-to-day consumer transactions, including health care, and that will drive a scenario very much like what Lenny described last week (but my guess is much sooner than 2030).
A high-tech platform to benefit consumers, insurers and providers
A high-tech health care platform that tightly integrates patient information and makes it instantly available to consumers and care providers would very likely lead to better long-term health care outcomes and so less expense for the insurance companies. But how can the health care payer organizations leverage an Uber-like health care platform? Think about it: Uber, Airbnb, iTunes, etc., these companies all provide on-demand products and services. What could possibly be less on-demand than insurance?
The health care insurance industry in the U.S. largely has the wind at its back: with ACA health care benefits are available to more Americans than ever before*, and cost trends are moderating, increasing the potential profitability of covered lives.
But in the longer term the industry faces a competitive challenge: the same technology that will someday enable millennials and others to have Uber-like health care customer experiences can also be used by health care providers to more effectively manage the health of their patients – this is referred to as population health management – and once a large health care provider has established effective population health management the risk entailed in providing coverage for that population becomes more manageable. As that risk becomes increasingly manageable, providers are establishing their own health plans and becoming a competitive threat to traditional health care insurers.
And providers are establishing health plans and developing a competitive threat to traditional health care insurers.
Integrated health care
Over the 4 years of 2011 – 2014 membership in provider sponsored health plans grew by 21% while over the same period membership in non-provider plans grew only 14.6%. Provider-sponsored plans – Kaiser Permanente is the largest and best-known in the U.S. – are also known as integrated providers. Theoretically, integrated care results in:
- Efficient treatment, because unlike in the traditional provider/payer relationship, the doctors and other providers work for the company that’s paying for the treatment.
- Higher quality outcomes, because healthy patients cost their insurers less money than unhealthy ones.
The health care market in the U.S. is moving towards a more integrated care approach: in addition to the growth of provider-sponsored plans, insurers are putting providers on the hook to provide high quality outcomes (e.g., less hospital readmissions), transferring some of the risk to providers, Accountable Care Organizations (ACOs) are providers that work with insurers and in many cases directly with employers to manage care for a large group for a fixed fee, resulting in the ACOs being profitable if outcomes are good, and insurers are buying provider organizations.
The problem is that cultural and bureaucratic issues make integrating payer and provider organizations incredibly difficult and time consuming. It’s also the case that in the race towards integration providers have a distinct advantage over payers – they have the relationship with the patient; people generally don’t talk to their insurance companies unless they have a problem.
Insurance as a platform
But does health care as a mobile platform change the game? Maybe even in a way that’s advantageous for payers? What if a payer organization becomes the platform?
In pursuing this strategy a payer’s independence from providers is a competitive advantage – the providers that contract to be on this payer mobile platform make up the range of choices consumers on the platform will have, and they will have many – what provider in a competitive market would want to be left out of the easiest and most convenient way for consumers to access health care? A payer that builds this kind of platform can create stickiness with consumers in many ways – instant access to health care data, custom-built wellness programs, reward points for healthy behavior…the potential features of this kind of platform would be virtually unlimited.
Insurance companies’ expertise is in claims processing and risk management, not in building innovative, market-changing consumer platforms. Maybe instead of buying provider groups smart insurers will look at technology start-ups. After all, the largest taxi company in the world – Uber – doesn’t own a fleet of cars, and the largest hospitality company – Airbnb – doesn’t own any real estate.
For many if not most people – families, the elderly, those with chronic conditions – the advantages of integrated care likely trump the convenience of a mobile health care platform, but for young and healthy millennials (who generally purchase profitable high-deductible plans) that platform will provide the customer experience they want and expect.
*A SCOTUS ruling on King v. Burwell could be a setback for expansion of health care coverage in the U.S., but the potential political fallout of effectively taking away benefits from 6 million currently insured citizens will very likely lead to some kind of solution that will prevent the unravelling of the Affordable Care Act.
**Membership growth rates: Leerink Partners, Healthcare Services, March 3, 2015