Business Strategy

How to survive the uberization of health insurance

How to survive the uberization of health insurance

The following is an excerpt from Symptoms of Change, an ebook on the retailization of healthcare. Download the full ebook to learn more. 

In a recent LinkedIn post, Humana CEO Bruce Broussard shared his thoughts on the imminent “uberization” of healthcare. According to him, the industry is about to see the same type of disruption that has plagued the taxi and financial industries.

“Uber revolutionized the taxi industry by cutting out the middleman—the dispatcher—and connecting the passenger and the driver who will get them to their destination,” he explained. Healthcare, Broussard said, will soon see its own version of uberization. “By facilitating a transaction between a person and the people who serve them (primary care physicians, specialists, caretakers), we can usher in a new era of disruption in health care.”

If Broussard’s prediction comes true, it will represent the next step in the enormous disruption happening in healthcare. In the last five years alone, the industry has seen significant evolution due to the passing of the Affordable Care Act (ACA). That legislation —paired with changes in technology and customer behavior—is forcing insurers to re-evaluate their approach to doing business.

ACA has turned patients into true health consumers, giving them tremendous leverage to reshape an industry that once took them for granted. That’s why in 2014, nearly half of the 2.2 million Americans that shopped for new coverage switched plans. This year, millions more will enroll on the exchanges as premiums continue to skyrocket.

The pressure on the industry to change—to become more customer-centric—is only growing. To get there, health insurance companies need to adopt these new business goals.


Attract young customers

For America’s insurance firms, the ACA has created new uncertainties and challenges. A vast number of issuers requested major premium increases from state regulators for 2016, ranging from 20 per cent to 40 per cent or beyond. In Oregon, the two plans with the highest enrollment were granted premium increases of 25 and 33 per cent. New Mexico’s largest insurer requested a 51 per cent rate hike. The story is not much different elsewhere across the country, and the reason is simple: issuers underestimated their costs, and ended up paying out far more in claims than they earned in premiums. The problem, in a nutshell, is that too many enrollees come from older demographic groups that tend to require more medical help, which drives up claims.

To solve the problem, issuers are in a race to enroll millennials—also known as “young invincibles,” because they are at a healthy stage of their lives. Insurance plans with a strong contingent of young invincibles, who make fewer claims, are better able to keep premiums stable. What’s more, this demographic bulge of Americans born roughly between 1980 and 2000 represents the future for health insurers: they’re young professionals and parents-to-be who’ll soon sign up their entire households for coverage.

Of the 10.5 million Americans who are still eligible to enroll in the health exchanges, more than half are young invincibles. But precisely because they are healthy, many don’t see the need for insurance. Even once they buy, millennials tend to be fickle: they display little brand loyalty, switching regularly in search of the best customer experience. And the experience they’re looking for is currently beyond the capability of many insurers. Some 85 percent of millennials own smartphones and touch them an average of 45 times a day. Yet a 2014 report from PwC found high levels of consumer demand for more and better smartphone apps from insurers.

“Of the 10.5 million Americans who are still eligible to enroll in the health exchanges, more than half are millennials.”

Because millennials are notorious early adopters of new technologies, products and services—first to try something new, and first to discard it for something better—many firms are challenged to keep abreast of their motivations and desires.


Improve customer satisfaction
2015 Temkin Experience Ratings
Photo credit: Temkin Group

Then again, perhaps it’s little wonder that issuers have difficulty attracting young invincibles: across all demographics, insurers rank poorly in consumer satisfaction surveys. A recent study by Temkin Group, a Massachusetts-based leader in customer experience research, health insurers have among the worst consumer satisfaction ratings of any industry, comparable to cable companies and car rental agencies.

The Temkin findings highlight the extent to which the insurance industry, long-focused on providing wholesale coverage through employers, has considered individual consumers an afterthought. The industries that fared best in the Temkin study, including supermarket, restaurant and retail chains, have decades of experience in gathering insight from their consumers. That leaves healthcare insurers with plenty of catching up to do.

And the rewards are impressive for those who close the gap quickest. Kaiser Permanente, which has actively engaged its consumers through various initiatives for more than five years, scored 11 points higher than the industry average in Temkin’s consumer satisfaction findings. Kaiser is also at the forefront of efforts to woo young invincibles: the firm is highly active on social media and was the main sponsor of Millennial Week in Washington, D.C.


Ensure a seamless customer experience

One of the reasons why customer satisfaction is low in the industry is the lack of focus on customer experience. The industry lags when it comes to providing a more seamless experience for the modern customer.

As the retailization of healthcare continues unabated, insurers will have no choice but to continue innovating with new products and services, and even to transform their business models on the fly. Consumers will expect to be the key decision maker when choosing their insurance provider and the options available to them. They’ll want a full suite of technological assistance, from smartphone apps to wearable devices.

Such is the fast-evolving nature of the omnichannel experience for American healthcare consumers. In the past, the healthcare industry managed its consumer relationships through separate and distinct pathways: a visit to a clinic, a referral to a specialist, a trip to a pharmacist, an insurer’s reimbursement. The patient perspective, whether of being well cared for or shunted from one health service to another, was never the concern of providers or insurers.

But as the entire healthcare system becomes more consumer focused, the sector is fast realizing that patients don’t experience these steps individually, but as part of a single, overall brand impression. As many other sectors have already learned, the omnichannel experience has grown to include websites, interactive online services, mobile apps and more. Every touchpoint the empowered patient has with their healthcare provider impacts the next along their unique pathway of care, and informs their overall impression of the provider’s brand.

In this emerging omnichannel environment, the competitive advantage will go to insurers that are able to mold all these disparate touchpoints into a coherent, consistent and rewarding experience.

Learn how successful healthcare insurers and providers gather the best, most reliable patient insight. Download the free ebook Symptoms of Change

A customer-focused approach

In this evolving landscape, insurers have no choice but to become more customer-centric. These three steps provide a good starting point.

  1. Help customers make their own decisions.

Insurers should empower customers to make better decisions about their health care. Educating customers about the options available to them, explaining their options and listening actively to their questions is a good start.

Offer them technological tools that make them better-informed stakeholders in their care. And eliminate the noise in the system: manage channel conflicts between providers to ensure a smooth patient journey.

  1. Appreciate your customers.

Engage in an ongoing dialogue with your customers to learn about their experience with your company and how it could be improved. Deliver better products and services by inviting them to participate in the design stage of new programs and initiatives.

  1. Gather actionable data.

Insurers have a lot of data at hand thanks to the many claims they process every year. It’s a tremendous opportunity to generate data-driven insight. A strong data-collection program, one that generates continuous quantitative and qualitative information and insight, will help ensure patients experience a course of care the way you designed it.

Conclusion

The transformation of healthcare insurance has just begun. The uberization that Broussard describes in his LinkedIn article will affect all industries, changing customer expectations across the business landscape, including in the insurance industry. To keep up with the pace of disruption, insurers need to use customer intelligence to drive better business decisions. Only by putting on a customer-centric lens can insurance companies disrupt their own industry and win the business of the empowered customer.

To learn more about the challenges facing health insurers in the retailization of the healthcare industry, get your copy of the ebook Symptoms of Change.

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