Adjusting a Rapidly Changing Healthcare Ecosystem
Less than 10% of health insurance companies are basing their investments in digital transformation. Unfortunately, this lack of a vision-driven approach to digitalization is all too common in the health insurance industry, causing companies to fall behind the curve.
Our data and further secondary research clearly highlights vulnerability among health insurance companies who sit outside the vision-driven quadrant. This vulnerability is coupled with a rapidly changing insurance environment, fundamentally altering the healthcare ecosystem.
However, there is still opportunity for companies to undergo a digital transformation, but there is little room for error in execution. Company leaders who aggressively pursue understanding through analytics are set to benefit by digitalizing their services and transforming their human talent to become the future giants of the health insurance industry.
Top Concerns for CEOs in the Healthcare Industry
Health insurers must undergo a digital transformation of their operations and adopt a digital-first approach. Health insurance is heavily dependent on upstream changes in pharmaceuticals and biotechnology. Similarly, downstream changes in primary and secondary care are transforming the industry environment. Further changes in consumer lifestyles are also having an impact.
CEOs can overcome these challenges with the creation of new product-service portfolios focused on technology and data-driven value. This will require a transformation of leadership, systematically executing digital transformation initiatives across the value-chain and company-partner ecosystem. Here are the top seven concerns Healthcare CEOs will have to address in the digital era:
Lower Insurance Premiums
Advancements in medicine and care are changing the insurance environment. Today, more diseases and conditions are treatable than ever. This means lower health requirements and therefore lower insurance premium revenues, threatening the bottom line for health insurers.
As consumers adopt increasingly digital lifestyles, health insurers will need to adapt to deliver digitalized products and services. Additionally, digital management of insurance products and services will become mandatory in the eyes of these digital-first consumers, with legacy options losing value.
A new paradigm of InsurTech is introducing alternative insurance models to the mainstream. The near future may present opportunities for health insurers to leverage real-world data (RWD) and adjust insurance premiums, much like “safe drivers” receive a reduction in their vehicle insurance. This will lead to dynamic pricing and rewards for people with health insurance based on self-care or preventative action.
Digital insurance applications are becoming more commonplace, with on-demand APIs for healthcare transforming the way patients manage their insurance plans. This will offer greater integration with wearables and home monitoring devices, and extend capabilities around data sharing and communications between health insurers and patients when calculating premiums.
Direct primary care is transforming expectations among patients. The first interaction between patients and healthcare providers is destined to become digitalized, negating the need for travel to a clinic. Instead, patients can remotely converse with clinicians using teleconferencing software. This presents a new dilemma around billing and insurance coding for these digital interactions.
Over-regulation through HIPAA and GDPR is restricting the potential to generate value with patient and healthcare provider data. This also introduces huge staffing requirements, with administration and coding inflating operating costs for health insurers.
Digitally savvy management personnel are few and far between in the health insurance industry. This prevents health insurers from understanding and adopting new technologies. It may also prevent them from finding the right technologies through a lack of digital transformation experience among stakeholders.
A Changing Approach to Health Insurance Delivery
The health insurance industry is experiencing rapid change across the product-service ecosystem. Upstream care is changing through advances in pharmaceutical medicine such as drug therapies and diagnostic medical devices. Downstream care is driven by changes in the socioeconomic circumstances of patients. The health insurance industry sits in the middle of these sweeping shifts, leaving itself vulnerable to a storm in which companies will have little control over the end result.
Both pharmaceutical and healthcare companies are ahead of health insurance companies when it comes to digital transformation. Despite this, many health insurance companies are making large investments in analytics, with the main focus being the identification of avenues for operational cost-reduction.
The emergence of InsurTech and digital-first health insurance competitors is putting legacy insurers at risk. A data-driven approach, coupled with ecosystem integrations and process digitalization means digital-first disruptors are well-poised to outcompete legacy insurers.
The Most Successful Digital Transformations Are Powered by Analytics Capabilities
Our benchmarking services are powered by over 1.5 million data points in addition to our primary research and data collection capabilities. With access to leaders across more than 40,000 companies in various size segments, industries, and geographic locations, we can quickly gather additional data to address how your business is performing against the competition.
Data Analyzed in this report comes from 4,000+ responses. For the health insurance industry, data from 239 companies have been used.
Our health insurance industry experts can offer insights into the following sectors:
Agencies and Brokerage Firms
Third Party Administrators (TPAs)