Health plans pivot to put experience first

How digital transformation can help prepare payers for anticipated disruption ahead

By | 3 minute read | February 10, 2020

Emerging trends are forcing health plans to re-think their business model, as highlighted in “How Can Payers Prepare for Digital Transformation in 2020 and Beyond?,” an IDC Analyst Connection. I agree that value propositions that worked for health plans 10 years ago are no longer enough; health plans must pivot to new value propositions to prepare for changes ahead.

Health plans have traditionally differentiated themselves through the pricing discounts they offered to employers. But this differentiation will not hold up against several pressure points that have emerged over the last decade, which include:

  • Employers banding together. The Health Transformation Alliance, for example, is a group of more than 50 employers (including IBM) with the goal of improving the way corporations offer healthcare benefits. Dissatisfied with the low quality and high cost of healthcare, other companies are working together and choosing direct contracting options with providers.
  • New players entering the market. From technology giants to small start-ups, there are many companies that are signaling increasing interest in the healthcare market. New entrants are bringing new approaches and finding opportunities to disrupt the status quo.
  • Consumers expecting more. Healthcare can learn from digital transformations in other industries – such as finance or transportation – that consumer demand can help re-shape the industry. The rise of the consumer in healthcare means that their experience becomes increasingly important in helping to drive the future of healthcare.
  • Aligning incentives for payers and providers. A recent survey of 1,000 healthcare executives by the IBM Institute for Business Value found that the interests of payers and providers are converging with the emergence of value-based health and there is greater interest in collaboration. For example, both payers and providers say that interoperability across the ecosystem is the number one barrier to innovation.
  • Government regulations shaping the ecosystem. In the U.S., rules around topics such as price transparency and interoperability continue to drive stakeholders to find new ways to collaborate with the goal of delivering better healthcare results.

These are a few of the trends forcing health plans to develop new, more agile business models. Differentiating on pricing discounts is no longer enough to satisfy stakeholders; instead, health plans will need to differentiate on the quality of experience they can offer. And, in my opinion, having a sound digital transformation strategy is key to building and delivering the best experiences for stakeholders – and will re-ignite the move to value-based health.

The road to digital transformation

For health plans, the road to digital transformation is not an easy one. They operate in a highly regulated environment, often with antiquated technology systems and teams of employees who support those systems. In my experience with health plans, ripping and replacing is not always a viable option and change management is fundamental to succeeding in this environment.

One of the most common mistakes I see health plans making on the road to digital transformation is that they define their IT strategies before considering the most important question: What is the experience we are trying to achieve? For example, before a health plan sets out to replace an aging customer relationship management (CRM) technology, it should have a clear vision for the customer experience it is trying to achieve.

While healthcare leaders recognize the value of digital transformation and what it can do to improve business models, strengthen customer relationships and evolve to the next generation, it requires a significant change in perspective to achieve it. It’s not just an investment in new technology; it’s re-thinking every process in the organization. It’s a long journey that should be inspired by the desire to change the experience of healthcare – and to deliver on the move from volume to value in health.

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