The industry has changed. What were strengths are now limitations, and new critical success factors have emerged. The status quo may be the path to extinction.
The historical fundamental tenets of scale, vertical integration, beating up providers, and "mother-may-I" limits are either no longer applicable or played out.
Vertical integration is inefficient. Scale can be rented. Providers won't accept zero-sum anymore. Members want transparency and choice. Health plans must truly drive better health outcomes. Many existing processes, capabilities, and systems do not support the changes necessary.
Health plans are moving to software-as-a-service and cloud technology for more collaborative environments and creative business models, without recreating the legacy investment they once needed. There is a need for flexibility to work with providers in new and yet-to-be-created risk-sharing arrangements, efficiencies, and consumer engagement.
Flexibility may be the most critical characteristic. Health plans need to support growth models that include expanding into new and often unfamiliar markets, creatively addressing the rising demands of the individual and the constantly shifting business models of risk-bearing providers, and staying in front of ever-changing government regulations and potential legislation. Flexibility requires modularity, agility and scalability across the enterprise and is enabled by an advanced technology infrastructure.
Efficiency is critical to both cost-containment and growth. To thrive, health plans need to maximize automation of core processes, like claims adjudication and billing, as well as streamline complex business tasks, such as Medicare-Medicaid dual eligibles administration, so they are able to invest more in their differentiators. Achieving these efficiencies will also significantly reduce manual errors and rework to improve accuracy while simultaneously increasing productivity and compliance across the board. With businesses evolving more rapidly, health plans need to administer changes to their solutions themselves via configuration settings, rather than through expensive change orders.
Capturing and normalizing data from many sources, including EHRs, biometrics and apps is a competitive advantage today, but will be table stakes in the future. The ability to gather and glean actionable insights from real-time data sources with advanced analytics will allow the transformed plan to drive outcomes, consumer engagement, and win-win provider risk-sharing.
Regardless the form of risk sharing (bundled payments, episode-based care, capitation, gain-sharing), progressive plans know that the old model of ratcheting down fee-for-service rates is no longer the best path to controlling medical cost. Well-managed populations, notably for higher risk tiers, are best achieved through deep collaboration and incentive alignment, driving new provider contracting models. Some models are well known. Others are yet to be invented.
The choice and burden of healthcare is increasingly shifting to the consumer via direct purchasing in individual products, higher deductibles, defined contribution, or other mechanisms. Consumers who are now accustomed to user experiences on social media and smartphones are demanding an enhanced, seamless consumer experience with more and more intuitive touch points. Health plans need to connect with individuals in new ways to differentiate from competitors in an effort to retain and attract members, making those offering a range of services -- from wellness, to financial management, to flexible benefit design -- the most appealing.
In this era of uncertainty, health plans must embrace the opportunities today while readying themselves to navigate new challenges that have yet to present themselves. The transformation of the industry has only just begun for health plans and more change is inevitable.
Joe Marabito is president and CEO of ikaSystems.