Across the globe, online shopping for electronics, books, and clothes has become second nature for most consumers. So, it was only a matter of time before customers’ expectations for online convenience and intuitive selection guides were transferred to insurance products. When today’s increasingly tech-savvy patients look for a health plan or a provider, they anticipate that digital tools will help them retrieve results based on their budget, medical needs, and personal preferences.
No wonder healthcare providers and payers have been stepping up their digital transformation game. While insurers are still catching up with providers, they’ve made strides over the past year in tech investments. More and more payers are partnering with InsurTechs that leverage advanced and emerging technologies to solve customer, operational, and business-model challenges for insurers.
InsurTechs Stride Health and Hixme both deliver online comparison platforms that provide health plan recommendations based on individual consumer profiles. Other InsurTechs are developing mobile apps that present a complete view of benefits, healthcare expenses, and providers that give users easy access to all their health-related information via a single channel.
Digitization in the United States is vigorously ramping up with health insurance entrants such as Oscar and Clover Health redefining health insurance delivery by using data and innovative technology. These InsurTechs use analytics to identify care gaps and to help patients seek necessary medical attention. They also offer mobile apps for access to telemedicine and healthcare provider information. Popular among both customer and venture capital firms, InsurTechs are gaining ground thanks to highly customer-centric business models.
What’s keeping healthcare payers up at night?
Periodic changes in healthcare regulations are the norm, and the United States has been in the spotlight lately as political debate casts doubt on the fate of the Affordable Care Act (ACA). With talk this year of scrapping health insurer subsidies and expanding the sale of short-term plans (with lower costs and less coverage), uncertainty looms regarding insurers’ customer risk pools and margin pressures. Needless to say, US health insurers are closely assessing their strategies and processes as the fate of Obamacare unfolds.
Clearly, digitization can help payers become more agile and better prepared to adapt when a regulatory change occurs.
Providers merge, re-enter as insurers
As connected technologies and analytics enable providers to focus on outcomes-based preventive care, there is a rising trend among health systems to offer their own health plans. US providers UPMC in Pittsburgh, Henry Ford Health System in Detroit, and Baylor Scott & White in Temple, Texas, each offer a private insurance program. Moreover, consolidation among providers in recent years has shifted power to providers when it comes to negotiation with health insurers.
Another reason why agile response to change is becoming more critical for healthcare payers.
As patients demand a convenient omnichannel healthcare experience, customer-centric insurers must embrace a digitized front end. However, it will take similar modernization of back-end systems to enable implementation of new services and new payer business opportunities.
While most health insurers have dipped their toe in digital waters, now is the time for complete digital transformation built on cloud and robotic process automation (RPA) technologies to ensure speed and efficiency throughout the process chain. Similarly, the payer workforce must power up with mobility tools and advanced analytics.
Where does digital transformation stand with payers?
Digital transformation is enabling the continual build-out and extension of healthcare services and data. Blue Cross Blue Shield and Humana were among the first payers to understand the potential impact of digitization and today they are energetically investing in healthcare InsurTechs. Other healthcare insurers are beefing up efforts in digital platforms, big data, analytics and RPA—and some are going so far as to create C-level positions such as Chief Digital Officer, Chief Analytics Officer, or Chief Data Officer to demonstrate their commitment.
However, a comprehensive digital strategy must include a well-planned tech roadmap and board-level consensus regarding:
- The role—if any—of local/siloed initiatives within an enterprise-wide digital transformation
- A clear description of the firm’s customer-centricity effort: Does it merely include the addition of a few new member apps and a portal upgrade?
- The transformational end game: Will it only cover front-end platform modernization or are back-end initiatives required to future-proof the business?
For healthcare insurers ready to make the commitment, digital transformation presents an immense opportunity. The payers that stand to benefit the most are those that use the impetus of change to rethink all their operations, from customer experience to claims management.
 “28 InsuranceTech Companies That Are Shaking up the Trillion-Dollar Healthcare Industry,” Let’s Talk Payments, ,Feb. 2, 2016, Accessed November 2017 at https://letstalkpayments.com/28-insurancetech-companies-that-are-shaking-up-the-trillion-dollar-healthcare-industry/
 “Silicon Valley Is Trying to Reinvent Health Care, Starting in New Jersey,” Lizette Chapman, Bloomberg, Dec. 7, 2016, Accessed November 2017 at https://www.bloomberg.com/news/articles/2016-12-07/silicon-valley-is-trying-to-reinvent-health-care-starting-in-new-jersey
 “Report confirms gradual growth in hospital-owned health plans”, Bob Herman, Modern Healthcare, April 14, 2016, accessed October 2017 at http://www.modernhealthcare.com/article/20160414/NEWS/160419947
 “Major Health Insurers’ Bets: Where They’re Investing Across Digital Health, Elderly Care, & More,” CB Insights, May 13, 2017, accessed October 2017 at https://www.cbinsights.com/research/health-insurance-corporates-investing-startups/