Industry disruption by digital players is a major threat to the health insurance industry, but insurers themselves seem to be more dazzled by the oncoming glare than galvanised behind comprehensive strategies and best-practice development frameworks for digitising their businesses.
While there is a general cohesion around CRM and the customer experience, the deeper benefits of digitisation – administrative and medical streamlining and cost reductions, improved health for customers as they are influenced to take a more preventive approach to managing their own healthcare and ultimately, sustainable revenue growth – have been noticeably slow to emerge.
In Europe, there have been pockets of progress. AXA’s collaboration with Ecole Polytechnique in France, for example, has seen the creation of a ‘Data Science for the insurance sector’ Chair with a focus on developing new techniques to exploit data collected by insurers and attract data science talent to the insurance business. In 2015, the company also formed a start up incubator, Kamet, to create a new generation of disruptors that will eventually join the AXA Group.
‘Grow your own’ is certainly one way to address the challenge posed by digital giants such as Amazon and Google as they mass their own forces to take on the health insurance space, but at the other end of the scale, much of the innovation is coming from smaller payers as they address customer influence.
The Exeter in the UK has developed a digital-first model that promotes digital healthcare as a benefit of health insurance. A new app provides access to digital health services without impacting a customer’s no-claims bonus, including phone and video GP consultations, prescription issue, postdiagnosis second opinions, and physiotherapy and mental health consultations.
“The Exeter’s digital-first approach for customers is a really interesting one and shows it is listening to its customers, who are increasingly using devices for everyday matters,” says Rod Jones, head of partnership at the company’s insurance comparison partner ActiveQuote.
“It also shows that health insurance providers, who have mostly remained very traditional in their approach to the way they work for and with policy holders, are following on the online and on-demand trend that the comparison market has been doing for decades.” Strategies like this clearly resonate with tech-hungry consumers – one of the reasons why disrupters have a strong card to play against the more cumbersome approach of incumbent payers, a trend identified by consultant McKinsey in a recent article on how digital is reshaping health insurance in the US.
While more agile providers are moving quickly, many are still finding it difficult to make headway with their digital transformation programmes. “One thing is clear,” say authors Greg Gilbert, Luis Almeida Fernandez and Ajit Sawant. “Digital transformation demands a nuanced approach. There are best practises, but no one-size fits all solution.” McKinsey paints a picture typical of an industry struggling to take a coherent approach to digitisation. Multiple challenges, spearheaded by the lack of enterprise-wide collaboration and a major shortage of skills across the development, mobile, design, analytics and tools fronts, are compounded by a lack of internal focus and the sheer scale of the demand and urgency.
ORDERS OF IMPORTANCE
Prioritisation will always depend on the individual business, but the authors of the article advocate a more collaborative approach which brings together stakeholders, drives new working practices – particularly in development – and focuses on investment and orchestration of a new technology ecosystem, the elimination of legacy complexity and the development of APIs for constituents, partners and customers.
Ideally, this should be driven by a chief digital officer who can identify and prioritise momentum builders. The ultimate call to action is 'Do it now' – but the authors also make a strong case for looking outwards to forge partnerships with disruptors themselves.
This suggestion is also made by partner Henrik Naujoks and his co-authors in an article from consultant Bain, which takes the view that insurers themselves hold the key to healthcare’s digital future. “They can become the principal players at the center of an ecosystem of healthcare services, acting as processors and payers, but also as partners with their customers in the digital experience,” they write.
By looking at the potential application of 30 technologies across the entire healthcare insurance value chain, they suggest that digitisation could help a ‘prototypical’ German health insurer boost its premium revenues by 6-11 percent in five years, and cut costs by 15-20 percent using digital tools.
According to Bain, there are seven key technologies on which insurers should focus:
1. Infrastructure and productivity (data exchange)
2. Online sales technology (mobile)
3. Advanced analytics (new business processes, CRM, claims processing and fraud detection)
4. Machine learning (care, claims management)
5. Internet of Medical Things (prevention and early detection)
6. Blockchain and digital ledger (treatment cost control)
7. Virtual reality.
With a more focused approach, insurers ought to be in a prime position to become the nucleus of a network of stakeholders, including hospitals, doctors, patients, pharmacists, pharma companies and device makers. Some observers would go further, suggesting that digitisation could be a force for change, with increased predictive analysis, for example, shifting the balance of power from claims management to customer benefits and the addressing of deeper challenges in healthcare systems.
“In the UK, combining insurance, AI, robotics, digital, the workforce and social enterprise together with an integrated approach could produce a new model, which could provide much more support to the difficulties that exist in the NHS, alongside providing much greater benefits to its direct customers,” says Richard Skellett, founder of campaign group Digital Anthropology. He says the impact of a new operating model for healthcare insurance would be a true illustration of how technology can augment and impact people’s lives: “The ability to use AI in proactive treatments [and move] away from reactive profitbased treatments in one which should be pursued.” As a potential new business model, that might be a step too far from commercial health insurers who must answer to shareholders and investors, but it does signal digitisation as an essential strategy for flexibility and diversification.
There is a note of caution, however. Insurers should be careful not to favor the front-end over an integrated behind-thescenes strategy. As Henrik Naujoks points out, using AI tools to speed up claims processing might be a more profitable strategy in the long run than investing in the development of a cool bot for the customer complaints chatroom.
This article was first published in the newest issue of the HIMSS Insights eBook, which looks at digital transformation in healthcare. MobiHealthNews is a HIMSS Media publication.