The healthcare payer is on the cusp of what is likely to be a significant, rapid, and sustained transformation. Information transparency and rising consumer expectations are rippling across the entire health sector and an era of innovation in the health sector is dawning. The future promises to increase wellness, decrease disease, and set new standards for both managing human health and conducting business across sectors.
In a report we recently authored that explores the future of healthcare in the United States over the next decade, we spotlight a range of dazzling new technologies and approaches to managing human health that are upending traditional business models and promise to provide staggering advances in the health of our nation. Our research identifies seven areas that, taken together, will have a disproportionate influence on the future of health. Each represents enormous opportunities to improve health outcomes. And each carries with it profound challenges to ensuring wide and equitable access. As consumers take charge of their health and embrace new disruptive technologies, the traditional business models of healthcare payers will need to adapt accordingly to accommodate patients’ more proactive role and meet their expectations for cost-effective, individually tailored treatments that are informed by their medical history and other personal preferences.
Invest to Adapt to Shifting Demographics
The healthcare payer in the future will need to cater to the requirements of the younger, more cost-conscious, and healthier Millennial and GenZ generational cohorts that demand technological solutions for their healthcare management at large. Within the United States, we project a widening wealth–health gap between the two largest adult cohort groups. Tensions between Millennials (those born between 1981 and 1997) who are healthier, but less wealthy than the wealthy but not-so-healthy Baby Boomers (those born between 1946 and 1964) are mounting over key health policies that will mandate changes to how payers currently approach their customers.
For a traditional business model serving an aging, less healthy, more chronically ill Baby Boomer population, this has potentially profound implications for the payer community. Millennials and Gen Zer’s, for example, predominantly (72 percent) prefer self-service options to phone calls in resolving customer service issues. Big tech companies such as IBM Watson and Microsoft are offering artificial intelligence (AI)-based FAQs, forums, and customer portals as well as chatbots that quickly can serve as substitutes to current payer forums. This self-service trend is also feeding into the larger shift toward robotic process automation (RPA) of repetitive claims to eliminate certain manual work altogether. The self-service trend driven by demographics shifts is producing cost savings for payers. But it must also be accompanied by thoughtful investments in technology to meet the needs of the younger generations.
The younger generation is also precipitating healthcare regulatory changes. Support for Medicare-for-all has been growing, peaking at 70 percent in the second half of 2018. The last Congressional election cycle showed broad support for candidates in favor of Medicare for all. And single-payer models from Scandinavia, Western Europe, and Canada continue to be used as examples of “fair” healthcare environments. Payers cannot afford to sit on the sidelines and need to develop strategies to co-exist within some kind of universal healthcare construct.
Partner with Technology Players to Spur Innovation
Advances in telemedicine and mobile healthcare are enabling payers and providers to reach those previously underserved in new and exciting ways. Wearables connect doctor and patient in real time, allowing for remote monitoring of personal health data, providing reminders when medications need to be administered, ensuring compliance with medicine dosages, and alerting medical authorities for health emergencies. Robots will assist in everything from complex surgical procedures to providing support for the sick and the elderly. The digitization of health information and medical records combined with artificial intelligence may soon generate better outcomes and reduce costs. But while many of these advances will lead ultimately to higher efficiencies, the initial costs of adoption may be high. And many countries are already behind in terms of access to these technologies. Payers will have to invest in the technologies that provide the greatest benefits to their member populations, identify fraud and over-prescription of care more efficiently, and encourage the use of telemedicine to reduce health costs.
Partnerships between payers and large technology players will be a natural consequence. These kinds of partnerships have the potential to be very effective in disrupting the status quo in healthcare and create a digital health platform that leverage technology to improve patient care and outcomes at a lower cost. Payers will need to innovate their current business models and embrace an ecosystem of partners across the industry.
Build Direct-to-Patient Capability and Harness Real-Time Analytics
Developments in digitalization, growing capabilities of consumer-priced wearables, and a shift in general consumer interest in health and wellness are accelerating patient empowerment and transforming health into something more in line with mainstream consumer experience. With increasing availability of medical information patients better understand their health, choose their providers, and play an increasingly active role in deciding their course of treatment—all without seeing a doctor. These rising consumer expectations will ripple across the entire health sector. As consumers take charge of their health, the traditional payer business models will have to change to accommodate patients’ more proactive role and to meet their expectations for cost-effective, individually tailored treatments that are informed by their medical history and other personal preferences.
Policymakers and insurance companies will need to ensure that all patients have the ability to make choices about their health providers, which should drive improved health standards and outcomes. Payers are ripe to harness real-time analytics to better match patients to physicians, track real time wearable information, and provide better transparency between insurance premiums and health outcomes.
Protect Patient Integrity and Build Trust
While the growth of electronic medical records (EMRs) and connected medical devices is greatly beneficial to patients and providers alike, this fast-growing ocean of data is also an increasingly attractive target for cybercriminals. Payers will play a role in dealing with key barriers to technology adoption such as helping build the IT infrastructure needed for data sharing and to defend against cyber threats. The explosion of electronic health records (EHR) systems, revenue cycle management (RCM) systems, smart medical devices, trackable pills, and the IoT ecosystem is requiring increasingly more complex processes and tools for providers. Payers can help by standardizing claim submission, automating claim processing procedures, and subsidizing the digitization of patient data.
As more claim processing and patient customer-service work is being outsourced to increasingly capable outside partners, more patient data is being transferred outside of payers’ data lakes, thus increasing the magnitude of a potential cyber security event. Payers need to not only ensure a robust in-house cyber security strategy, but also demand a similar level of security from their global business process outsourcing (BPO) partners. The Brookings Institution finds that 23 percent of all cyber breaches happen in the health sector, and that the “medical data of more than 155 million Americans”—nearly half the total population—has been “potentially exposed in 1,500 separate incidents over the past six years.” As payers frequently rely on BPO partners as a cost-saving operating model, data security and trust are crucial.
Promote Personalized Treatment and Preventive Care
Currently, chronic, non-communicable conditions such as heart disease, cancer, and diabetes account for 75 percent of U.S. health spending—and the rate is rising. Yet these outcomes can be largely averted with dietary, exercise, and other behavioral changes, improving health outcomes and reducing health care spending. The proactive promotion of preventive approaches by payers represents a great opportunity to not only improve health outcomes, but also help drive cost efficiencies, on a global stage.
Routine preventive screenings and an awareness of effective diet and exercise regimens are becoming quite common and payers need to actively spread such knowledge and practices to minimize their total costs. Payers can foster patient wellness and continuous patient contact via partnerships with the key players in the health ecosystem. For example, by incentivizing providers to employ patient engagement initiatives, payers can encourage preventive and early stage treatments. By partnering with med-tech companies that own patient-generated health data—or by providing free fitness trackers to patients and financially incentivizing their use—payers can monitor activity levels, blood pressure, and other markers to identify at-risk patients and incentivize patients to get more involved in their own care.
Moreover, breakthroughs in bioscience present both an array of dazzling possibilities for the future of health and challenges for payers to rethink their actuarial processes and ultimately pay for new breakthrough treatments. Take, for example, CRISPR-Cas9, a “cut and paste” tool for DNA that can delete, repair, or replace genes with precision, which has bent the cost and time curves to alter the human genetic code and cure diseases. The remarkable possibilities of advancements in personalized treatments are resulting in a paradigm shift in treatment and prevention.
Scientific advancements not only present better clinical outcomes but can also result in cost savings. For example, new cancer-fighting drug costs have soared in recent years and some immunotherapies may cost up to $500,000 per course of treatment. Recent studies found that more than $600 million could be saved annually by performing a genetic test on metastatic colorectal cancer patients to tailor their treatment or to avoid costly treatment altogether. For payers, harmonizing global standards on such emerging life-science technologies will be necessary to strike the delicate balance of ensuring appropriate access that maximizes health benefits, and new funding models will be required to take advantage of cutting-edge therapies while also improving general public health.
Looking Forward
In summary, rising consumer expectations will permeate the entire health sector. As consumers take charge of their health and embrace new disruptive technologies, payers’ traditional business models will have to change to accommodate patients’ more proactive role and to meet their expectations for cost-effective, individually tailored treatments informed by their medical history and other personal preferences. The future promises to increase wellness, decrease disease, and set new standards for both managing human health and conducting business across sectors. To seize these opportunities and realize the brightest possible future, multiple challenges will have to be overcome and the payer environment will need to evolve to capture customers and realize value.
Per Kristian Hong is a partner and member of A.T. Kearney’s Health Practice. He is based in Minneapolis. [email protected]
Vlad Rykov is a consultant at A.T. Kearney based in Chicago. [email protected]
