What Payers Missed at World Health Care Congress April 7-9th in D.C.

James Barber's picture
 By | april 16, 2014
april 16, 2014

The first and last sessions at the World Health Care Congress in D.C. last week were bookends, focussing on repeating the traditional tussle of the two political parties’ talking points, and ending with a profound overview of how the Gov. of Oregon is transforming the health system across payers and providers with cross party support.

For payers, this sets the bar. The question now in an increasingly non-underwritten health insurance market is becoming very clear: How do payers leverage their business information to change the behavior of providers and patients? This is the main path to reduce the medical loss ratio and improve outcomes without adding variable expenses. Put another way, in the new world, just paying the claims transactions brings no value.

A Tale of Two Analytic Cities

  1. Many insurers were early in their journey in exploiting information and focused on the mechanics of getting the data together. Included was lots of conversation about how difficult it was to engage patients, and minimal external data was assumed in the discussion.
  2. A few (often larger) insurers were clear that the efforts that paid off were preventative applications that prioritized, predicted and automated efforts long before an episode occurred.  Their balance of care had shifted due to many business case improvements even ahead of new mandated triple aim objectives. Additionally, they largely viewed (the reactive) healthcare delivery as a failure.  They were intentionally vague about their decades-long journey to get there, and the majority of insurers asked almost no questions about this seismic shift. Finally,significant external data was understood by the few as a needed precursor to deliver the business value.   So projects had already blended it with internal data to deliver the impact.

Based on discussions I had with the leading informational thought leaders in attendance, here are some items that payers need to know:

  • The financial opportunity to use information differently is larger than in P&C when Progressive changed the industry in 1992, and had 10% plus better ROE while doing it.
  • The ability to change individuals’ behavior has been proven, and is readily doable.
  • The real issue is internally changing the payer’s culture.
  • Few payer business leaders are aware of the horizon of business cases possible.
  • There is a surprising opportunity for small and mid-sized health insurers to out execute big insurers with BI/ analytics.
  • Practitioners worry most about deep pockets needed to create individual point solutions, and finding the one killer application.
  • They should worry more about creating an overall aligned strategy to compete with the business information. Small and mid-sized insurers when they are clear about their vision with information can execute in a more aligned way, driving up overall ROI. 
  • How do we know? After seeing a couple hundred business cases in P&C, and now working with dozens of payer customers, they pretty much all apply to health insurance. And within P&C insurers clear on their approach we have seen results writing to a 78 combined ratio, 20% more profitable than the average. McKinsey / AMBest studies confirm this. IT just became strategic due to the disruptive nature of analytics on the business model. This presents hope for those who want to be clear about how they will compete in this new world.
  • Owning both sides of the payer and provider is not the only answer. Those we spoke to who were in both were very clear that a driver for owning both sides is to change the game using available information. Often, the acquisition is the test bed for informational pilots that once built will be deployed to address the bulk of their opportunity – i.e. the traditional book of business through payers they do not own!

So the race to compete with information is on. Are we clear we stand in this race? Do we know where the goal line is for us?

If you'd like to learn what executives from regional and BCBS insurers have to say on the future of the industry, download our free eBook (works on Kindle and other device platforms).