Oliver Wyman's Todd Van Tol and Sukanya Soderland attended and spoke at last week’s America’s Health Insurance Plans (AHIP) 2016 Institute in Las Vegas. Here, they share some observations from the event:
1) Continued market uncertainty is the new normal
The forecast calls for uncertain, and likely choppy waters ahead. To start, there is the continued instability of the ACA markets, which are driving big losses for many (but not all) payers and significant rate increases for many plans, along with exits in some markets.
There is also uncertainty surrounding payer and provider consolidation. The future – and potential impact – of major, horizontal-consolidation deals on both the payer and provider side remains unclear. Throw the election and political uncertainty into the mix, and it is clear payers will be navigating an environment of continuous (and often unpredictable) change for the foreseeable future.
2) Consumer experience is a focal point for differentiation … but needs to be tailored to healthcare’s unique requirements
Consumers have rising expectations around ease of use, functionality, and customization based on what they experience in other parts of their lives, where personalization, convenience, community, and transparency are the norm.
But focusing on consumer experience is not just about being the Amazon, Google, or Zappos of healthcare. To provide an enhanced consumer experience, payers have to address healthcare’s unique environment and challenges – and they need to nail the basics. That means making the experience easier and more helpful, and ultimately earning the right and brand permission from consumers to pivot into broader business model offerings.
3) Creating real value remains a key tenet
Payers are actively seeking ways to better manage and contain medical cost while delivering better value and outcomes. That may include tighter partnerships with providers (driving better palliative and home care, reducing opioid use, etc.); and it might mean looking beyond the traditional drivers of cost to address root-cause issues, including social determinants such as access to affordable, healthy food, and addressing emotional and behavioral health issues in conjunction with traditional health issues. Here, payers can turn to the Managed Medicaid space for lessons in what may work.
Once payers crack the code on consumer engagement, they can drive behavior change and outcomes improvement.
4) Disruptive innovation is on the rise
Throughout the three-day event there was a heavy focus on innovation, coming from both incumbents and well-funded early-stage ventures. New players such as Oscar Health, Clover Health, and Bright Health are making wholesale disruptive changes and using new offerings in novel ways (care centers, telemedicine, data/analytics, etc.) that could serve as substitute markets for traditional PPO-style offerings. But it is important to remember it is still early days, and the marketplace is determining whether there is a clear path to success and scalability for these new ventures.
Incumbents, meanwhile, are wrestling with how to best partner with the new innovators and nurture innovation within their own enterprise. Major underlying tensions are that many of the innovations replace or disrupt existing assets, culture, and relationships. In addition, payers are still heavily focused on IT-integration challenges and costs of trying to optimize the traditional core business model.
At the same time, upstart innovators – fueled by a surge of capital – are creating a new frontier of personalized healthy living solutions. There are initial niche results of progress, but also struggles with point solutions, and challenges with commercialization and scaling. If these players can overcome early-stage hurdles, their success may pave the way for a vast expansion of the health and wellness market – a market that is accessed through health plans’ front door.