The 3 Biggest Challenges Facing Health Insurers Today
Welcome to our Vlocity Health Insurance blog series.
This blog series will be dedicated to helping health insurers think through the problems of cost, experience and competition as they transform and modernize their front office capability set in today’s highly competitive market.
I’m Kevin Riley, General Manager and Vice President of Health Insurance at Vlocity, and we are focused on combining decades of healthcare expertise with decades of software delivery to build the next generation of the Cloud Platform for Health Insurance.
We will use this forum to expand your thinking, and our own, on the business of health and health insurance. We would be remiss if we did not speak to our solutions in regards to some of the biggest problems facing health insurers today:
- Unsustainable Costs
- Poor User Experience
- Growing Competition
As a top challenge for the health industry, the question remains; how can health plans solve the ?
Are you aware that according to Forbes U.S. healthcare costs are rising faster than inflation? This is not just a U.S. problem. The Organization for Economic Cooperation and Development reports that since 2009 health care spending has grown in most industrialized countries. The L.A. Times reports that a substantial portion of this increase in healthcare costs has been borne by employers. Few businesses can sustain themselves when their operating expenses rise this much and this quickly. As a result, employers have had to shift the burden to their employees. Over this same period, the share of health care costs covered by employees from payroll contributions and out-of-pocket spending has increased 222%.
Compare this to the Bureau of Labor Statistics report that average salaries have increased only 36%. According to Health Affairs, the Centers for Medicare & Medicaid Services (CMS) estimates healthcare expenses for private businesses are expected to climb to a 5.3% compounded annual growth rate from 2014-19. For health plans, the affordability of premiums, deductibles, cost-sharing and administration operations drives their business, and ultimately their competitiveness.
Poor User Experience
We will look at how health insurers can cure the almost universally bad user experiences they create for their members, patients, and stakeholders.
Unnecessarily complex consumer engagements are at the heart of the increasing healthcare costs. For most people, the act of buying health insurance is daunting at the least, not to say overwhelming. Even within the paradigm of buying health insurance through their employers, many employees report making ill-informed choices.
A study by Carnegie Mellon shows that shopper comprehension of which health plan best suits their medical and financial needs is incredibly low. In some cases, 71% of employees could not identify the right plan. Another study showed 65 percent of employees selected the wrong plan based on the financially logical choice. Shoppers are further encumbered as health plans offer more choices than ever. The fact is that health insurance customers lack education before making a decision, and even less guidance during the process.
The confusion is only exacerbated as members begin to exercise their plan benefits. From choosing the right doctor to finding out how much something costs, to paying the right amount for what is owed – the entire process is disjointed and utterly confusing.
Finally, we will look at how health carriers can become more agile in an increasingly competitive environment.
The business agility of healthcare companies depends on how fast they can respond to the speed of their customers. Dependence on legacy infrastructure and the use of multiple systems-of-record inevitably creates “member fatigue” and leaves health plans open to disruption. There is a reason why the health insurance industry is consistently ranked at the bottom of the Customer Satisfaction Index.
The profitability of healthcare companies depends on how efficiently they manage their operations, and how successfully they attract and code for the populations they serve. Through regulation, the U.S. health care industry has been slowly moving into a more commoditized market. As one of many choices, insurers must compete harder to differentiate and win. And competition only looks like it will increase as statements by the new Presidential Administration focus on removing the state lines and creating a more national market for health insurance.
Going forward, we will use this blog to share a mixture of thought provoking topics, feature industry experts, and highlight real-life case studies. Our next blog will cover how Vlocity is Driving Innovation in Healthcare. We will take a deep dive into the lessons learned from health insurers as they modernize their front office capabilities using Vlocity.
Please join us as we explore ways to create better health and healthcare using Salesforce + Vlocity.