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Health care modernization in 2021

Scanning for key health care market trends

Profound transformation of the health care industry isn’t just imminent—it’s here. As the industry continues to confront the COVID-19 pandemic, how can it leverage the related adversity to drive change in 2021 and beyond? Explore forward-thinking insights, learnings, and health care market trends from some organizations who have successfully undertaken health care modernization journeys.

Recalibrating your health care modernization compass

Modernization has been an overused term and underutilized strategy over the past five years in the health care industry. More a reactionary approach than part of an organization’s DNA, health care modernization has often focused on rationalization and incremental technology upgrades versus digital and business transformation. This is a familiar reality in the health care industry, where plans and providers’ capabilities often lag customer expectations for accessible and easy-to-use digital services.

In the Change Healthcare-Harris Poll 2020 Consumer Experience Index, the vast majority of respondents said they want better, clearer, easier communications via more modern platforms and digital experiences that allow them to comparison-shop like they do for many other services—yet two-thirds of those same respondents said every step of the health care process is a chore.

As chief executive officers and chief information officers across health care continue to grapple with the unique constraints of the COVID-19 pandemic, they’re realizing these challenges are an opportunity to transform their organizations and the industry. Digital triage and virtual care have the potential to drive radical market change and a sustained recovery of the industry and the economy.

This market scan report shares the experiences and learnings from some of our health plan clients who have successfully undertaken modernization journeys with us over the past few years. We have parlayed these insights into forward-thinking principles that may help other organizations embrace necessary transformation and execute them successfully.

Driving health care modernization

Taking the first step toward future of health

What will the health care technology ecosystem of the future look like? How will it operate? And what can health care plans and providers do to be part of advancing it?

Ecosystems in the future of health would be more effective if they’re digital-first, customer experience–led, and highly interoperable to unlock the potential of uber-collaboration. An experience-led design puts consumer needs first, while radical interoperability will lead to a rich data supply chain, and a digital-first approach will deliver highly interconnected, extensible systems.

Brain monitor on a mobile device with nearby earbuds

Key drivers of health care modernization

Our research shows that health plans continue to push against the preexisting boundaries between plans, providers, and consumers by enabling them to interact in real time and at all points along the consumer well-care journey. Their transformational initiatives are driven by the following forces:

  • Health care product innovation
  • Market agility and interoperability
  • Consumer engagement and experience

The road to health care modernization

Complex transformations don’t happen as single, point-in-time events. Rather, they’re journeys consisting of a series of carefully planned, incremental steps. Each advancement builds upon the previous one, and the journey must continually adjust to internal and external influences over time. Our experience helping organizations with the planning and execution of their modernization strategies has revealed four essential pillars in this journey:

  • System and business consolidation, particularly in the wake of mergers and/or acquisitions, to reduce inefficiencies and create opportunities for innovation
  • Cloud-enabled solutions for exponential scaling and rapid integration
  • A consumer-centric approach to digital transformation of the organization
  • Diversification of capabilities, products, and insights through augmented reality, virtual reality, facial recognition, and cognitive technology

Critical factors in a successful journey

As we’ve learned in our modernization work with plans and providers, the success of these journeys is rooted in a set of enabling factors:

  • Induce a startup-like culture within the organization for large transformations to spur ingenuity and innovation and establish business case and stakeholder alignment with commensurate incentive structures.
  • Empower junior and senior leadership to be accountable and responsible for health care modernization programs through independent, ROI-based funding structures and governance bodies with direct access to executives.
  • Sponsor a multiyear funding pool and segregate initiatives that provide quick wins and mission-critical enhancements from future-oriented programs that are meant to transform the enterprise.
  • Stay ahead of change to empathize with and prepare the enterprise’s most valued resources (humans), given the pace of technological disruption typically supersedes that of its eventual adoption.
  • Be agile in planning and delivery to account for market pressures, internal prioritization, state and federal regulation, and shifts in consumer behavior.

Lessons learned from transformation success stories

Successful programs set an achievable business case that factors in near-term wins, scalability for the future, and extensibility for forward-looking capabilities. An achievable business case usually indexes on an annualized selling, general, and administrative expense (SG&A) reduction to deliver continuous value and balance expectations with delivery risks. The business case must be focused on unlocking exponential growth potential, as opposed to incremental wins.

For example, reimagining how products and plans are designed and configured into system-consumable benefits could result in immediate SG&A reduction (reusable components, rules-engine framework) and sustainable top-line growth (designing and selling more profitable products).

Modernization programs are more likely to be successful with a strong executive sponsor who can define and set a clear North Star and facilitate alignment across key stakeholders. Program scope, delivery model, and timelines need to be flexible and responsive to changes in the enterprise, technology landscape, and business realities.

For example, emerging market opportunities may outweigh preplanned capability releases and require replanning to better handle change management and delivery risk. While a desire to stay true to the original scope is critical, successful programs have also found the right way to balance it with agility, keeping the focus on enterprise value generation. It’s important to note that being agile can’t be a future aspiration achieved in phases; the organization, as a whole, has to embrace the methodology and adopt its ways in order to transform.

Our experience tells us large-scale health care modernization programs require commensurate spend to ensure consistent and meaningful returns year over year while mitigating impacts on core business functions. Incremental spend often results in suboptimal interim states (e.g., multiple applications performing the same function, nonstandard operational workflows, or disjointed market capabilities) and rarely delivers on the promise of true digital transformation, while overspending doesn’t guarantee the right return on investment (e.g., investing in technology upgrades before addressing gaps in the business model and processes they enable). Co-owned core solutions have lower perceived technical debt. At the same time, caps put on key investments have often led to conflicting objectives and outcomes.

We’re seeing health plans spending significant portions of their SG&A on modernization programs, yet barely moving the needle on digital transformation (such as cloud enablement and experience-driven platform design). This is due to residual work they need to complete on platform rationalization and legacy technology upgrades and, in our opinion, indicative of a lagging digital maturity across health plans. Following through on digitization and not stopping at system rationalization and legacy modernization has yielded the most return on investments made.

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