The digital health imperative for health plans

The need to evolve

The evidence is abundant: Traditional health care isn’t working. Rising costs, misaligned incentives, low productivity, fragmented technology and data, and poor medical performance are plaguing the US health care system. Still, lacking disruptive competitive pressures, health plans, providers, and other stakeholders have traditionally not been incentivized to improve operations, lower costs, or create meaningful or engaging experiences.

But these industry dynamics are changing, driven in part by deep-pocketed new entrants that are free of legacy constraints and have a compelling financial incentive, the technology know-how, and trusted brands to own the customer and disrupt health care from the outside.

The entire health care ecosystem faces a difficult, but clear, choice: evolve and survive or remain static and perish. Health plans are responding by ratcheting up vertical integration, but acquisitions and alliances alone aren’t enough to repair a broken system and counter new competitive threats. Health plans also need to create a consumer-centric, digitally enabled, and fully integrated health care ecosystem to help them improve operating and financial performance, connect with customers, bend the cost curve, and carve a meaningful place in the future of health care.

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What health plan customers want

Health care customers—employers, providers, and consumers—are speaking up. And loudly. They want improved engagement, greater access, and lower costs—and these call for digital solutions.

Employers view health plan digital platforms as key differentiators. For plan sponsors and benefit managers, the buying decision is driven by 1) health care cost; and 2) the integrated “package” of programs and tools to drive engagement. A breakthrough digital platform with true integration across self-owned assets and strategic partnerships is a way for health plans to achieve these two things.

For health care providers, digital is the key to improving care efficiency. Providers want digital solutions that reduce the time spent on administrative tasks (handling patient data, managing referrals and paperwork, etc.) and allow doctors to focus more on delivering care. Providers are open to using digital dashboards and tools if it can be shown to help improve outcomes.

And consumers have a clear hierarchy of priorities when it comes to health care, and digital tools are the key to effectively meeting their needs.

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The path to a digitally enabled ecosystem

Despite digital’s potential, few established health care industry players—including health plans—are effectively leveraging it in an integrated way. Consumer engagement experiences, in particular, remain fragmented and under-developed. In addition, just 22 percent of consumers think their health plan is integrating or utilizing their data. Meanwhile, technology giants and other well-financed market entrants are making bold, experimental moves to tackle rising costs and consumer engagement by integrating technology and data.

Looking to strengthen their competitive position as investments and innovative technologies flow into the industry, health plans increasingly are engaging in vertical integration:

• Major retailers/pharmacies and pharmacy benefit managers (PBMs) are acquiring/being acquired by health plans and disruptors in the care space to own the end-to-end value chain at a local level
• Health plans are also innovating, including launching their own PBMs to remain competitive
• Health plans are acquiring and/or building out their self-owned and joint venture provider networks
  

Health plans are also diving deeper into digital health technologies. Many large health plans are designing digital tools in-house and with partners across web, mobile, and wearable technologies. Other major players are acquiring smaller firms and startups with digital capabilities to take advantage of their skilled development teams and flexible platforms.

With health care firmly on the path to a digital future, health plans that want to ensure their continued relevancy and viability will need to double down on the steps listed above in order to craft a consumer-centric, digitally enabled, and fully integrated ecosystem that can solve health care’s problems and meet customers’ expectations.

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What health plans should do next

While the steps to create a digital health ecosystem solution will differ for each health plan, one way to start is by taking the pulse of an organization’s current digital health. Are there existing advantages that can be leveraged—for example, robust customer data, strong provider network, investments in digital tools/analytics?

Results of the digital health assessment can help identify opportunities to fill gaps and build-out existing capabilities in three areas. The good news is that many health plans may already have some foundational elements in place and can source other needed capabilities internally and/or with partners.

To learn more about conducting a digital health assessment, download the full report.

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