Accenture’s recent experience with midsize and regional health plans signals eroding traditional advantages in pricing and local networks, and those who fail to respond are at risk of steady or even steep decline in market share of group business. New entrants are hitting the scene with competitive wellness, analytics and virtual health offerings that satisfy employer demands. To win in this new landscape, midsize and regional plans need to capitalize on their local advantages and make targeted investments in value-based partnerships, community-focused branding and regional health trends.
Midsize and regional payers can no longer cash in on pricing advantages
A perception of stability in group business pricing advantages may be shrouding big changes within the market that call those advantages into question. Midsize and regional plans saw flat or declining commercial group market share from 2015-2019 when compared to the five largest national health plans. Accenture analysis shows a drop from 58 percent to 50 percent for administrative services only, and 75 percent to 74 percent for fully insured.1
Meanwhile, providers are consolidating. Between July 2012 and July 2016, the number of hospital-employed physician practices grew by 36,000 practices; a 100 percent increase over four years.2 This level of provider consolidation increases negotiating power in a climate where the rate of employer coverage in US has gone nearly unchanged (+0.4%) from 2013 to 2017.3
Midsize and regional health plans must react to the signals of change to stem the tide of further market erosion. Creating new pathways to cost relief for employer groups via value-based arrangements and a clear value story are essential to maintaining market share and winning new business across self-funded and fully insured segments.
New entrants are coming for your margin
New entrants and competitive extensions from benefit consultancies, startups and select brokers chip away at the potential for packaged offerings from midsize and regional health plans that deliver additional margin.
Working-age consumers want innovation—79 percent of Americans under 65 consider technology important to managing their health. These consumers (85 percent) are willing to wear a device that tracks vital signs and their fitness/lifestyle (or both) and 74 percent are open to sharing their data from wearables with their health insurer.
Employers are interested in offering innovative services to employees. Among large firms (200+ employees), 62 percent offer health reimbursement accounts, 50 percent offer biometric screenings and 82 percent offer employees wellness programs that include smoking cessation, weight loss, lifestyle and behavioral coaching.4 Among employers offering screenings, 48 percent of larger firms use at least one third-party vendor that isn’t a carrier or third-party administrator to administer the screenings.5
While new entrants often cannot offer a foundational health benefits package, they can offer the add-on services that appeal to employers today.
Tap into local data to satisfy employer needs
Midsize and regional plans can tap into their local advantages—network advantage and value-based partnerships, community-focused brands and regional health trends—to stand out from national competitors and new entrants.
Value-based partnerships and network advantage have the potential to offer a leg up on the competition. Midsize and regional plans also have an opportunity to closely collaborate with employers in their communities. The Independence Blue Cross Foundation is a good example. The foundation invested $4.8 million in local initiatives in 2017. These initiatives include addressing cardiovascular disparities in underserved populations in Southeastern Pennsylvania and increasing awareness and access to effective community-based opioid treatment and prevention.6 Such investments help midsize and regional payers to build a community-focused brand that attracts the attention of local employers.
Midsize and regional players can act on a wealth of regional health data to develop targeted programs that impact lives in that state or region, and they can do so more effectively than nationals that may have wider analytical focuses and less targeted data.7
Capturing the B2B market
It is time for midsize and regional plans to act on their home turf advantage. Here’s how:
The path to growth in downward trending markets for employer services requires that midsize and regional plans contend with multiple types of competitors. However, these plans can turn the trend around and use their local presence, data and relationships as an edge on the competition.
1 Accenture analysis of AIS data from 2015-2019
2 “Updated Physician Practice Acquisition Study: National and Regional Changes in Physician Employment2012-2016;” Physician Advocacy Institute; March 2018
3 Health Insurance Coverage in the United States: 2017; U.S. Census Bureau; September 2018
4 “Employer Health Benefits 2018 Annual Survey;” The Kaiser Family Foundation
6 “Independence Blue Cross Foundation invests locally to Create a Healthy Southeastern Pennsylvania,” IBC news release, June 2018
7 “BCBSIL Program Takes on Childhood Asthma;” BCBSIL blog, July 1 2016