The future is unfolding

Health plans historically have functioned as administrative middlemen that focused on “communicating their value through accurate eligibility, plan administration, claims processing, settlement and customer service.”1 Now, CEOs see themselves “under constant threat of disintermediation”2 by new entrants, other plans, provider-payer collaborations or providers taking direct risk.

The new health economy, rise of personalization and technology disruption are all challenging the effectiveness of traditional health plan business models. Payers must reinvent themselves to survive in this complex new environment. But how? Based on Accenture’s CEO research, four dominant strategies are emerging to redefine health plan business models.

1 Accenture 2016 Payer CEO Survey

2 Ibid.

Four business models show options

CEOs are exploring four distinct business models that provide strategic direction amid a rapidly changing health plan environment.

Master the core

Leaner operations that leverage efficient processes across the value chain maximize cost performance. Health plans doing so are using sophisticated market and consumer data to understand their customers better, create differentiated products and engage the market in new ways. They are applying new technology to improve processes and reduce costs. Lower cost and greater plan relevance improve value-to-premium ratios and membership growth.

Provider integrator

Health plans are exploring health system partnerships, gaining access to capital and driving systemic change. This path builds on the previous approach, but moves aggressively toward reconfiguring the payer business model and entity structure.

Payer collaborator

To diversify revenue and forge new markets, several CEOs are selling their core competencies as a service to other plans, thus becoming outsourcing service providers. Medicaid, ASO, ancillary products and core administration are examples of solutions being offered to other plans.

Payer as business platform

Platform business models connect new products, services and engagement models to end users while collecting and sharing end user data with current and potential business partners to increase value.

Adapting to the new

Market-making CEOs indicated the need to combine different business models to design a winning enterprise strategy. Navigating this journey requires balancing market readiness with market agility using the appropriate set of capabilities.

A significant number of regional and niche plan CEOs Accenture surveyed discussed a transformation journey that begins by mastering the core, as it allows them to safely take risks while evolving. Now, plans are using continuous improvement and automation to master the core and spend less time on complex administrative processes—but is that enough?

Regional plans are aggressively trying to become closely aligned to their providers, as they have local market density and focused M&A that can accelerate capability development. GuideWell has created an innovation center in Lake Nona, a “medical city” designed for health startups. By innovating and creating living services locally, GuideWell is able to strengthen its competitive position in retiree state Florida, and it’s able to better serve the region’s growing over 65 population.3

3 “For health start-ups, a new innovation space opens in Lake Nona;” Orlando Sentinel; December 7, 2017

Making moves

Accenture’s 2016 Payer CEO Survey indicates a shift in the dominant strategies health plans use to create value. The majority of health plans have streamlined their core value chain for decades through a relentless focus on cost. While cost has historically been the greatest concern for a payer, the changing market has now put extra focus on outcomes, quality and keeping the patient at the center of the healthcare universe. Accenture expects a greater number of CEOs will shift their business models to achieve these goals.

Health plans can combat disruption and put themselves in a stronger competitive position by choosing the right business model(s). Research, analysis and leadership engagement should inform these critical choices. Selecting a new path is hard and fraught with uncertainty. Making such bold moves will call for breaking old paradigms—changes that affect the health plan’s people, structure, governance, rewards and culture. However, in the end, the right strategy can create value for all constituents.

Master the core

Focuses on eliminating unnecessary costs within its value chain and migrating to customer segmentation models with aligned products and services.

Provider integrator

Embraces transfer of risk to providers through innovative product, network and pricing schemas with shared financial gain and future healthcare vision.

Payer collaborator

Drives business model disruption within peers and own system and alternative product partnerships, both in- and outsourced.

Payer as business platform

Leverages installed membership base and IT investments to create growth platform capable of a myriad of non-traditional consumer-oriented solutions.

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Kazim Zaidi

Managing Director – Accenture Strategy, Health, North America


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