The Case for an External Digital Strategy For Payers As consumers flock to payers that create a more consumercentric experience, the payers that invest early and heavily in external digital assets will be the ones that reap the most rewards in the form of cost savings and customer loyalty. May 2014
Authors Mattan Shrager Consultant mattans@elevarco.com About Elevar Elevar delivers real innovation in healthcare through Elevar Consulting, our boutique healthcare consulting services as well as Elevar Labs, our healthcare innovation development program. Through Elevar Consulting, we work with senior executives of large Casey Le Jeune Officer caseyl@elevarco.com Alek Bituin Engagement Manager alekb@elevarco.com healthcare organizations to address their most challenging healthcare problems and specialize in healthcare strategy, IT transformations, healthcare payments and payer-provider collaborations. Through Elevar Labs, we leverage our deep ties with innovative healthcare startups and offer a unique platform to infuse health innovation into enterprise. Elevar is a privately held company. Elevar s management team brings decades of experience from a wide variety of players across the healthcare industry including payers, providers, and life sciences companies. Contact Us info@elevarco.com www.elevarco.com 1
EXECUTIVE SUMMARY Recent shifts in the healthcare industry including growth of consumer driven health plans, increased patient financial responsibility and healthcare reform have placed consumers at center stage. Consumers today have a growing number of robust mobile tools available to them for other industries and they are now starting to demand the same streamlined digital experience from their health payers in the form of convenient services, payment tools, and mobile access to their healthcare information. However, many payers have not adequately addressed and capitalized on this demand. With the increasing cost pressures faced by payers as well as the shift from a business-to-business (B2B) to a business-to-consumer (B2C) model, now is the time for payers to take part in the digital, consumer-centric revolution. Leading payers will benefit from actively pursuing a comprehensive digital strategy while others will get left behind. Convergence of Stakeholder Behaviors and Emerging Technology KEY INSIGHTS Member loyalty will become increasingly dependent on a payer s ability to engage members and provide services that allow them to create an increasingly digital relationship with the payer. These digital touchpoints will lead to cost savings and the large amount of captured data will position a payer to better retain members with a higher, more personalized degree of service. The airline industry provides a successful case study about the benefits of developing an external digital consumer-centric strategy. This has enabled the airlines to interact with their customers in a more engaging and cost-effective way. If the trend towards digital continues, a payer s mobile application will become the most common touchpoint the payer shares with its members. As such, payers can no longer operate business as usual but should focus on developing specific capabilities that are correlated with the greatest impact on user satisfaction. 83% of consumers said they would be more likely to recommend service providers offering easy and consistent selfservice via a mobile device 7 2
DEFINING A PAYER S EXTERNAL DIGITAL STRATEGY A payer s external digital strategy represents its commitment to retaining members and lowering costs by capitalizing on the power of digital touchpoints. A digital strategy can be defined as a unifying, cross-functional approach leveraging digital assets for the benefit of customers and internal business units. This type of approach involves actively listening to customers, using that knowledge to offer services tailored to their specific needs, and collecting data to continuously improve their experience. The consumer-facing components of a digital strategy are its external digital assets, which include engagement with members via online, mobile, and social platforms. Specific goals of these assets include enhancing service tools (e.g., mobile applications for members) and acquiring data to enhance predictive analytics capabilities (e.g., capturing data about member activity on a website). These features often allow a two-way communication between the payer and its members, permitting the users to personalize their experience while also allowing the payer to gain feedback on its products. 1 76% of consumers generally prefer to resolve issues with a mobile application as opposed to calling a customer support line 7 In healthcare, customer service performance is expected to emerge as a source of member loyalty and retention. 2 By investing in external digital assets, payers can improve their customer service performance while simultaneously decreasing costs. For example, digital assets can enable payers to gain knowledge on members preferences in order to more effectively address their needs. Additionally, a well-developed self-service tool may reduce the customer s need to contact the payer s customer service department, reducing call volume and ultimately leading to administrative cost savings. 3
AIRLINES A SUCCESSFUL DIGITAL STRATEGY CASE STUDY In 2014, Elevar crafted a digital strategy for a large regional health payer. As part of this study, Elevar conducted a comparative analysis of digital strategy maturity among industries and found that payers lag significantly behind other highly regulated sectors (e.g., Airlines, Financial Services) and even further behind advanced Technology firms (see Exhibit 1). In response to the competitive pressures of the industry and the demand for consumerization, airlines underwent a relatively recent shift into the Breakthrough stage of digital evolution. In contrast, health plans are still operating in the Incremental stage of evolution since digital offerings are available yet inconsistent and their development is minimal. While many payers have not yet invested in a comprehensive digital strategy, decisionmakers can look to the airline market, another heavily regulated industry, to learn from its successful digital transformation. As the airline industry faced increased costs, competitive pressures and razor-thin ticket margins, airlines responded by creating digital solutions to improve the customer experience, increase revenues, and lower costs. This has largely been driven by the rapid adoption of smartphones and tablets, the ability to be connected anywhere, and the self-service mindset of connected travelers. These factors contributed to the momentum for airlines to innovate digital products and services. 3 At the center of the airlines digital customer engagement strategy is mobile technology that offers conveniences to consumers such as booking a flight, changing a seat on an existing flight, and even rebooking in the case of a missed flight. In addition, airlines began to cross-sell services such as premium seat selection, baggage charges, meals, and inflight movies. With personalized technology, airlines have been able to sell these additional services via the smartphone app or interactive in-flight screens. 5 These types of self-service offerings improve customer service performance and provide a source of differentiation that leads to increased customer loyalty. 2 As a result of increased consumer engagement, airlines began using a variety of raw passenger data in order to understand the preferences of travelers. By analyzing passenger behavior captured by digital tools, airlines began to personalize products and prices in ways that were previously unprecedented. This increasing level of intelligence allows airlines to tailor each customer experience to the preferences of the individual. Exhibit 1: Industry Assessment of Digital Strategy Evolution 4
THE HEALTH PAYER DILEMMA The airlines case study provides a good backdrop to the health payer market. While payers have released mobile apps, those apps have not exhibited the quality or functionality prevalent in other mobile apps. As part of a 2014 Elevar Consulting study, Blue Cross Blue Shield health payer mobile applications scored an average of approximately 3.2 out of 5.0 on the Android market scale, far below the 4.1 average score for all Android applications worldwide (see Exhibit 2). Even the largest three U.S. payers by revenue only exhibit an average score of 3.3, 20% below the average for all mobile apps. Exhibit 2: Mobile App User Satisfaction Scores Proactive care and selfservice strategies are likely responsible for relaying over 40% of customer service calls to lower cost alternatives 7 STAYING AHEAD OF THE COMPETITIVE CURVE So what can payers do to address these gaps and develop more competitive digital capabilities? In order to have a robust external digital strategy, payers should consider making progress in the following areas: Get personal with your members: Health insurance, while historically focused on large employer plans, must now engage the individual consumer directly as the market becomes more consumer-centric. This direct engagement can be accomplished through personalized marketing messages that utilize data gained from all channels including social media, call centers, and mobile devices. According to the Health Research Institute, member perceptions are shaped increasingly by online interactions. One third of consumers would be willing to switch payers if they offered a better experience. 5 Improve functionality of mobile applications: Due to the increased adoption of smartphones and tablets, one of the most powerful touchpoints for engagement is through mobile applications. In a Deloitte survey of senior executives from the U.S. mobile sector, 78% of respondents stated that the healthcare/life sciences sector held the greatest potential for mobile business innovation. 6 Elevar s research identified three major capabilities most likely to increase user satisfaction for mobile applications (see Exhibit 3). Those include: (1) a robust benefits transparency tool, (2) access to real-time spending account details, and (3) the ability to make mobile payments. 5
Capture and use data in a meaningful way: Not only do payers need to capture the data from all sources, but they need to provide a seamless experience for customers as they engage with each of these touchpoints. For example, any preferences saved by a consumer should be synchronized in real time across all touchpoints (e.g., mobile, online, call center). A complete picture of the customer s information, preferences, and record of interactions should be easily accessible by payers in order to create a streamlined experience for the member. By the same token, payers should invest in the ability to integrate emerging technologies such as wearables and telehealth solutions into enterprise systems. Exhibit 3: Key Capabilities for a Payer Mobile Application Benefits Transparency Tool: In the Elevar study, benefits-related questions were identified as one of the primary reasons for health payer customer service calls. A self-service mobile benefits transparency tool could reduce this burden and decrease costs. However, the tool must be easy to use and cannot simply be a copy of the member s benefits booklet. A member must be able to input a procedure and obtain coverage and associated costs in an understandable format in order for the self-service value to be maximized. For example, increasingly popular wearable technology tracks quantifiable health metrics. In addition, digital health kiosks create the ability for members to weigh themselves, check eyesight, blood pressure, and glucose levels. By non-invasively capturing this data, payers can develop a more comprehensive profile of the member to engage them with proactive health alerts, educational tools and games to increase wellness. By offering these touchpoints and incorporating all of these data streams into a digital strategy, payers can improve patient engagement and outcomes, while enhancing member loyalty. Real-time Spending Account Details: The ability to view spending account details and a total view of health finances provides valuable decision-making support to members. This capability is ideally coupled with a treatment cost estimator tool that provides accurate estimates of member out of pocket costs. Mobile Payments: An easy mobile payment system has been identified as one of the top desires for members in Android user reviews, and the lack of such a feature has been a source of frustration. Despite high demand among users, many health payer applications do not have a native payment feature; rather, members are redirected to a web page. Increased and timelier collections from customers are just a couple of the benefits payers can gain from developing this capability. * Average Score With Capability was measured by averaging the scores of plans when the capability is present ** Differential Impact Score was measured by the slope of the trendline, or the difference between when a capability is present and when it is absent 6
MEETING THE CHALLENGE Increased proliferation of smart devices and other digital touchpoints has created a greater appetite within consumers to receive a personalized experience with healthcare. As a result, payers need to stay on top of new data sources from health apps and devices and to continue to utilize digital technology in order to retain and acquire members and improve their bottom line. As consumers flock to payers that create a more consumer-centric experience, the payers that invest early and heavily in external digital assets will be the ones that reap the most rewards in the form of cost savings and customer loyalty. - Sources: 1 Bud Caddell. Digital Strategy 101. July 2013. 2 Accenture. The 7 Things Your Health Insurance Customers Are Not Telling You. 2011. 3 SITA Group. It s all about me... Me-centric Passengers. September 2011. 4 Airline Trends. How Data, Connectivity and a Retailing Mindset Help Increase Onboard Revenues. August 25, 2013. 5 PwC, Health and Research Institute. Moment of Truth for Healthcare: Why the Customer Experience Matters. July 26, 2012. 6 Deloitte Consulting. Open Mobile: The Growth Era Accelerates. January 1, 2012. 7 Amdocs. Improved Proactive Care, Mobile Self-Service Tools Can Increase Service Provider Net Promoter Scores. February 2013. 7