Situations of Rapid Change

Stakeholders in the healthcare ecosystem of the future

Healthcare ecosystem of the future

by Ludovic Pureur – Vice President, Strategic Partnerhips at Virgin Pulse

Health promotion and disease prevention have always been considered important. But, of late, their importance has reached new heights and they are now at the heart of most, if not all, discussions, especially since the spread of the COVID-19 virus in the world. It is now a widely accepted fact that good health and healthy habits (or lack thereof) have an impact on the overall loss experience of different players in the market. Companies in general, for example, are affected in terms of absences and productivity levels, insurers are concerned about their loss rate and claims, and finally, even at the national level there is an aggregated effect reflected in the country’s Gross Domestic Product (GDP) and performance levels.

Daily interactions with various players in the health market confirm these impact trends and they seem to be quite ubiquitous. It doesn’t matter where you look. Of course, some markets are more advanced than others, and some have access to more resources than their counterparts. In any case, their goals and directions are the same.

  • Governments are in the process of setting up the much needed legal and administrative frameworks that will encourage the exchange of data, sharing of responsibility and cash flow
  • Insurers are undergoing a paradigm shift and beginning to adopt a mindset geared towards a philosophy of openness within an ecosystem rather than containment and control
  • Companies understand that a critical factor in their success is their own employee base

Clearly, these three stakeholders are the most important and decisive players when it comes to the future of health promotion and disease prevention. And though each has its own goals and vision for success in the future, they are not without individual challenges to overcome, their own legacy, habits etc.

To elaborate on this, let’s take the example of insurers. While they seem to have their operations more or less under control, their traditional business models seem to be suffering certain “modern” challenges such as:

  • Lack of timely interaction on customer touchpoints
  • Homogeneous and static products
  • Poor leverage of data due to asymmetric information

In addition, these challenges are accentuated and exacerbated due to increasing pressure on the market, driven in the past couple of years by COVID-19 and all its subsequent variants. We can cite the rise of four trends that are forcing insurers to reinvent themselves rapidly:

  • Permanent changes in customer behaviour
  • A growing digital mindset in the boardroom
  • The rise and scale of Insurtech
  • Advances in new data management technologies

But, how do these pressure trends impact the way insurers operate? How can they reinvent themselves? Simple – by redefining their business models and converting the threats they face into new opportunities. Examples include the transformation of the current value chain set up (operations, distribution, claims, underwriting and fraud detection) and the creation of new and improved business models (customer understanding, digital ecosystem, new products).

Having said that, it is worth noting that insurers continue to follow the rules of their “DNA”, comprising risk aversion and control, even as they try to stay ahead in the market. So, cost management becomes their natural priority in any innovation efforts.

For example, modern data analytics can automate large parts of the operational activity such as:

  • Distribution: From a dominant agent, standard methods of communication and traditional advertising to digital-direct, personalised/contextualised and socially engaging
  • Underwriting: From complicated products, long launch cycles and static pricing to more specific products tailored to unique customer needs, with rapid time-to-market and dynamic pricing structures
  • Claims management: From manual processing, long waiting times, ad hoc and often delayed self-reported data to automated processing, speed of execution and measured data

The move from a traditional to a digital value chain set up also becomes a key factor in the success of insurers and the satisfaction of their customers. Boosted by their customers’ willingness to share data to benefit from personal and useful offers, insurers have every incentive to integrate preventive health solutions within the ecosystem, thus transforming their value propositions: from that of a Health Payer to a Life Partner.

This kind of innovative approach also makes real business sense. Digitising the customer journey not only benefits customers, it also creates tremendous opportunities for up-selling and cross-selling products at different customer touchpoints such as awareness, consideration, purchase and retention.

You only have to look at the most advanced insurers to find the proof in the pudding. There is a clear indication of higher satisfaction among customers who have access to digital solutions (Net Promoter Score of +6 points). There is also a six-fold increase in the use of services related to health promotion and a three-fold increase in the consumption of complementary services and products. So, a win-win all around.

Now, what about the other two market players? How do they compare vis-à-vis insurers? Unsurprisingly, the challenges observed at the insurer level also exist, albeit with different variances, at the governmental and corporate levels. And, the only way the sectors involved in the future of the healthcare system can meet these challenges is by acknowledging their respective shortcomings, their individual legacies, their internal culture, the state of the corporate employee base and by looking forward, ready to deal with any inevitable disruption in their current ways of operation in the coming years.

In short, it is suffice to say that those who can anticipate these trends and adapt readily will be the winners in the future.

Detractors to insurers’ reinvention

As said earlier, the intrinsic heritage and risk-averse DNA of the insurance industry are quite robust. By definition, this industry is the one that has the most difficulty in reinventing itself. The main detracting factor slowing down reinvention lies in the existing mindsets of the people holding various organisational positions – from being a micro manager and a control freak who is reluctant to change due to personal insecurities to having a fear of losing secure profits (a false perception in itself).

Actionable plan

To counter these die-hard mindsets, insurers need to hire new people who bring with them an openness and a willingness to embrace and promote new and modern solutions if they want to strengthen their innovation competence. Knowing that the world today is dictated by data management, it is only natural that the number of jobs related to the field of data are growing yearly. But, it is not insurers who attract these new talents first. For example, data scientists will not naturally be drawn to work in the insurance industry. Instead, it is more likely that they will seek employment in an Insurtech or one of the big tech disruptors (such as FAANG and others like them). To their credit, insurers have understood this problem and are making great efforts in improving their brand image (rebranding, creating new messages, refreshing existing social image etc.). But, the road to change is long and it will take time for insurers to renew their culture and image to finally start attracting these new talents. This is why, in recent years, we see insurers have stepped up their efforts in terms of open innovation, i.e. they are collaborating more with specialised Insurtech. And, due to their strong financial capacity, combined with their need for control and ownership, insurers will no doubt be able to support Insurtech with a stake in the company, access to existing resources and, above all, a rapidly accessible distribution channel to test solutions and apply agile innovation principles speedily.

If you want to know more about the revolution and digitalisation of the healthcare system, download here Horizon 2050, a research paper where we dig deep into the changes the system is facing.

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