Health Insurers and the Advent of New Technologies

The future is here. Are you ready?

Swiss researches have designed a device that can power pacemakers by harnessing the kinetic energy generated by heartbeats. The U.K. National Health Service is starting a six month trial of an AI chatbot ‘triage’ service as an alternative to its customer service phone helpline. Japanese insurer Fukoku Mutual Life Insurance is in the process of replacing some of its employees with IBM’s Watson Explorer cognitive system. Oh, yes, and Norway is shutting down its national analog radio.

The above is just two minutes’ worth of news in today’s time.

Yet, each and every one of these news items will uproot existing business models, change processes, revolutionize technologies, and shift outcomes at a deeply personal, human level. It comes then as no surprise that the one thing everyone agrees on is that the rate of change in business and technology is getting faster and faster. Here are a few reasons why this is happening:

  • Collaborative forms of innovation such as crowd-funding, crowd-sourcing, open-source development and ‘hackathons’ are leading not only to greater experimentation with new ideas and with a wider range of solutions, but are also placing a wealth of novel ideas, business models, products and solution in the public domain, ready to be picked and mixed-and-matched in ever more complex innovations.
  • Product cycles are getting shorter across several industries, from technology to fashion, thanks to better integration and automation within the supply chain.
  • Production is getting cheaper in many areas and not only because of globalization, or through the robotization of production lines, but also due to new production technologies that span the gamut from more efficient ways to extract hydrogen out of water, to new ways to mass-produce stem cells technologies, and to 3D and 4D printing techniques.    

Squeezed between short-term profitability expectations and long-term growth goals, CXOs are understandably concerned about their ability to master and lead change. In fact, a study performed by KPMG found that 81% of CEOs are concerned about keeping up with new technologies, while two-thirds of CEOs are concerned that their organizations are not disrupting business models.

So, if you are a health insurance executive looking to understand how these trends affect your company’s growth strategy, where do you even start?

A good way to start is to determine what aspects of your company may be impacted or may benefit from these trends. In a previous article I was describing the business enterprise as a conduit for value creation – a Value Creation System – made up of the fixed and moving parts which together generate the products or services offered to the market. T

  • The Value Creation System (see diagram) provides an easy, intuitive way to classify the latest trends in business and technology and consider how they may impact your business – or, even better, how to get in front of them.

According to the CAQH Index® report for 2016, of the $31 billion each year spent by healthcare providers conducting basic business transactions with health insurers, $8 billion per year could be saved by automating manual processes such as phone calls to verify patient eligibility and coverage, and the mailing of claims and of checks. As the CAQH report highlights, capturing all healthcare administrative data in electronic format will enable innovative data analytics which are expected to lead to cost reductions in the system and better quality health care for consumers.

And yet, as optimistic as this seems, it is only the beginning. New concepts such as “digital twins” open the door to the creation of behavioral and health profile models of your health plan members and using such software models to test insurance products and benefits which promote preventive care and wellness-oriented behaviors. Virtual reality applications could help your claim processing staff in supervisory roles to “see” and solve bottlenecks in the claims processing workflows. Your health insurance company and its affiliates (e.g., hospitals, labs, clinics, and fitness centers) could form business ecosystems which share infrastructure and application platforms designed to optimize business processes and information flows. The list goes on…

The Value Creation System can help us make sense of possibilities. As can be seen in the diagram accompanying this article (scroll down), the three components of the Value Creation System for health insurers – Controls, Operational Capabilities and Assets – are broken down into sub-components, and each sub-component is then mapped to new/emerging technologies and platforms forecast by research firms such as Gartner as top trends for 2017. What we uncovered by applying this simple mapping exercise to the health insurance enterprise is extremely exciting, as the diagram shows.

This type of visualization provides business and IT executives a succinct view of the types of innovations applicable to each area of the enterprise, yet it is sufficiently detailed to act as the starting point for an evaluation and prioritization effort to support future investment planning.

The Health Insurance Enterprise as a Value Creation System – A Map to New Technologies

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