Innovation is mainly driven by insure-tech companies raising hundreds of millions of investment money. Established health insurers must know new insure-tech digital business models to understand their impact on both value chain and market position.
Over the last couple of years, insure-tech companies have started to focus on the health insurance business. Solutions like Oscar and Clover Health are prominent examples of how those companies innovated the way health insurance services are sold and delivered to their members. Other insure-tech organizations, especially the ones operating in Asia, have followed this trend and developed their health insurance service offerings around a set of new digitally enabled business models that promise to change health insurance industry, similar to what is already happening in the financial market.
It is critical for health insurance market players to be aware of the developments and changes occurring in the market due to the integration of the digital component. New solutions developed by health insure-tech companies attack all parts of the health insurance industry value chain, such as product placement, member acquisition and member management, even expanding it into the dimension of health care delivery.
There are four major areas of operation of the new entrants which health insurers should pay particular attention to:
Over the last few years, insure-tech companies have launched new health insurance plan comparison and enrollment services delivered through special digital web or app platforms. These solutions go beyond simple comparison and selection, they also provide member companion services just like a traditional health insurance company does. For example, mobile apps helping insured members get information about their health plan reimbursement scheme, book a doctor appointment or file a claim. This will create a new layer between members and health insurance companies, which has to be addressed by payer organizations in order not to lose the opportunity to get direct member access themselves by using digital solutions.
Member acquisition is as at the heart of new digital business models invented by health insure-tech companies. Offering free or discounted activity trackers or health sensors allowing new members to track their health status and get benefits in return (reduced premiums or copayments, gift cards) is a common model to attract customers. Already in 2015, China-based ZhongAn launched their step-tracking campaign, Bububao, which provides users with free insurance when they achieve their daily step goal (up to 15,000 steps per day). In addition, ZhongAn promotes suitable health insurance plans with different coverage for participants based on the tracking result.
Companies like Getsafe are using an API (Application Programming Interface) model to attract new members starting with dental health insurance products. The model allows websites and apps to offer health insurance coverage to their user base by adding widgets or frames to their solution. Health insure-tech companies using the API model significantly increase their reach into new customer segments. Global health insurance companies should be aware of new digital services that mainly target new customers within a region. Currently, those services address only the 10-20% of tech-savvy population with a need to get a new health insurance coverage. However, this might expand to broader target groups very quickly, as solutions mature and currently existing regulatory boundaries fall in most countries.
Digital technologies’ integration also transforms the way payor organizations deal with the community of enrolled members, both in the areas of health data tracking and a suit of digital solutions for patient engagement improvement such as portals for claims management and online doctor appointments. The idea of rewarding healthy behavior with reduced monthly payments is not new. Digital technologies just make it much easier today. Vitality (UK) is one of the numerous companies which have introduced a special reward scheme for a healthy lifestyle. It tracks its members’ activities with the use of connected devices and health apps and reward them with so-called “activity points” which can be used to get discounts and complementary products from partnering organizations. In addition, Vitality promotes its own life insurance and investment services among health insurance members by offering premium and product services discounts for those who managed to accumulate enough “activity points”.
Other health insure-tech companies, such as Oscar and Ottonova, ease and digitize the entire member interface providing their members with an app-based health concierge service to support their members along each step of the value chain.
Health care delivery
New digital business models are also being used to blur the line between a payer organization and health care delivery. Digital technology provided by the payer organization is used to offer health services that were previously provided only by doctors and nurses. Now digitally enabled coaching programs, diagnosis and second opinion support, doctor recommendations are a part of insure-tech offerings. This goes hand in hand with massively improved data exchange between payers and providers inside and outside the network. It includes tracked health data of the patients allowing to establish closer links between payers and HCPs and nurses. Clover Health has chosen senior at-risk population suffering from chronic conditions as a target group for its solution: it aggregates and analyzes available population data to identify the members requiring special attention and proactively intervene to help them achieve better health, e.g. keep in touch with them to encourage medication adherence or organize home visits to reduce overall final care costs.
Health insurance and care delivery are getting so close that some providers introduce their own health plan analogues. Forward clinic charges a flat monthly fee which covers primary care services for a patient, a suit of digitally enabled tools and trackers and allows remote patient monitoring by care team.
What does this mean to health insurance companies?
Attracting new members without a comprehensive freemium-based digital service offering will become more and more difficult. Middleman concepts that take away the direct member contact in the digital world do represent a major future threat to payor organizations that do not move fast enough to offer their own digital member interfaces.
Using digital technology to track and link healthy behavior will become a must-have in most regions of the world, despite regulatory boundaries that prevent those concepts from being applied to the standard and basic health insurance coverage. Private or co-pay markets will adapt once initial success becomes visible in a comparable market/region.
Digital technologies have also demonstrated that payers, HCPs and patients become more closely linked. This will have a major impact on the discussion about “who does what?”. We see payers providing health-related member coaching or diagnosis services (starting as a second opinion) and hospitals offering their health plans directly to patients. This value chain adjustments have to be understood and actively managed by health insurance companies globally.