Transformation is coming to the health insurance industry…but for very different reasons than most people think.
On October 1, 2013, the launch of health insurance exchanges, as mandated by the Affordable Care Act (ACA), will mark a paradigm shift within the industry. At first glance it appears as though politicians and public policy are steering this transformation. In reality, the power resides with the people. Consumer consciousness and brand expectations are the true drivers of transformational change in the health insurance industry.
Recent history repeating itself
In the not-so-distant-past, banking had an industry-altering event that prompted it to become more consumer-centric: the 2007-2008 U.S. financial crisis. In the wake of bank bailouts due to insolvency from sub-prime mortgage losses and other adverse industry practices, people became more aware of how patriarchal banks were. They noticed products and services were developed to benefit the institutions rather than their customers. Eyes newly opened, consumer trust in financial institutions was eradicated. As a result, an industry that historically looked out for its needs first and consumers’ second had to transform its business model to win over a very skeptical American public. To their credit, numerous financial institutions responded remarkably well by launching new customer-centric products and services.
Facing the future, one member at a time
The current combination of policy, politics, and the national conversation around health care’s future are the health insurance industry’s version of the banking crisis. These events have raised consumer consciousness and interest in the workings of the U.S. health care system to historic levels. These events have also forced an industry response to consumers’ dissatisfaction with their perceived sub-par health care category experience, including the rising cost and impersonal nature of health insurance.
Like banking, the health insurance industry has not traditionally focused on its end user, the plan member. Until recently, companies have devoted their attention to developing products for the wholesale employer market; mitigating risk and controlling utilization; and, keeping their balance sheets in the black. Reform has changed that business model. Analysts predict that coverage through individual insurance markets (exchanges) is projected to increase by 23-69 million between 2012 and 2021. The result: insurance companies can no longer craft brand strategies or products solely for the employer that is purchasing healthcare plans for its employees. Instead, insurers must consider and speak to the needs, emotions, and values of their end user—the individual member.
Some health insurers have jumped in front of this new branding and communications challenge. They are taking cues from consumer packaged goods brands by drawing upon traditional toolkits for consumer marketing: themed messages, loyalty and rewards programs and new brand marks. Consumer-focused re-branding and marketing campaigns are only the first step in the right direction. Health insurers must deliver on their promises by building their products, services and brand around improving member health versus merely mitigating risk and cost. A few notable insurers already have begun to create such offerings:
- In July 2012, New York State insurer Independent Health introduced a new approach to innovate health care delivery, The Primary Connection. This program elevates primary care physicians’ (PCPs) role in patient management by placing them at the center of patient care and coordination. The program also provides PCPs with the tools and incentives to collaborate with Independent Health. Each primary care practice has an assigned Practice Care Coordinator, a registered nurse, who plans, coordinates and evaluates all options and services available to develop individualized care plans for each patient. In addition, The Primary Connection contains a reimbursement model based on pay-for-value and quality of care rather than full reliance on fee-for-service.
- In September 2012, Walmart and HumanaVitality partnered to create a healthy foods program to incentivize wellness. This program allows HumanaVitality members to receive five percent savings on foods that display the Walmart “Great for You” icon, like fresh fruits, vegetables and low-fat dairy. To participate, members log onto HumanVitality.com and complete a health assessment questionnaire. They then receive a “Vitality HealthyFood” card qualifying them for the savings, which are loaded onto the member’s card as a credit toward their next purchase. These points can be used for redemption on anything sold in store at Walmart.
The brand is the experience, and the experience is the brand
In addition to dealing with reform-related branding challenges, health insurers must manage and leverage changes in consumer information-gathering and purchasing behaviors. The advent of “me-centered” technologies such as smartphones and tablets has given consumers instant access to information and products that target their specific needs and desires – from household goods to health insurance. As a result, insurance brands must adopt a new philosophy about brand-consumer engagement: the brand is the experience and the experience is the brand.
For starters, insurance companies must begin to develop brand equities and promises that meet the needs and aspirations of all stakeholders – members, brokers, administrators, physicians, et al – in equal yet individually relevant ways. Doing so will make their brand experiences personal and positive. In addition, insurers must evaluate all products, services and operational choices against the litmus test of fulfilling these brand promises. Similar to changes within the banking industry, health insurers must also restructure their brand architecture to reflect that they are consumer-driven service organizations versus patriarchal institutions. Finally, they must adapt and change their public personas – in word and deed – from untouchable, distant institutions to brands that represent the voice of the consumer
Health care reform may be the tipping point but consumers are the way forward. Regardless of politics, U.S. health care is evolving to become more consumer-centric. In response, health insurance companies must become consumer-focused brands – regardless if those consumers come to them via an employer, state exchange or other individual policy – if they hope to be viewed as allies in the quest to transform the U.S. health care system.
Allison Bradley is Brand Strategy Director at Hyperquake. She can be reached at allison.bradley (at) hyperquake (dot) com.