Stakeholder alignment - difficult but necessary

by Torsten Bernewitz

Payers who want to get closer to their end-customers must become excellent on four dimensions: consumer insights, consumer engagement, simplicity and openness and stakeholder alignment.

I discussed consumer insights, consumer engagement and simplicity and openness in more detail here:

http://payer-strategies.blogspot.com/2011/09/inside-consumer-insight.html
http://payer-strategies.blogspot.com/2011/09/consumer-engagement-making-difference.html
http://payer-strategies.blogspot.com/2011/09/simple-is-not-easy.html

Here are some observations about the fourth success factor: stakeholder alignment.

The experiences of many healthcare companies who are practicing it show that consumer marketing in healthcare is particularly complicated. There are many more stakeholders and influencers than in most other industries, and they don’t always align. In fact they may actively work against each other. 

In a recent study we were mapping the stakeholder and influencer impacts across the multi-decade diabetes patient experience (i.e., from at-risk to death). We found that patient journeys and stakeholder relationships were exceedingly complex, resulting often in conflicting and confusing experiences for patients, and likely poor outcomes as well.

It is important for health insurers to appreciate this complexity. The focus on consumers (or for that matter any other stakeholder in the healthcare supply chain ranging from providers over employers to the government) is not independent from the way we engage with the other stakeholders, and the way that they perceive us.

Pharmaceutical manufacturers had to learn this lesson the hard way, when they “circumnavigated” physicians and started to communicate directly to patients. Many physicians did not really appreciate patients questioning their decisions or asking for specific therapies because of something they had seen on TV.

Payers can experience these conflicts today, when patients redeem co-pay cards they received from their physicians, who got them from drug manufacturers. Payers are not thrilled by the distortions this creates to their benefit designs.

As health insurers move closer to the consumer, they need to take care to synchronize their consumer activities and communication with those to the other stakeholders in the healthcare chain.

For example, Cigna’s consumer engagement program includes mobile applications that locate the nearest pharmacies and emergency rooms and decision-support tools that compare quality and medical costs. Cigna also provides access to health coaches for chronic conditions like diabetes. This will only work well if providers are well aligned with the same protocols and priorities.

How easy will it be to create this alignment?

In fact it may be very hard. According to a recent study by the American Medical Association, nearly two-thirds of U.S. cities are dominated by two health insurers, and nearly half of all metro areas are controlled by one. In 60% of the 359 largest metro areas, the two largest carriers have a combined market share of 70% or more, and in almost half (48%) of cities, one insurer had a market share of 50% or more. Local market domination is critical to influence practices of healthcare delivery through contracting terms, guidelines, etc. For example, it helps to introduce new payment models to replace traditional fee-for-service contracts.

Of course the dominant players in these markets are not always the same. For the individual insurer, engaging providers may therefore be easier in some areas than in others. We will continue to see disparities in medical practices, protocols etc., and this will make consumer engagement, which requires overall consistency, potentially very challenging. This may be one of the reasons why companies like Cigna limit their push into the individual market only to select markets, where they think they can build a strong presence - in Cigna’s case currently only 10 states.
________________________

Torsten Bernewitz is a healthcare industry analyst and management consultant.
He is Managing Principal, Healthcare Insurers and Payers at ZS Associates.

This post is the author’s own and does not necessarily represent ZS Associates’ positions, strategies or opinions.

Contact: torsten.bernewitz@zsassociates.com

Simple is not easy

by Torsten Bernewitz

In recent posts I proposed that to embrace the direct-to-consumer marketing model, payers must become excellent on four dimensions: consumer insights, consumer engagement, simplicity/openness and stakeholder alignment.

I discussed consumer insights and consumer engagement in more detail here:

http://payer-strategies.blogspot.com/2011/09/inside-consumer-insight.html
http://payer-strategies.blogspot.com/2011/09/consumer-engagement-making-difference.html

Here are some observations about the third success factor: simplicity and openness.

The consumer engagement strategy and tactics will be very different across segments, but two important guiding principles should never be violated. Unfortunately, both may require a significant attitude shift for health insurers, whose culture is strongly imprinted by actuarial and risk management considerations.

1. Simplify, simplify, then simplify some more. Consumers have been “trained” by other industries to expect a hassle free, easy and fast experience (think Amazon’s one-click shopping). In fact, health insurers may be well advised to study and emulate how successful consumer companies create these customer experiences. Enrollment, renewal and adjudication must become straightforward, fast and user friendly (with a particular focus on friendly) - today they are anything but “one-click”.
2. Keep everything transparent and easy to understand. Health insurance is complex, but consumers must not get lost in the maze, or they will check out. Helping the consumer navigate the healthcare decisions process, presenting the options in an honest and easy-to-follow way will go a long way in creating trust and building loyalty. The new insurance labels - the mandated standardized plan summaries or “food labels” for health insurance plans - may help, but they are probably just entry stakes to becoming more consumer-focused. Instead of looking at the usefulness of such labels with skepticism, health insurers who are serious about becoming consumer-centric should embrace the concept and push the envelope further. This is not a trivial task, and companies who excel at this can build a real source of differentiation and competitive advantage.

________________________
Torsten Bernewitz is a healthcare industry analyst and management consultant.
He is Managing Principal, Healthcare Insurers and Payers at ZS Associates.

This post is the author’s own and does not necessarily represent ZS Associates’ positions, strategies or opinions.

Contact: torsten.bernewitz@zsassociates.com

Consumer engagement: making a difference through differentiation

by Torsten Bernewitz

In a recent post (http://payer-strategies.blogspot.com/2011/09/what-does-it-mean-to-become-consumer.html), I proposed that to embrace the direct-to-consumer marketing model, payers must become excellent on four dimensions: consumer insights, consumer engagement, simplicity/openness, and stakeholder alignment.

While another post (http://payer-strategies.blogspot.com/2011/09/inside-consumer-insight.html), probed deeper into the first dimension - gaining deep consumer insights - today I want to explore the second dimension: effective consumer engagement.

Once the consumer landscape has been well understood and mapped out, we need to make two important decisions: with which consumers do we want to build relationships, and how?

We need to tailor the offering, value proposition, messaging as well as the way how products and services are offered, to the specific needs and preferences of each segment. The “Goldilocks Principle” applies: don’t under- or over-serve a specific segment, get it “just right”.

The vast differences in consumer needs and preferences can perhaps be illustrated by two groups of consumers that are expected to join the health insurers market.

• The first group will join the market through the individual mandate provision of the Affordable Care Act. This group is young and healthy, currently uninsured but with disposable income, i.e., they are “good risks” and potentially a very profitable segment. This group is also used to online stores that serve and simplify all their needs, and it is unlikely that they are very keen on paper applications or brokers. They are quick at making judgments, and vocal - sharing experiences (and griping about bad ones) in real-time with their friends.
• The second group will join the market through Medicaid expansion, the federal subsidies above the 133% FPL cut-off, the guaranteed issue provision of the law, or from smaller employers who stop offering coverage. This group is generally older, in worse health, with larger families but fewer resources. It can be expected that they are less internet savvy and tech-gadget oriented. Some of them, if they are near the 133% FPL threshold, may flip-flop between Medicaid eligibility and the exchanges because of income changes.

The descriptions of the two groups above are just characterizations in big brush strokes. In reality, there will be significant differences within these groups as well, for example based on education, income, location, age etc., which require further customization of the engagement approach. One size, clearly, does not fit all.

It may be beneficial for health insurers to learn from the experiences of other players in the healthcare field who are making similar transitions to engage the consumer, for example manufacturers of medical devices. Blood glucose meters for diabetes are a classic example, and the medical device players in this space may have just as many marketing people focused on patients and channel marketing as they do on healthcare providers. Several companies have publicly declared "patient first" strategies and are talking a lot about "wellness" and "patient experience" – just like health insurers. They have been hiring marketers from traditional CPG companies to help develop effective consumer engagement approaches. They develop solutions that are customized to specific consumer profiles, for example products that are easier to use for consumers with low literacy and numeracy skills.
________________________

Torsten Bernewitz is a healthcare industry analyst and management consultant.
He is Managing Principal, Health Insurers and Payers at ZS Associates.

This post is the author’s own and does not necessarily represent ZS Associates’ positions, strategies or opinions.

Contact: torsten.bernewitz@zsassociates.com