One the one hand, we have an unmistakable trend for large health care systems to try to expand their market reach by acquiring insurance companies. The latest in this category is Ascension Health. As reported in Modern Healthcare:
Ascension Health is in talks to acquire an unnamed insurance company that operates in 18 states, which would be a significant escalation in the brewing shift among hospital operators toward the business of selling health plans.
The St. Louis-based system owns 101 hospitals and is the nation's biggest not-for-profit healthcare provider. Ascension Health President and CEO Robert Henkel said during an investors conference in New York that the potential deal is one strategy to boost the system's capacity to accept the financial risk of value-based contracts with employers and insurers. “We anticipate that we'll take more risk,” he said.
Meanwhile, an upstart emerges, exemplified by Oscar. As noted by Crain's New York Business:
Oscar, with its clean user interface and playful consumer-facing ads, is trying to be the Amazon of health insurance.
Oscar's sleek user interface is also a point of pride for the company. Members can search for doctors who use electronic medical records or treat many patients their age. They can also look up their symptoms in Oscar's database and see a range of treatment options, complete with price estimates. By showing consumers that a visit to an asthma specialist could cost $200, but a primary care visit costs $100, they hope to subtly encourage cost-saving behavior. When members sign up, they get a $10 gift card to fill out a detailed health history questionnaire. That information helps Oscar pinpoint chronically ill (and therefore expensive) patients, and encourage them to seek treatment.
Oscar is focused only on New York so far, but it has attracted capital and has the potential to expand. To use the term of art, it is scalable. A savvy friend of mine puts it this way:
The millennial's don't give a hoot about the traditional hospitals and insurance companies. In fact, they
are offended by this line of thinking and behavior. They develop code
and companies in the same speed we change lanes driving on the
expressway. They are quick, nimble and very fickle. They changed
forever the communications industry in the world in less than 7 years -
Facebook and Google. YouTube is less than 5
years old. It is the sharing economy. Zipcar, Hubway, pop-up stores. They have changed they way we buy and consume almost everything from
news, information, clothes, stuff and things through Amazon and Apple
and Netflicks.
This generation has no patience for stupid, analog, wasteful bureaucracy. iTunes thought they were immune (and they were a disruptor) and then came Spotify from Sweden which is 7 years old and owns 70% of the music market today. Smartphones didn't exist until 2007 or 2008 and with that need to get information in different formats out instantaneously constantly without interruption.
This generation has no patience for stupid, analog, wasteful bureaucracy. iTunes thought they were immune (and they were a disruptor) and then came Spotify from Sweden which is 7 years old and owns 70% of the music market today. Smartphones didn't exist until 2007 or 2008 and with that need to get information in different formats out instantaneously constantly without interruption.
So, with all their swagger and intelligence, how do the people who run
hospitals believe that they can truly compete with the millennials who
are hell bent on breaking down walls, dematerialising everything and
bringing margins as thin as possible?
Is health insurance disintermediation the next part of disruption in the health care world?
Is health insurance disintermediation the next part of disruption in the health care world?
7 comments:
The answer to your question is a definitive yes.
One way to rethink/reposition themselves is to think of "Negaclaims" as a goal (taking inspiration from energy's use "Negawatts"). https://www.linkedin.com/today/post/article/20140531134152-255656-patient-engagement-negaclaims-can-reposition-health-insurance
Between what the ACA has done in terms of capping profits and the low Net Promoter Score, there is much to be gained by fundamentally rethinking health insurance's role.
I think the primary goal of any hospital system that buys an insurance company is to keep as much healthcare business within its own network as possible. To do that, it will presumably have to offer competitive (meaning low) transfer prices to its captive insurer for care delivered within its own network in order to offer a competitive insurance premium to members and potential members.
Such a model will look a lot like Kaiser and maybe the future is that most cities and regions will wind up with two or three Kaisers competing for the available business. For any care they can’t provide in house, they will need contracts or some other appropriate financial arrangement with outside providers who can provide those services. Kaiser does that as well.
Perhaps we will even get disclosure of actual contract reimbursement rates to enhance competition among both providers and insurers.
The cynic in me suspects a lot of this movement is the age-old bandwagon effect among hospital CEO's. The first few have thought it through; the rest just don't want to be left behind. IMO it remains to be seen whether this takes hold or not.
nonlocal MD
All the "disruptive models" happening today will allow new solutions to rise to one's attention that would have been swatted away like an annoying fly before...
Consumer-facing superior service will be the only differentiator going forward for medicine.
Question for all you physicians - why do you load up your CV's and bio's with all your awards and papers?
Don't you realize that real people care about how you treated and helped other real people (that we be patients), not some silly prize?
C'mon, you graduated school already and you are out in the real world with the rest of us.
Please, some useful information about your success rates, real metrics to judge you and your skills is required. Using your "accomplishments" as a cudgel against your colleagues is unbecoming and useless information for patients.
Two roads diverge? How about two different roads.
One organization is buying an insurance company. Another organization is setting up a website to help buyers choose among the offerings from insurance companies. The website could be the most brilliant in the world and it would mean nothing, positively or negatively, about Ascension's decision to buy an insurer to better understand the risk business.
Whether through freestanding insurers or hybrids or whatever, there will always be a need to understand risk in health insurance. Not two roads diverging but two paths that will cross.
I have a different view of the motivation of at least some "lower cost" health providers and networks.
Currently lower cost hospitals, doctors groups, networks etc, do not benefit from being low cost.
Their lower cost is buried in a "total insurance premium" where they effectively subsidize high cost providers.
The classic example in Massachusetts is many lower community hospitals, and even teaching hospitals subsidizing Partners and Childrens.
Minuteman Health (consumer driven insurance company) is an attempt of some of those lower cost providers - Tufts Medical Center, Lahey Health, the local Tenet Hospitals (Metrowest and St Vincents), and Steward Healthcare & others - to gain market share by providing lower costs directly to consumers.
But the roll out of Minuteman was tied to the local Massachusetts Obamacare Marketplace. As we all know that marketplace has not worked up to this moment. (The thinking probably was if Massachusetts had a working marketplace from Romneycare, how difficult could it be to update it.)
But that attempt to capture healthcare market share (from high cost providers like Partners and Childrens) by giving consumers of healthcare access to lower costs high quality healthcare has been stymied by the non-functional market place.
So not all health providers are doing this for selfish reasons, as Partners might be with Neighborhood Health.
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