It feels like eons ago that we placed calls from a landline rather than an iPhone, rented our movies from Blockbuster instead of streaming them from the comfort of our couch, and navigated a road trip with a map rather than a GPS. However, the reality is that these technologies – and countless others – have entirely transformed daily life over an astonishingly short period of time. So much so that it’s difficult to remember life without them.
Information technology continues to revolutionize almost every industry sector, from entertainment to transportation, at an accelerating rate. By comparison, the healthcare industry has been slow to adopt new information technologies.
For too long, healthcare payers have been forced to accept this reality. They continue to operate with decades-old technology, all while shouldering a tremendous amount of responsibility to enable doctors, nurses, and other clinical healthcare professionals to do their heroic work every day.
For such an instrumental role in America’s largest industry, a large array of cutting-edge analytical tools and data should be available to enable payers to do their jobs effectively. However, professional health market managers are limited to using outdated or inadequate information feeds and software, often gathering and analyzing data with spreadsheets for lack of better tools.
Payers deserve better – much better. Payers have always set out to identify and pay for the best care at the best price for the best outcomes. However, as the pressure and barriers to doing so continue to mount, the time has come to usher in the transformation the industry has long sought.
The time for transformation has arrived – and payers, who sit at the heart of the healthcare industry, are uniquely positioned to be the catalyst for this innovation. This transformation is critical to the health marketplace and is possible with the right information technology within the hands of payers dedicated to bringing about structural change.
Traditional technologies and processes aren’t a sustainable solution
As payers strive to address the mounting pressures from government entities, competitors, consumers, and within their organizations, they are realizing that their legacy technology, processes, and perspectives are explicitly impeding their ability to meet the competitive access, price, and service expectations for their customers. These challenges become apparent when trying to meet new government regulations for transparency or providing a customer-centric purchasing experience within existing ecosystems. All of this is occurring during unprecedented, accelerating change in our industry, requiring payers to take deliberate and focused actions.
The IT solutions that payers have relied upon for years to address their marketplace challenges are no longer sustainable and, in many cases, are adding unnecessary complexity to their operations. While the external pressures on payers are substantial and multifaceted, three significant and related challenges prevent every payer from buying healthcare optimally:
Confusing and opaque health market pricing
The first hurdle is healthcare’s perplexing and opaque pricing structure, ultimately leading to unsustainable medical loss ratios. With countless network and healthcare provider options available, payer organizations face the challenge of limited time, data, and analytical capabilities needed to evaluate these options and make optimal choices for their member populations. The absence of actionable pricing intelligence increases costs for payers, plan sponsors, and members.
Building a competitive provider supply chain
Second, payers must build out a provider supply chain that is customized and optimized for their unique member populations. To compete, payers must build out their provider supply chain from 1.8 million potential care sites. To organize so many sites of care, payers must choose amongst more than 11,000 intermediary provider networks, point solutions, and digital health vendors, making it difficult or even overwhelming to thoroughly evaluate options and ultimately select best-fit solutions for their member populations.
Inefficient point-to-point connectivity
The third issue faced by healthcare payers is inefficient point-to-point system connectivity. Each payer must build and maintain custom-code connections with multiple suppliers, continually adding more over time. These fragmented connections are inflexible, non-reusable, and typically impede data aggregation, analytics, and reporting capabilities. As a result of these structural inefficiencies, payer and industry administrative costs rise.
Healthcare reimagined
How can healthcare business leaders overcome their marketplace challenges? The solution begins with a change in mindset and strategy. Industry pressures and marketplace challenges are compelling payers to shift away from claims-focused business models, where investment and activities are based on retroactively paying claims. Instead, industry leaders and analysts are evolving to ecosystem-based strategies – where they are proactively procuring healthcare services using sophisticated data and modern software platforms.
Payers have been working toward this for years by managing their own respective systems of providers, third-party provider networks, point solutions, and vendors- building their ecosystems for healthcare. However, to effectively compete now and in the changing environment ahead, they need to build out increasingly sophisticated, optimized, and connected provider supply chains – an intelligent marketplace ecosystem – to optimize the buying of healthcare services for their members and plan sponsors.
To do this, payers need data and interoperability. Unlike the legacy claims and clearinghouse technology used today, they need software built to optimize and connect their marketplace ecosystems. They need to create their own intelligent health market to:
- Reduce costs – With the entirety of the payer’s ecosystem – and opportunities – visible and accessible, payers can identify the optimal combination of provider networks and health market partners for their member populations. This means finding the best care for the best cost. The ultimate goal of an intelligent health market is to deliver actionable market insights in real-time.
- Innovate – The ability to identify cost-saving opportunities in real-time means payers can continuously analyze and optimize for their unique member populations. With the savings gained, they can reinvest in their business, innovating and driving organizational growth.
- Improve care for members – Intelligent health markets allow payers to discover and assess more combinations of provider networks and health market partners than previously possible – and at a lower cost. That means they can find healthcare that better aligns with the needs of their members.
In conclusion:
When a payer builds their own intelligent health market to power their health marketplace ecosystem, they can begin leveraging actionable data to optimize and connect solutions that reduce costs while improving the overall quality of healthcare for everyone. They will receive a comprehensive view of provider networks and health market partners that was not possible before – enabling faster and more informed decision-making. It will deliver real-time analytics so the payer can continuously optimize and reduce costs without cutting down on care. These cost-savings and time-savings drive increased power to innovate and grow.
It is time for marketplace transformation in healthcare. By leveraging the technology and marketplace-centric mindset that other industries have successfully adopted, healthcare business leaders will be able to effectively respond to emerging competitive, regulatory, and consumer pressures, transforming healthcare in the process, making it more accessible and more affordable for millions of consumers.
Virgil Bretz
Virgil has more than 25 years of entrepreneurial and executive experience in the American and international health technology and insurance industry. Previously he was a co-founder and Partner at VIDA Health Ltd, a health insurance, technology and capital advisory firm which was merged into MacroHealth in 2017.
Prior experiences include serving as the co-founder and CEO of Hygeia Corporation for twelve years. Hygeia was a technology company that became the leading supplier of U.S. medical network and cost management services to international health payers, winning multiple awards for industry service leadership and innovative information technology development.
Aarti Karamchandani
With over 30 years of experience in healthcare, Aarti has helped many health organizations innovate, transform and be prepared to respond to constant change. Aarti believes that data, analytics and technology solutions combined with appropriate operational models are critical to setting the foundation for innovation and differentiation.
Currently, Aarti is the Chief Growth Officer at MacroHealth, an industry leading health technology platform leveraging interoperability and data analytics to create a first of its kind Intelligent Health Marketplace as a Service platform. During her tenure, MacroHealth has seen 70% year over year growth and been recognized by Gartner as a leading player in the provider network optimization and price transparency space.
