Challenges faced by payers
You have challenges. We have solutions.
Do any of these challenges sound familiar? See each issue from a new angle and read about solutions that PwC has to offer.
- Mitigating risks of noncompliance with evolving regulations
- Responding to a changing marketplace with new products
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An aging population. Longer life expectancy. Demographic changes are expanding the market for health insurance. But who will pay? Corporations are cutting health benefits, most of all to retirees. Health insurance is being driven into a direct-to-consumer business. Rising unemployment is shrinking the commercial insurance market. And reforms from the Obama administration such as a new public health plan or expansion of Medicare could crowd private plans out of the market and reduce the pool of potential customers. Payers need to adapt to these epochal changes in the commercial insurance marketplace. Introduce new benefit models to proactively anticipate and address the needs of targeted sub-markets such as retirees, young workers and the growing ranks of the unemployed. Develop new products and reshape existing ones to attract consumers demanding quality and value. Consumers who want to stay healthier longer, for less money.
The right products can bring you new customers and deepen your relationships with existing ones. For example, you can offer:
- Lowered co-pays for “preferred brand” medicines
- Insurance against loss of coverage
- Offshore resources or “medical tourism” to reduce costs and expand treatment options
- Plans that incorporate disease management and preventive medicine
Once you develop market-savvy plans, you must carefully assess risks to price them appropriately, and then devise strategies to market them effectively. Direct the efforts of your product development to get to market more swiftly than your competitors with quality products that add value to the consumer's healthcare experience.
Our point of view
- You can grow your market share by developing products that meet the medical needs of retirees and address the financial constraints of retirees and their employers. You should develop innovative benefit plans that address current and future retiree health issues. Assess each plan's risks and liabilities to price them appropriately.
- You can attract health- and value-conscious customers with new plans incorporating wellness, preventive medicine and integrated health management. You should incorporate wellness initiatives, personalized medicine and disease management practices into an overall health management program.
- Managing federal Medicare and state/federal Medicaid programs continues to be a growth area for many payers. To profitably manage complex government programs, you must carefully consider benefit design and pricing, alignment of plans with your business strategy, preparation of applications and competitive bids, sales and marketing analysis, plan implementation, network development and medical management.
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- Minimizing costs and maximizing operational efficiencies
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Consumer choices, government mandates, loss of key accounts to a troubled economy and the possibility of healthcare reform all amplify the relentless pressure on payers to grow revenue and shrink costs. Restrictions on coverage options and premiums will challenge payers to profit from these new members. Keeping plans attractive and affordable will mean driving value up and costs down.
To remain competitive, you need to improve your operational performance. Integrate your information systems throughout your enterprise. Conduct transactions more collaboratively and seamlessly with other stakeholders. Streamline your administrative processes. Understand that performance improvement is more than a strategy for growth - it is a tactic for survival.
Our point of view
- You need to widen your margin from both sides, reducing bottom-line costs and increasing top-line revenue. You can reduce costs by improving your financial processes and operating more efficiently. You can enhance revenue by improving the quality, value and relevance of the products you offer to your customers.
- You need to establish a disciplined approach to continuous, long-term performance improvement. You should identify global best practices and use them as benchmarks to analyze and evaluate your operating and management processes. Systematically adopt or adapt best practices to your own operations to reduce costs and increase efficiency of your key business functions.
- You need to anticipate and capitalize on margin-enhancing opportunities presented by evolving market conditions and regulatory mandates. You should identify short- and long-term opportunities to improve the effectiveness and efficiency of your organization and position it for the future. Enable these initiatives with integrated information technology. Accelerate them through enterprise-wide change management.
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- Deriving value from M&A and marketplace changes
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A worldwide economic recession. A constricting marketplace. New, global competitors. A shrinking commercial insurance market. Proposed policy reforms that could potentially reshape every aspect of the health insurance industry. Payers face daunting challenges. As always, you must respond to relentless pressure to grow revenue and shrink costs. In today's volatile economic and political climate, you share with other stakeholders the burden of transforming an unsustainable healthcare system. Stakeholders are still working to reach consensus on the nature of the transformation and the details of how to achieve it. The payer balance between public and private has yet to be determined. New regulations and new marketplace realities are already changing the way you sell your products, and to whom.
Economic and demographic trends drive the transition away from employer-based health plans to an individual-based market for health benefits. Although proposed mandates and tax credits would enlarge your customer base, there will also be constraints on your profit margins. The federal government's likely expanding role in healthcare could lead to caps on premium increases, coverage mandates, limits on your insurance underwriting strategies and other regulatory burdens.
Our point of view
- You need to protect the markets in which you sell your products. You should develop new markets and new revenue sources for your firm. Explore the potential of new benefits models to meet the needs of targeted sub-markets including retirees, young workers and the unemployed.
- You should diversify your product portfolio. Develop innovative new lines of business. You should develop new products and new care models (wellness initiatives, e-prescribing, disease management, etc.) that keep patients healthier for less cost.
- The conversion to ICD-10 and the implementation of standardized electronic health records (EHRs) will require you to adapt - and invest in upgrading - your clinical processes and IT infrastructure. You should initiate a strategic plan for integrating your clinical and business processes and IT infrastructure for better outcomes and competitive advantage.
- You need to expand into new territories to tap new and growing private insurance markets. You should explore new business arrangements with providers and other payers. Seek global partners and pipelines, and new customers. Consolidate your market position through mergers and acquisitions. You can develop arrangements with off-shore partners and non-health companies to expand capabilities, reduce costs and tap emerging markets such as personalized and preventive medicine.
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- Leveraging IT for competitive advantage
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Market forces are converging on Payer IT organizations like never before as evidenced by the Health Information Technology for Economic and Clinical Health (HITECH) Act, healthcare reform, ICD-10, privacy and security regulations, cost-reduction strategies, clinical information systems and secondary use of data, to name a few. These and other market forces make it more important than ever to have a high-performing IT organization. PwC combines unparalleled industry and technical expertise to assist payers to leverage IT for competitive advantage.
Our point of view
You want to leverage IT for competitive advantage.
Employers, members, providers and many other stakeholders can all benefit from enhanced information technology. You want to use enabling technologies to increase customer loyalty, improve quality, reduce costs and add value to the healthcare ecosystem.
You want to plan, prioritize and execute IT projects to align with your business strategy.
The list of IT initiatives is endless. You want to align potential projects with your organization's business strategy and budget to focus on those with the highest value. Then plan and execute with methodical precision to deliver on budget and on time. It's no secret that there is a high failure rate with large-scale implementation projects, so you want to use a proven risk-management framework to periodically assess the progress of your initiative.
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