Insurance Exchange Enablement Heats Up as the Clock Ticks Down

Today’s news that Wellpoint and two other Blues (HCSC and BCSB MI) acquired a 78% stake in Health Insurance Exchange vendor Bloom Health is not the first – and won’t be the last – move in what is sure to be a consolidating market.

The Accountable Care Act (ACA or Obamacare) requires each state to establish an online shopping portal, known as a Health Insurance Exchange (HIX) for individuals and small groups to purchase health insurance no later than January 1 2014. We have written and blogged extensively on the topic. In our estimates, HHS and the states will need to spend in the neighborhood of $4-$6 billion dollars on technologies order to create these exchanges. In addition to the ACA HIX, there is perhaps a bigger market opportunity in the private sector to create non-government sponsored insurance exchanges, creating even a bigger market opportunity. Bloom Health is one of many vendors specializing in the private exchange market.

Wellpoint, the Blues, and in fact all health insurance companies are making the individual and small group markets a top priority for new business and growth initiatives. These markets will explode in growth due to the Obamacare legislation and the carriers recognize the opportunity and the challenge with tapping this market.

The insurance exchanges, both public and private, will be the primary vehicles to reach into the individual and small group markets. Wellpoint’s move on Bloom, and Optum’s acquisition of Connextions, is recognition of this fact.

In addition to the Connextions and Bloom transactions, the vendor community is also coming together to help create insurance exchanges. Accenture’s acquisition of Duck Creek, announced partnerships from Oracle, Microsoft, CSC and others such as Maximus’ partnership with Connecture, portend of additional transactions to come in the space.

Insurance companies need help in positioning into the individual market, and also need technology to help them more effectively participate in the public and private exchanges.  Several vendors are positioning into the market but only a few have broad, proven experience with exchanges.

Companies like eHealth and Extend Health, which have consumer engagement and online shopping capabilities from market adjacencies (a leading online brokerage for eHealth and a robust Medicare exchange from Extend) will be important players in the new world of insurance exchanges. Other players like DestinationRx are similarly active in the exchange marketplace, working with HHS and multiple insurance plans, and will have a meaningful impact on the public and private HIX marketplace.  These vendors already have a head start in exchange operations, plan comparison features and tools to help consumers sort through the confusing world of insurance costs and coverage.

TripleTree’s recent HIX research report lays out a number of vendors that are currently engaged in HIX solutions. The report concludes that no vendor provides a complete solution.  Given the importance of the exchanges and the immediate market opportunity, no doubt consolidation will continue.

Have a good week.

Scott Donahue

Scott Donahue is a Vice President at TripleTree covering infrastructure and application technologies across numerous industries and specializes in assessing the “master brands” of IT and Healthcare. Follow Scott on Twitter or e-mail him at sdonahue@triple-tree.com

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Viewing Healthcare Consumerism through another Lens (pun intended)

As a senior analyst for a research based investment bank, it shouldn’t be surprising when personal health experiences and areas of focus for our strategic advisory practice collide.

With increasing frequency, TripleTree is discovering thriving healthcare solutions whose business model is based on consumerism.  This is a departure from traditional models where health plan reimbursement ruled the day, and fee-for-service payment models were avoided.

My recent experience with a Lasik consultation offered a terrific case study on the force multiplier of consumerism and prompted me to conduct a quick assessment of its impact on elective surgeries.  Done thousands of times each day at clinics in every community, elective procedures like Lasik are the apex of value pricing, where customer service is the only differentiator between providers.

• Patient experience:  After some online research, I scheduled an appointment with a clinic and my experience commenced in a flower-adorned office (resembling more of a day spa than an out-patient waiting room).
• Patient information:  First step…upon check in, an iPad was provided as a platform for capturing personal information and answers to a battery of questions.
• Patient preference:  Second step…a selection of color preferences was offered to support my experience.  Upon blurting out “yellow”…not only was a yellow folder and welcome packet presented, but now a range of “yellow themed” accoutrements will follow me through the procedure.
• Patient peace of mind:  Third step…a facility tour.  Here is where my yellow theme will come to life as the surgical procedure is staged and conducted in a glass surrounded room where lighting, music and temperature are tailored to my preference.
• Patient education:  Fourth step…dilate my eyes for pre-op consultation.  Again, an iPad was presented, but this time to play an informational video trumpeting the credentials of the surgeon, facility and post-procedure information.
• Patient access: Last step…a discussion with the surgeon including thorough Q/A session and the encouragement to contact him (phone or email) with any questions.

This all points to how aware this clinic was to my choices, and its local competition.  In fact, health information tools like Castlight Health show me that 10 Lasik clinics are within a 20 mile radius of my home.

Consumerism in healthcare isn’t a zero sum calculation…but when viewed through the lens of a Lasik consultation (sorry, pun intended); perhaps it can be considered as a formula that calculates the “economics of trust” as one weighs hope for improved eyesight with the decision of who can provide it.  Or:

“A provider’s ability to differentiate

as it relates to my health need”

+

“The level of frustration that my ‘other doctors’

don’t offer the same individualized approach”

Consumer engagement and consumerism is a primary theme of our research agenda for 2011 and we’re starting to see the emergence of “consumer as payer” drive a range of innovations…in Lasik and other more pressing areas like diabetes management.  Retail health settings (MinuteClinic); community health approaches (LifeLine Screening); tailored care (GetWellNetworks); drug prescription kiosks (InstyMeds); and other compelling innovations are converging on the consumer as health reform shifts payment models from pure fee-for-service to value-based approaches.

My Lasik procedure at $1200 per eye comes with a lifetime guarantee…but when its all said and done, my out of pocket will actually exceed $3000.  The side note (as my husband pointed out); is that because my out of pocket ‘elective’ procedure will help me say goodbye to my eyeglasses; he’ll happily elect to say hello to a new set of golf clubs to keep things in balance.

Let us know what you think!

Joanna

Joanna Roth is a Senior Analyst at TripleTree covering the healthcare and technology industry, specializing in education solutions. Follow Joanna on Twitter or e-mail her at jroth@triple-tree.com.

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B to C Marketing, Sales and Service: The New Battlefield for Health Plans – 09/17/10

Historically, commercial health plans have leveraged a traditional “B to B to C” model for marketing, selling and servicing health insurance products to their members. The breakdown for this distribution model is as follows – Health plans “B” create a product catalog for their broker network “B”; and brokers in turn sell to employers or groups “C”.

The pressures of a post-reform world are forcing a shift in the sales strategies of payers. Medical Loss Ratio compliance rules for example, are pinching the income statements of health plans so significantly that getting closer to the member (i.e. eliminating the broker) will be table stakes if they choose to remain competitive. Net result? The traditional model will fade and be replaced by a direct-to-consumer (“B to C”) strategy.

This threat to the broker-driven sales model is compounded by consumer “connectedness” (everywhere-WiFi + prolific mobile devices + social applications) where empowered individuals are becoming engaged relative to researching, monitoring, communicating and paying for their own health care.

Around our shop, we’re referring to this shift as ‘consumer engagement’; a concept pioneered by a few BlueCross organizations who successfully cultivated direct-to-consumer messages via TV, radio, print and online media for some time. Early on these consumer-direct campaigns were an anomaly, but we’re now seeing this approach take hold more broadly. This is more than simply educating potential members about “the right health plan” – it’s a 1:1 marketing approach with messaging the places the health plan in a new light as an entity capable of tailoring health and wellness services (bundled inside of health insurance) to individuals.

Consider what UnitedHealth Group did during this summers’ PGA Masters Tournament. The health plan behemoth aired variations of its “Heath in Numbers” television spots to showcase an optimized health experience for their members thanks to uniquely intelligent tools and services.

If Cigna, Aetna, Wellpoint and others haven’t taken note, they will – and rest assured the big ad agencies will be quick to offer them ideas honed from decades long slugfests in industries like consumer retailing and banking. These health plans are stepping onto a new competitive battlefield, and will likely find themselves trying to out-market the likes of Walmart and Target.

TripleTree is way out in front of other strategic advisors on this topic and has strong viewpoints on where the next set of industry inflection points will occur. Principally, we’re convinced that the health plans can’t go it alone successfully – they lack the internal resources and specialized skills to tackle consumerism, much less the turn-key solutions need to support the state health insurance exchanges.

We’d like to know what you think, and have a great week!

We’d also like to invite you to participate in our one question survey:
Given the momentum around consumer engagement, prioritize the five initiatives below relative to your experience as a member of a health plan.

Chris Hoffmann & Michael Boardman

Chris Hoffmann is Research Director at TripleTree covering Cloud, SaaS and enterprise applications and specializes in CRM, loyalty and collaboration solutions across numerous industries. Follow Chris on Twitter or e-mail him at choffmann@triple-tree.com.

Michael Boardman is an associate at TripleTree covering the healthcare and technology industries, specializing in clinical software solutions.  Follow Michael on Twitter or e-mail him at mboardman@triple-tree.com.

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Meaningful Use Considerations Are Just Small Part of a Broad Compliance Landscape – 08/03/10

The subject of compliance conjures an image of a massively fragmented arena where technologies, workflows and processes are intertwined to address economic, legislative and vertical industry mandates.  Because healthcare is one of the thorniest industries on the planet (and fraught with considerable legislative hurdles), its complexities are significant.

“Meaningful Use” has been in the press of late, and is one of a host of significant compliance initiatives impacting clinical reporting requirements in healthcare. As part of the American Recovery and Reinvestment Act of 2009, Congress included up to $34 billion in incentives for eligible hospitals and physicians to implement and use certified electronic health record (“EHR”) solutions.  Known as HITECH, the provision requires that providers achieve meaningful use through a staged roll-out of the program through 2015. While the exact parameters of the program have not been established, the following broadly outlines the objective of each stage:

Stage 1 criteria focus on electronically capturing health information in a coded  format, using that information to track key clinical conditions, communicating that  information for care coordination purposes, and initiating the reporting of clinical quality measures and public health information (for more on the proposed Stage 1 meaningful use criteria see the Appendix).

Stage 2 expands on Stage 1 criteria in the areas of disease management, clinical decision support, medication management, support for patient access to their health information, transitions in care, quality measurement & research, and bi-directional communication with public health agencies.

Stage 3 will focus on achieving improvements in quality, safety and efficiency, focusing on decision support for national high priority conditions, patient access to self management tools, access to comprehensive patient data, and improving population health outcomes.

The roll-out of meaningful use requirement sets varies depending on the provider’s initial payment year. For example, providers can satisfy Stage 1 meaningful use standards as late as 2014, but must adhere to Stage 3 requirements in 2015 to receive the incentive payment.

Meaningful use has far reaching implications for providers and remains an area within reform that our team is watching.  Two recent articles that touch on the topic can be found here and here.

In the coming weeks, look for our team to write more on these pages about the four sub-sectors within the Compliance landscape:  Clinical Auditing, Consumer Engagement, Anti-Fraud & Recovery and the emergence of ICD-10.

Until then, let us know if you have any questions and have a great week!

Chris Hoffmann

Chris Hoffmann

Chris Hoffmann is Research Director at TripleTree covering Cloud, SaaS and enterprise applications and specializes in CRM, loyalty and collaboration solutions across numerous industries. Follow Chris on Twitter or e-mail him at choffmann@triple-tree.com.

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