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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Marketers Beware: Seniors Are Far From a Typical Healthcare Consumer

The U.S. is on the verge of a dramatic demographic shift as more than 10,000 Baby Boomers turn 65 each day.  This startling demographic change has tremendous implications for our society, ranging from the availability and utilization of our healthcare resources to the staggering, uncontrollable economic cost of providing medical care and support services.

While the problem is wide-spread, the age of Health Reform has shifted the traditional health delivery model to one focused on the individual.  In our research on seniors, TripleTree has unearthed several emerging themes that introduce improved transparency, advocacy, and choice into the senior’s decision-making process regarding their health and prescription drug coverage.  As a result, the senior becomes the focal point to improved coverage that better aligns with their specific health needs as well as cuts unnecessary cost and waste out of the purchasing and enrollment process.

The following themes highlight a few examples of how an alignment around the senior has played into the strategies of large corporate entities as well as emerging innovators that specialize in combining technology with high-touch service capabilities.

Leveraging “Brand”

The new generation of seniors will be much more retail-savvy, will demand greater transparency, and will have improved information tools to help guide all aspects of their health-related spending.  Recognizing this, retailers such as Wal-Mart, Walgreens, and CVS/Caremark are strongly positioned to leverage their trusted brand within the decision-making processes of seniors.

• Wal-Mart, through a recently announced co-branded Medicare Part D prescription drug plan with Humana, is already taking advantage of this phenomenon.  The Humana Wal-Mart-Preferred Rx Plan (PDP) is being offered in over 4,000 Wal-Mart pharmacies nationwide, providing substantial cost savings for the 18 million Americans that rely on Medicare Part D for their prescriptions.
• Walgreens has made several acquisitions that place limited service, acute illness clinics in retail stores and employer settings.  These purchases – which include Whole Health Management, I-trax Health Management Solutions, and Take Care Health Systems – highlight Walgreens’ efforts to expand an already trusted relationship with their customers.
• CVS/Caremark, like Walgreens, has capitalized on an opportunity to expand its platform to include other service-line extensions.  The company’s acquisition of MinuteClinic and subsequently, its rather aggressive expansion strategy have played on the brand’s trusted, neighborhood presence as a means of providing face-to-face care and assistance for seniors and other demographics.

Unique Demands & Approaches

While the complexities of comparing and procuring health insurance are much greater than that of other day-to-day purchasing decisions, new industry dynamics are driving the demand for solutions that can address both the functional requirements of health insurance exchanges as well as the purchasing preferences of seniors.  New innovative approaches are being developed to address the emerging demands of this new healthcare marketplace.

• Transparency: Several emerging vendors – such as Connextions, Benefitfocus, and Extend Health – have established themselves as trusted sources of information within the health and prescription drug coverage procurement process.  Their solutions interface with multiple data feeds (including eligibility, subsidy, health plan, premium data, etc.) and present this data in an easy-to-use, consumer-friendly format that can be understood and relied upon by the senior.
• High-Touch Advocacy: Companies that layer personalized advocacy and support services over their core technology are a step ahead as the requisite technology-services mix comes together to enable a comprehensive yet flexible approach that caters to the personal buying habits and technological proficiency of a diverse senior population.
• Establishing Trust in the Decision-Making Process: Seniors, to an extent greater than their younger peer groups, have a more pronounced set of preferences and possible reservations when it comes to making decisions regarding their health and prescription drug coverage.  This dynamic – which is only exacerbated as the senior ages and experiences accelerated cognitive impairment – introduces greater uncertainty and the potential for mistrust within the purchasing process.  To combat any negative preconceptions, companies that wish to market successfully to seniors must be disciplined in how they incorporate an easy-to-understand decision-making framework with personalized, high-touch guidance and support.

Soon, our research team will be publishing a series of reports on the Seniors market.  A range of themes are evaluated in the context of providing seniors with greater access to resources, support, and decision-making tools as they increasingly desire to age independently in the home.   Let us know if you’d like a copy.

Have a great week.

Seth Kneller

Seth Kneller is an Associate at TripleTree covering the healthcare industry, specializing in revenue cycle management, clinical software solutions, geriatric care and healthcare analytics. Follow Seth on Twitter or e-mail him at skneller@triple-tree.com.

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