5 Strategies to Combat Health Reform Pressures

Health plan executives say their three major challenges are figuring out how to deal with healthcare reform, the health insurance industry's systemic shift from wholesale to retail business and bending the cost curve.

Resolving the challenges will require health plans to shift their focus from group to individual sales, identify and test new behavior predictors and shorten the timeline of product development.

The findings were part of a session about predicting and managing change presented at the annual conference for America's Health Insurance Plans. The session was based on a study developed from interviews with 40 senior healthcare executives by SAS, a Cary, N.C.-based business analytics firm, and Chicago-based Stonegate Advisors, a healthcare research and analytics company.

"Health plans are facing a fundamental change in how they do business," explained Sarah Rittman, a senior industry consultant for SAS. "Accurately predicting market shifts will be imperative for developing go-to-market strategies."

The study, Tackling U.S. Health Plan Challenges with Advanced Analytics, presents these strategies for health plans:

1. Predict market changes in new and creative ways

Today's healthcare market depends on traditional actuarial and underwriting principles to predict risk. But the post-reform market will require health plans to combine third party data – like credit information, social media and purchase data ? with claims data to help understand potential market shifts.

2. Get to know your customers as unique individuals

Reform is expected to bring a flood of individuals into the health insurance market. Member-centric product and service strategies haven't been a focus but now "health plans will need to understand what individuals like and what they want," says Rittman. That includes learning their price and product sensitivity and how they like to communicate and how often. "It will take years for the healthcare industry to figure out how to influence consumers.

3. Do retail like pros

Healthcare needs to learn from other industries – like banking, telecommunications and airlines – that have been through a similar process. "These industries re-invented themselves," explains Marc Pierce, president and founder of Stonegate Advisors. He said that to succeed health plans will need to shorten their product development cycle, add service and loyalty programs, and develop sophisticated pricing strategies.

4. Manage the cost of care

In post healthcare reform managing expenses at a plan member level will be critical to keeping premiums affordable and maintaining the required MLR of 80% to 85%. Plans will need to develop analytics to monitor services, treatment patterns and cost trends to identify medical expense concerns. "Health plans will need to know what customers they can impact and how. They'll need a way to identify those members who are on the edge in terms of willingness to change a behavior and then develop a program that will influence them," says Pierce.

5. Collaborate more effectively with providers

Controlling healthcare will require that health plans work with their providers to develop payer/provider models to see what works based on financial viability and sustainability, including pay for performance, patient centered medical home, an integrated care system and an accountable care organization. Collaboration should include the ability to share clinical, claims and pharmaceutical data to track and analyze outcomes. "This is very valuable information for both the payer and the provider," says Rittman.

This article was originally posted at http://www.healthleadersmedia.com/page-2/TEC-267558/5-Strategies-to-Combat-Health-Reform-Pressures