The Affordable Care Act (ACA) has brought about a lot of changes in the healthcare industry in the United States. One such instance is the requirement of plans sold through the Health Insurance Marketplace to cover treatment for pre-existing medical conditions. Because of this, payers can’t deny coverage to high-risk patients or charge them exorbitant premiums.
Another change is incentives offered under the ACA, which have prompted some health systems to create or acquire health insurance companies. According to the Robert Wood Johnson Foundation, provider systems in the U.S. established 37 new health insurance companies and acquired five existing health plans between 2010 and 2015. However, as of 2017, only four of them were profitable, and five had gone out of business.
One trend that we’ve seen across the industry is with payers and providers partnering with each other, as well as with large tech companies, to improve quality and reduce costs. In the past, payers have lagged behind in utilizing technology, such as artificial intelligence and automation, to lower costs and improve member satisfaction. Now, some of them, especially larger companies, are combining resources with technology to boost high-quality outcomes, enhance member satisfaction and improve access to pertinent data.
Because the National Committee for Quality Assurance (NCQA) urges payers to integrate electronic clinical data in their quality reporting, these types of ventures help payers play a larger role in improving patient outcomes through technology-enabled delivery of evidence-based practices and augmenting data, analytics and care coordination. Such partnerships allow both parties to combine assets while sharing financial risk and reward.
In the first quarter of last year, insurance technology startups raised $597 million, $280 million of which was garnered by health insurance companies. Payers have the lowest profit margins in healthcare, so collaborating with a tech provider to obtain access to clinical and financial data makes both financial and operational sense. They can then analyze the data for a better overall view of not only the cost but also the value of care.
A survey by PricewaterhouseCoopers (PwC) of health insurer executives found that 33 percent of respondents believe increasing collaboration with providers will be most important to their organization’s success and 17 percent stated that they’d be fully integrating payer and provider functions into a single organization in the next five years. Much of this collaboration is due to the shift to value-based payment models. Payers bring their wealth of historical claims data to the partnership, and providers bring their clinical data.
As with payers, providers that combine their resources with technology businesses are better able to serve their patients while reducing costs. The use of innovative technology lets them develop a customized approach to care management and proactively perform population health management. As indicated by the PwC survey, tech companies help providers deliver quicker and more effective care than their non-digital counterparts. Specifically, it states that “vertical integrators, technology invaders and health retailers all have a leg up on many established health players in understanding consumers and tailoring experiences for them.”
Following are a few examples of these types of partnerships:
The growing popularity of technologies like artificial intelligence and blockchain may increase the number of these partnerships. Both providers and payers are continually looking for ways to improve quality of care while reducing costs, and collaborating with technology firms may provide them with the necessary resources to accomplish that.