Thoughts from the Road

A Mid-Sized Dilemma

Mid-sized, regional health plans are stuck in the middle. Every health plan faces the same issues: consolidating providers and medical trends that premiums can’t cover. But mid-sized payers have a specific challenge of being neither fish nor fowl. On one hand, national plans and dominant local plans have scale and contracting advantages that are difficult to match. On the other hand, there is an increasing number of “piranha” plans that bite off small, niche chunks of sub-sub segments. So, what is a mid-sized plan to do? How can they create market distinction?

Accenture advocates that mid-sized plans could differentiate, at least in part, by bringing to market innovative product designs. These designs would benefit from tight arrangements with (or ownership by/of) local providers that include new value-based arrangements. This is great advice – leverage the combination of being small and agile but big enough to offer a competitive advantage.

But here’s the rub. In order to generate creative benefits and bring enhanced product offerings to market, plans need to see their products and benefit data in a structured way. How can you create interesting new combinations if you don’t know what you’re working with? It’s like the books in my house. My family and I love to read, and we have hundreds, if not thousands of books in our home. Between my wife, our three kids, and me, we have bookshelves in just about every room. But if you asked me to give you a sampler of teen fiction across Harry Potter, Percy Jackson, and the Land of Stories, I’d be lucky to find one or two of the books. What I need is a catalog (perhaps using the Dewey Decimal System – in full nerdiness) that lets me know what we have and where it is. Of course, I haven’t done this because it’s not a mission-critical issue for our household.

Health plans, on the other hand, have a mission-critical need – particularly this middle segment that has seen flat or declining growth over the past four years. They are running on poorly cobbled together data systems, including some combination of homegrown data warehouses, PDFs, and spreadsheets. Bringing the nerdy back, what plans need is something like their own Dewey Decimal System that: 1) structures the data, 2) codifies it, and 3) makes it shareable.

That technology is here and available today. It’s just a matter of committing to build it internally or finding the right partner. Either way, given current revenue growth trends, shouldn’t this kind of strategic investment make the 2020 list?