Data analytics, care coordination can help payers avoid going the way of Blockbuster

The health insurance industry "struggles not to be the next Blockbuster Video," according to Jeff Rivkin, a research director for IDC Health Insights. (David Boté Estrada/CC BY-SA 2.0)

Like travel agencies and video rental stores, health insurers are in danger of becoming obsolete amid pressure to cut out “middlemen” who don’t prove they can provide value.

However, there are ways that payers can survive and thrive as the healthcare industry changes, according to a new issue brief from IDC Health Insights titled "Digital Transformation and New Economics Highlight Payer Disintermediation."

Traditionally, insurers have offered three main functions: underwriting, setting up provider networks and processing claims, the brief noted. But numerous forces could disrupt that business model, Jeff Rivkin, a research director for IDC Health Insights, said in a statement.

"Employer-direct healthcare, governmental intervention, consumer-sharing networks and provider consolidation and repurposing are all chipping away at this industry, which struggles not to be the next Blockbuster Video," he said.

One way that payers can avoid this fate is apply their existing capabilities in actuarial scenario modeling and comprehensive analytics help the industry navigate the move to value-based reimbursement (VBR). Since providers can’t do this on their own, payers can gain a competitive advantage by using their resources to design effective VBR arrangements with their networks, the brief noted.

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Payers and third-party administrators also have the potential to mitigate rising costs tied to provider consolidation by designing networks that are more rational, Rivkin argues. For instance, they could steer patients centers of excellence for complex, high-cost surgeries while offering basic services are lower-cost settings.

Further, as the industry moves toward integrated care management, payers and third-party administrators can play a role—and be attractive to employers—by helping to coordinate care across the continuum. Doing so, however, will require “significant investment” in areas like process design, data exchange and data analytics capabilities.

Some insurers are well along their way in the effort to emphasize their tech capabilities. “Sometimes I think we’re becoming more of a data analytics company than anything else,” Humana Chief Medical Officer Roy Beveridge, M.D., previously told FierceHealthcare, noting that the key is putting actionable data in providers’ hands.

One way Cigna approaches this is by sending reports to providers that help them monitor quality and affordability by measuring them against their peer groups, said Lynn Garbee, Cigna's senior director for value-based reimbursement and collaborative care.