SAN DIEGO—A rapid shift towards digitization and consumerism across the healthcare industry has piqued the interest of some of the world’s largest retail and technology companies, blurring the lines of a sector that has been traditionally occupied by industry stalwarts.
Insurers in particular need to rethink their approach or risk being left behind, experts with Deloitte Consulting LLP said at a session at the AHIP Institute & Expo in San Diego.
“The clear and present danger for all of us in this room today is tech companies can vector into what was previously deemed a healthcare space,” said Ralph Judah, principal at Deloitte, noting that technology and retail companies like Apple, Google and Amazon are searching for a piece of the profit pool that accounts for roughly a third of the country’s gross domestic product.
He added that the definition of the term “healthcare sector” is quickly eroding thanks to the interest of influential outsiders, and “in 10 years, it won’t have much meaning at all.”
“Retail is rushing into the business as if there were a buy-one-get-one sale going one,” Judah said. “Buy one healthcare company, get one free.”
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Amazon’s interest in healthcare is the first example that comes to mind, a name that resurfaced throughout the discussion given the news that Atul Gawande, M.D., had been named CEO of the healthcare venture between Amazon, JPMorgan Chase and Berkshire Hathaway. Walmart has also reportedly expressed interest in purchasing Humana, and CVS, although it operates in the healthcare spaces as a pharmacy retail chain, is awaiting federal approval for its acquisition of Aetna.
At first #AHIP2018 session and Gawande appointment already came up. @Deloitte’s Ralph Judah: “Not just writing articles, but being able to vent into the sector, is going to be interesting.”
— Evan Sweeney (@DB_Sweeney) June 20, 2018
For insurers, there needs to be a willingness to adapt, embrace consumerism and improve its reliance on digital health and data analytics. Neal Batra, principal at Deloitte, said consumers engage with digital tools differently from the hours of 5 p.m. to 9 p.m. than they do from 9 a.m. to 5 p.m. But shifting expectations will increasingly blend those two approaches together, an issue that insurers need to embrace sooner rather than later.
“There are pockets where we’re capable, but not where we need to be,” said Leslie Read, principal at Deloitte. “We need to allow consumers to make the choices they want about who they engage with from healthcare perspective.”
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That digitally driven, consumer-focused transition is happening faster than many of the panelists previously predicted, and insurers need to become more flexible as a result, Judah said. Even hiring the right people—data scientists and developers—will be challenging given the allure of Silicon Valley, and it may force insurers to outsource critical elements moving forward.
“Business models need to become fungible and flexible,” he said. “Throw parts of your business model away and go outside and find players that are better faster, leaner and uglier than you.”