Insurers need to update their business models if they want to thrive amid "a fast growing wave of consumerism," according to a new report from healthcare investment firm Psilos Group.
The report pointed out that 40 percent of the health insurance market now consists of individual plans, a large jump from the 10 percent share of the market before implementation of the Affordable Care Act.
That finding supports another report, which showed that a dramatic shift is continuing toward consumers increasingly purchasing individual coverage based on insurers' second quarter enrollment numbers, FierceHealthPayer previously reported.
"The health insurance industry's 50-year legacy as a business-to-business model is on the edge of irrelevance," Steve Krupa, managing member of Psilos Group, said in a statement. "A change of this magnitude affects every stakeholder in healthcare. However, with this change comes an enormous opportunity for forward-thinking companies and new investment."
Essentially, Psilos recommends that insurers completely rebuild the insurance product to make it geared toward individuals instead of employers. To that end, insurers must reexamine their entire value chain, including:
- market research to understand the new consumer population,
- product development to begin incorporating value-added products and services beyond ACA requirements,
- network management to enhance price transparency, quality measures and other trends toward consumerism,
- customer relations to provide real-time, 24/7 access to customer service representatives available through multiple options, including online and mobile tools,
- marketing and sales to better articulate their new value products to the consumer market and leverage exchanges as the main selling channel.
"You're really going to end up with this individual consumer as the primary focus of how insurance companies are going to compete, and they've never done that," Krupa told MedCity News. "The reality is they're just beginning to come to grips with this. Some have done a good job at this, branding themselves toward the consumer, but you can run into problems if you brand yourself and the customer services aren't very good."