Healthcare Payors Go Digital

The healthcare industry has been a hotbed of technological innovation pressuring traditional insurers to slowly but surely embrace digital strategies. It’s a matter of survival in the highly competitive marketplace. Healthcare startups—from newfangled insurance companies like Melody Health Insurance to purely tech-focused companies such as Zenefits and Stride Health—are on a tireless path toward industry disruption and they’re keeping incumbents on their proverbial toes.

Innovation Now

McKinsey&Company’s Why Digital Transformation Should Be a Strategic Priority for Health Insurers examines the role of technology in the healthcare industry and encourages payors to start making changes now—that is, to stop waiting to adopt digital technologies. The article states that “as the US healthcare industry makes the B2B to B2C transition driven by healthcare reform and aging demographics, is there any reason to think that health insurance will be different?” Embracing new technology is required to meet consumers’ expectations and insurers are advised to get on board if they plan to stay in the game.

Senior insurance company executives seem to agree. Based on a their Digital Enablement Survey, McKinsey forecasts that digital transformation will account for more than 50% of payors’ strategic IT budgets within next three to five years. And what’s more, they estimate that as a result of investing in technology, a payor’s average administrative savings can be roughly 10% to 15% of their SG&A costs—that’s up to $25 billion industry-wide.

Benefits of Making the Digital Transformation

Cost considerations are key, and new market entrants know it. As explored on ModernHealthcare.com, health insurance tech raised more than $1.2 billion in venture funding in 2015 and investors predict there’s even more money to be made in controlling costs that will come from the pockets of legacy insurers, brokers, and third-party administrators. Startups are offering digital solutions that help insurance companies streamline their business models and enable their customers to manage their healthcare with greater ease and convenience.

Insurance companies are investing in these digital technologies—and developing their own—as part of a massive overhaul to gain operational efficiencies and better serve their customers. Along the way, they’re recognizing that “digitization” is not just an IT initiative, but rather a new way of working for everyone across the organization, and that includes customers and business partners. Whether they’re partnering with industry tech companies or pulling from their own resources, insurers are finding gains by way of enhanced:

• Automation – By removing process steps (not to mention paper) and enabling leaders to manage-by-exception, organizations are enjoying smoother workflows and greater efficiency and money-savings.

• Decision-making – Making use of big data is enabling insurers to make more informed decisions regarding everything from provider networks to payments and is helping them better understand their members’ various care and service needs—factors contributing to brand value.

• Customer service – Using technology to boost the buying experience through decision-support tools and a presence on social media, or giving members’ access to medical records on a mobile device, is going far to meet today’s healthcare consumers where they’re at. Read 3 Reasons The Mobile Revolution Is Flourishing in Healthcare Payments and Payment Possibilities: Healthcare Providers and the Chip-and-PIN Transaction for more.

• Connectivity with partners – Facilitating smoother and more timely business transactions with providers and vendors, as well as enabling the sharing of data, is possible only with today’s digital tools.

For a closer look at insurance billing and payments, read Tomorrow’s Healthcare Payments, Part 1: Understanding Today’s Limitations and Tomorrow’s Healthcare Payments, Part 2: Exploring New Forms of Automation.