Collaboration in a Competitive Marketplace

Is it possible?  Can competitors also collaborate?  Do they already?  When is it acceptable?  When does it push reasonable boundaries and when does it cross the line?  This post will cover those thoughts and others surrounding the value of ‘collaborative competition’.

In a recent in-person discussion with multiple customers, some competing for market share within the same geographic region, we were told, admonished really, that we (the ‘vendor partner’) worry more about their competition than they do – and they would find value and appreciate the opportunity to collaborate more.

I’ve been in the health plan business since 1990 and reflecting on the 90s when managed Medicare was beginning to grow, then regulated by the Health Care Financing Administration (HCFA), a predecessor to CMS, fierce competition quickly followed.  Health plans offering Medicare coverage within the same geographic region became strong competitors.  At the time, competition was based on the variety of benefits offered, co-pays and co-insurance, and most apparent, the premiums.

Very shortly afterwards, premiums dropped dramatically, and zero premium plans surfaced and became commonplace.  No longer was competition based on premium – shifting to benefits and member/beneficiary out-of-pocket cost.  This has remained a competitive factor for the past almost 30 years, and in more recent history, individualized customer care/service, predictability of cost, and quality (effectively, “The Triple Aim”), sometimes now Quadruple or Quintuple (often adding staff satisfaction and equity).

Competition in the markets of Medicare as well as Medicaid and Commercial remain a focus for health plans today.  This was confirmed earlier in 2022 when HealthEdge commissioned an independent study of over 300 health insurance executives on a variety of topics.  Competitive pressure was selected as a top challenge by 35% of executives responding, ranking fifth.  Competition also showed up regarding member acquisition, with 23% of respondents listing this as a top concern.  However, when reviewing the responses regarding technology, competition did not appear in the results.  Instead, investments in technology and alignment of business and IT were consistently the top two technology goals – with 53% of executives confirming.  An opportunity for collaboration exists here.

All health plans must efficiently operationalize in essentially the same manner – and utilize similar internal processes.  Some developing processes, for example, the approach to handling value-based care, remain competitive.  During the past couple decades, competition has increased within the health plan marketing environment – with various marketing solutions offering competitive advantages for capturing increased market share.  Typically, marketing is managed separately from the core operations within a health plan.  Does this make operational collaboration more reasonable?  Many would say yes.

Take provider data as an example.  It’s not unreasonable to conclude that 100% of health plans have some challenges in managing their provider data.  Health plans within the same geographic region often have very labor-intensive processes surrounding activities such as credentialing.  Some geographic regions, even some entire States, have established a variety of credential verification services – a “one-stop-shopping” approach, per se, to ease credentialing for everyone.  This is a collaborative solution that benefits everyone in the region yet does nothing to inhibit competition.

Often, health plans have built-in trust issues with their software vendors.  Time and effort are required to establish an effective partnership based on mutual understanding and common goals.  While this trust and partnership is being established and built, health plans can find common ground with one another.  As with any challenge in life, we all know that we’re rarely the first to experience something – and the collective experience of others can help to address any challenge.  Customers with common solutions can share experiences, tips and tricks, hacks.  And we all know everyone hates to open a ticket.  How nice to address an issue without that.  Do you contact Apple® support for questions regarding your iPhone®?  More than likely, you find the nearest teenager!  Health plans, even competitive ones, can commiserate, communicate, and collaborate as they have the same challenges.  There is strength in numbers – solving a challenge together is more effective that going it alone.  Networking with others within our small world also has many unintentional benefits.

My answers to the initial questions posed…  Is it possible to collaborate in a competitive marketplace?  Yes, it is possible!  Yes, competitors can also collaborate (sometimes)!  And yes, some already are!  When is it acceptable?  More often than some think!  When does it push the reasonable boundaries and/or cross the line?  When using similar solutions, far less frequently and rarely crosses any inappropriate lines.

A way to begin to establish new collaborative relationships is also through customer user groups.  If you’re not already connected to your HealthEdge product user group, use this link to register for the user groups of your choice.  If you are already a HealthEdge customer, feel free to also contact your HealthEdge Account Executive who can guide you as needed.  Go forth and collaborate!

The Return to Operational Efficiency

In 2022, HealthEdge once again commissioned an independent survey of health insurance executives to capture and monitor perspectives regarding current challenges and priorities. There were over 300 responses received – from Directors and above in a variety of types and sizes of health plans.

We’d like to focus on one of the reported Top Challenges Facing Health Plan Executivesoperational efficiencies.  The challenge of operational efficiencies came in second place and jumped 33% from 2021 to 2022, from 31% to 41% of respondents. To satisfy your curiosity, ‘managing costs’ came in first place, and ‘member satisfaction’ third in the 2022 study. In 2021, operational efficiencies ranked sixth. Member satisfaction and managing costs tied for third in 2021 behind ‘competitive pressure’ and ‘IT/business alignment’ (fourth and fifth in 2022, respectively).

When we began discussing and evaluating this internally, the comment came up about the pent-up demand for care as some consumers stopped seeking care during the COVID years of 2020 and 2021. It’s a complex dynamic, as the varying impact on payers and providers differ and could also be positive or negative.  Capitated health plan members seeking less care might be good for the provider financially, albeit temporarily. The influx of care may also have a positive or negative impact for payors and providers.  The increase in unemployment caused an increase in uncompensated care – but also an increase in Medicaid membership. It is anything but simple and there are many factors to consider – type of health plan, type of patient, type of reimbursement, conditions, diagnoses, contracts, etc.

Managing costs and operational efficiencies go hand-in-hand, so it makes sense that they both increased significantly in the responses for top challenges.  With the “great resignation”, the need to become more efficient is at play in all types of organizations – and is directly related to operational efficiency.

We’d like to focus on three potential areas to consider related to operational efficiency – auto-adjudication and first pass rate, digital transformation and return on investment (ROI), and staffing.

Auto-adjudication and first pass rate

Most health plans continue to focus on improvements to auto adjudication rate, a key indicator for improving operational efficiency. The obvious benefit here is the assumption that fewer claims will be touched by a human. However, first pass rate is often overlooked or not measured, and is equally, if not more important. For those that are unclear on the difference – the auto-adjudication rate is most often measured by simply calculating the percentage of claims successfully processed without manual intervention. Without more complex calculations, what is sometimes overlooked are claims that had previously suspended – maybe even more than once – and are now processed a subsequent time successfully – then counted as having auto-adjudicated, skewing the results.  Some of those claims were actually touched by a human, sometimes more than once.  First pass rate calculates those claims that were never suspended and successfully processed the first time. However, both measures help with evaluating operational efficiency.

Digital transformation and return on investment (ROI)

The buzz words “digital transformation” have been top of mind for the last several years, and remain a priority for improving operational efficiency.  What IS digital transformation? Each organization must carefully define what this means internally, but in general, it is increasing and improving the efficient use of technology. There is a cost to increasing the use of technology. There is certainly a ROI to come, and it’s critical to not only anticipate the ROI, but to continue to measure it.  The measurement can help to justify future improvements to and investments in technology once ROI calculation and measurement becomes routine and is demonstrated. The simple fact is that money must be spent to eventually save money – just like how converting a home to solar power includes a significant initial investment that pays off over time.

Software vendors are being asked more than ever to justify the cost of technology and demonstrate (in advance) the ROI. In some cases, ROI and/or performance guarantees are being built into software licensing agreements. The software industry should be positioned to explain and develop the ability to measure and commit to stated ROI for purchasers of their technology solutions.

Staffing

Operational efficiency related to staffing also increased in importance as most organizations are now trying to do more with fewer resources. Health plans are trying to become more efficient through higher automation of manual processes where applicable – and somehow enabling a corresponding increase in human efficiency. The so-called great resignation has health plans understaffed and has increased the urgency of this shift. Some did not anticipate the increase in staff productivity while working remotely.  While this is not true 100% of the time and not for 100% of employees, it has been true more often than not. Interestingly, in many cases, working remotely improved work/life balance – and consequently improved productivity.  This turned out to be operationally efficient.

Recruitment and retention are more critical than ever. Alternate staffing methods have become important to defend against this phenomenon. This includes some tried and true options such as 9/80 or 4/40 work schedules, part-time and shift work, full- or part-time remote work, additional paid holidays and/or time off, and other common staffing solutions. In addition, internship programs are increasing, as is the untapped value of the intern.  While many internship programs were and remain focused on the summer, many programs are now year-round. Many colleges and universities offer cooperative education (or co-op) programs – where paid full- or part-time jobs are taken for credit during what would be the typical school term (or longer). Internships are being made available to others, including recent graduates or master’s program graduates.

While the need for operational efficiency may increase or decrease in any given year, it is a continual challenge that can be achieved in many ways. We hope we’ve offered just a glimpse into a few potential contributors.

Read the full report here: Annual Market Survey Reveals What 300+ Health Plan Leaders are Thinking

Top 5 Tips for Presenting New Software to your Board

In my prior role as a health plan CIO, one of my responsibilities was to evaluate, select, and justify software solutions – and often to prepare materials to seek funding and/or approval from a Board of Directors.  HealthEdge helps to arm health plan CIOs and other health plan leaders with the information necessary to justify selection of our software solutions.

While no two boards are the same, these tips have helped me achieve success most often.

1. Understand group dynamics and individual personalities

One of the most important things to know and understand is that boards are made up of individual personalities – and that their collective presence has a group dynamic. The key is to understand the fabric of your particular board and the individual personalities.  Some things to discover are their individual backgrounds, their current career and aspirations, their passions, their relationships in the industry and community.  What are their individual and group goals?  What does success look like to them?  What information do they require to feel confident making a decision?

And, very important – be sure to anticipate each board member’s questions for every topic or decision put to them.

Understanding your unique board and board members ensures you can tend to each board member the right way.  Once you understand your audience, you can come fully prepared to answer questions they are likely to ask.  With that understanding and preparation, you may even get lucky and win their approval with few questions.

2. Build Trust.  Be Transparent.

A savvy board of directors can sniff out an unprepared presenter easily.  It’s important to respect their time.  In my experience, the majority of boards (and most others) appreciate honesty and transparency – whether bad news or good.  They will respect the candor.  They generally do not respond well to being served what could be perceived as a “sales pitch”.  They may even cringe at a lengthy slide deck.  A lot depends on the board personality.  Whether sharing good news or bad – the direct approach is best.

Once the board becomes familiar with your transparent and honest approach, the building blocks of trust start to accumulate.  This doesn’t happen overnight but is the critical foundation of a solid relationship with the board.  The ability to connect with the board and influence change hinges on this relationship and the trust you build.

I recall a memorable board meeting that was a turning point in a trusted relationship.  As I stepped to the podium to present my information and request funding – I examined their faces and gambled.  They had seen and read my advance material – they seemed anxious to not have a lengthy meeting.  In that moment, in reading their body language, I asked if they’d rather I run through my presentation or simply respond to their questions.  The board members looked back and forth at each other, asked two questions, voted in favor of funding the initiative – and then thanked me for my brevity.  Trust had been established.  This never means that one should become overly confident and comfortable.  Board members often rotate in and out, sometimes on a regular schedule – and that trust foundation must be continually maintained.

3. It’s more than just cost

When you think about implementing a new software solution, cost is obviously a significant consideration.  As you well know, there’s more to a selection than cost.  It’s advisable, in most cases, to have a consistent evaluation and scoring approach to document the selection.  Cost is one criterion, as are these items below:

  • Competition: Who are the competing vendors?  How do their solutions compare and contrast?  How are they aligned with your needs as well as your mission and vision?
  • Experience: how much experience do the software vendors have?  How much with companies like yours?
  • Reputation:  What is each vendor’s reputation within the industry?  What do industry experts say about each (e.g. Gartner, Forrester, etc.)?  What do references say?
  • Software development/maturity: Has the software been fully developed to the level your organization needs?  What is on the product roadmap?
  • Implementation: What does implementation look like (duration, process, etc.)?  How much time commitment is required of your team?
  • Partnership/Trusted Advisor: Is the vendor capable of being direct, telling it like it is, and being a true advisor?  Do they provide experts in your industry who can advise you?  Can they be a true partner, not just a “vendor”?  Can they clearly demonstrate an understanding of your business needs, where you’re coming from, and how they intend to help you get to where you want to go?

4. Be Concise but Thorough

There is a significant volume of information that contributes to the ability to select a new software solution.  The personality and dynamic of the board, and your knowledge of them will help determine how much of that information is needed for their approval – and in what format it should be presented.   In many cases, the board won’t need or want all the details.  Based on your understanding of the board, determine what they need and how best to present it.  An evaluation matrix can be helpful to succinctly address the areas mentioned above – and allow for questions.

5. Be prepared – common questions to have answers at the ready

While no two boards are alike, there are common questions. Make sure you have answers to these available.

  1. What is the problem we are trying to solve?  What is the business need?
  2. What is the technology need or impact?
  3. How much is this going to cost?
  4. How long is it going to take to recover the cost?  What is the ROI?  How has this ROI been proven in the past?
  5. What are we going to get out of this?
  6. How was the recommended solution evaluated and selected?  Why was that solution ranked #1 – and is #2 a valid backup plan?
  7. Is it the right time to do this?
  8. Would it have been less impactful if we had made this decision a few years ago?  Or are we late and need to do this as soon as practical?
  9. How long will the new solution last?
  10. What are the ongoing maintenance costs?

Hopefully something from this short blog will be helpful the next time you are presenting to your board. When you are ready to select a HealthEdge product, we are here to help you prepare for your Board meeting.

Value-Based Reimbursement: Collaboration Required to Lower Costs and Improve Care

Our recent consumer survey showed that 47% of the 3,000 respondents postponed care. And of that 47%, 55% delayed routine visits, 39% elective treatment, 32% essential treatment of a chronic condition and 22% emergency care. This might be slightly elevated because of the fear factor related to COVID-19, but many people may not be aware that consumers postpone care all the time. Many times, it’s because of the desire to avoid high costs.

So, it’s no surprise that when asked what services would improve the consumers’ current level of satisfaction with their health plan, tools or information to help understand benefits and financial responsibility (55%) and to help find less costly care (49%) topped the list.  Confusion continues beyond just transactions and expenses; the consumer survey also found that 50% of insured American adults don’t know all the services covered under their health plan.

Confusion around health insurance costs and coverage leading to delayed care is critical for payers to address because healthcare is changing, and the focus is shifting to quality. As the industry moves to value-based reimbursements, members avoiding care can actually drive costs up. Many regulations are requiring evidence of quality in the hospitals, health plans and clinics, etc. As a result, providers can be rewarded financially for demonstrating quality and keeping patients healthy. The benefit to payors is, if members are kept healthy, costs for everyone can decrease, and member satisfaction can increase.

For a high-risk Medicare member, a health plan might receive several thousand monthly reimbursements from CMS to care for that member. If the member gets sick, the cost of care chips away at that reimbursement. If the health plan and the provider work together and keep that member healthy, everyone benefits, including from a financial perspective.

Preventative care and proactive treatment to keep members healthy benefits everyone in the healthcare ecosystem. However, there’s a communication gap when it comes to supporting and promoting preventive care.

According to the consumer survey, when asked if a health insurance company, primary care physician, or a specialist directed the consumer to a community resource like Meals on Wheels or housing assistance to further support their care, 72% said no, including 83% of Medicare Advantage members and 77% of Medicare members.

“There is a significant communication gap and missed opportunity for the most vulnerable populations to take advantage of the resources available to help improve their care and overall well-being. There is also evidence that consumers will use these resources if they know they exist. For those directed to community resources, 81% engaged with the services—up from 57% in 2019.”

Consumers want tools to understand their costs, benefits covered, community resources, and overall better communication; if payers and providers work together to improve outreach and overall transparency, it will keep members healthy, lower costs, and benefit everyone in the long run.

Understanding the Complexity of Healthcare Costs

In a recent survey of 222 health plan executives, when asked, “how do you think COVID-19 will impact health insurance premiums?” 29% said lower, and 25% said stay the same. However, when asked the same question to 3,000 consumers, only 5% said lower, while 67% said premiums will increase. This is just one example from the survey that shows how hyper-focused consumers are on cost. In addition, consumers also said the costs have the greatest negative impact on their satisfaction with their health plan.

However, there are many components to healthcare costs, but those outside the industry may not always understand the complexities. Sometimes, even those of us within the industry have difficulty understanding and explaining all the complexities! Many responses to the consumer survey, not surprisingly, related to a lack of understanding of costs and blaming health insurers for the high costs.

As most consumers have seen on “explanations of benefits,” there are always “billed charges,” and several “discounts” or “allowed amounts.” Recently, a colleague had a medical procedure that was fairly expensive at $233,000 in “billed charges.” However, other than the office visit co-pays, this colleague paid nothing else – as everything was covered by insurance.

Billed charges originate with the provider of the care. From there, there are complex schedules that dictate what can be charged, based on the type of insurance. Sometimes, the consumer-paid insurance premiums help cover that cost. Sometimes, our taxes help cover that cost – for Medicare and Medicaid. It’s often the insurance company policies and sometimes State or Federal regulations that ensure that consumers don’t pay those high fees. The proposed Federal No Surprises Act is intended to help clear up some of this confusion. In all cases, the providers of the care also must pay the doctors, nurses, and other members of the care team. Those charges can help providers break even, sometimes make a profit, and sometimes a loss.

Pricing within the industry is confusing – leading to consumer dissatisfaction and mistrust. “Billed charges” can be compared to hotel “rack rates” – no one ever pays them – there is always some sort of discount. In the case of health insurance, all types of insurance (e.g., Employer-based, Individual, Exchange/Marketplace, Medicare, Medicaid) will cover some or all of these costs.

Patients want lower costs. While it varies by type of insurance, both insurance payers and providers of care are constantly looking for ways to lower costs while still recovering their expenses and making sure their overhead is covered.

Healthcare costs and transactions are complicated. Health plans need technology that enables them to be flexible, agile and provides real-time data sharing and transparency with the ability to make changes quickly. Improving operational efficiency, automation, and accuracy, with a system such as HealthRules, are key factors that can help payers and providers reduce administrative expenses and ultimately lower overall healthcare costs.

Health Plan Executives Focused on Aligning IT and the Business

A recent survey of more than 220 health plan executivesconducted by HealthEdge in partnership with independent market research firm Upwaverevealed that lack of alignment between IT and the business is a top challenge facing their organizations today. This is a notable shift from our 2018 executive survey where lack of alignment between IT and the business ranked at the bottom (21.9%).

Health plans are starting to see that they are technology organizations at their core, so there has been an increased interest in recent years to take advantage of technology to meet the business strategies. That’s why we’re seeing an increased focus on aligning IT and the business because the partnership has become even more essential.

In my opinion, IT and business have always needed to be in alignment. The most successful IT professionals have a natural desire to learn and understand the business.  Sometimes, IT professionals resist or do not prioritize learning about the business. Still, throughout the years, the most successful technology professionals and leaders have been those that have the interest in and take the time to understand and become part of the businesses they support.

When asked what steps health plan executives plan to take to achieve their organizational goals, 50.2% of payer executives said make a significant investment in innovation―a substantial increase from 2018 when only 19.2% of executives said they plan to invest in innovation.

Investing in innovation is gaining traction, but organizations must first determine how they define innovation to ensure a worthwhile investment. Innovation can be achieved by launching new and differentiating products and services, or new technologies, or ideally both in partnership.

It’s also essential to have a strategic plan that includes innovation. IT must have a corresponding strategic plan that aligns with the business. Some organizations find strategic plan development too burdensome, or, once developed, they are forgotten and collect dust ‘on the shelf’.  Gartner’s one-page strategy concept starts with telling one of three stories: a stakeholder story, a product story, or a process story and committing that strategy to paper. By keeping the strategy to one-page that includes a clear vision, metrics and initiatives, organizations remove complexity and deliver value, and enable the strategy to adjust more freely as business needs dictate.  Aligning IT and business strategies will enable payers to build the right teams and allocate the right resources for innovation.