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David And Goliath: Smaller Health Plans Can Remain Competitive With The Right Technology

As all health plans have continued the conquest of adding lives to their risk pools, the industry has witnessed vast membership consolidations over the past decade, resulting in a shrinking number of smaller regional plans operating independently.

Looking at the payer industry today, there are only a handful of major players left spread out across the nation. Almost every regional plan is becoming a subsidiary of those larger entities. As these smaller plans are acquired and absorbed into the landscape, there often comes a system consolidation of the core platforms fueling a competitive market for the remaining opportunities that evolve.

The larger the enterprise is, the harder it seems to implement change. That’s one reason why so many larger insurance providers take the minimum viable product (MVP) approach to reinvent themselves because they become stale, stagnant, and are too huge to create meaningful change. A common strategy is to take one of these smaller regional plans and rebrand that smaller plan using the MVP approach.

How can smaller payers continue to compete against larger payers as they continue to grow and add lives? How do they create operational efficiencies and lower PMPM costs?

One obvious way a health plan can gain efficiencies is through technology. However, it should be mentioned we must embrace the culture of change when implementing a new core solution. Often new software solutions can be the adversary to existing states.

Technology is just a tool, after all, so it is really the ability to adopt and master the application that determines the new solution’s success.

From a technology view, once the playing field is leveled, it becomes the savvy users who understand the system advantages; those who can embrace change often determine the outcomes of success or failure. Those that will ensure your organization is not “paving the cow path” and recreating a legacy approach in a modern system nor achieving inefficiency faster.

For additional competitive advantage, if a smaller health plan adopts new technology, should they truly partner with the software vendor for success —they will continue to gain efficiencies, remain competitive, and get further, faster.

Without a direct partnership with our customers, success can be challenging at best.

A great example of that investment or partnership in the effort to increase system adoption is providing end-user training. While initially is crucial, ongoing training is especially critical to build the culture of continual optimization.

As my colleague Wilda Todd wrote, smaller plans with fewer resources to invest in training are not alone! They should lean on their vendors and leverage their knowledge and expertise, not only in training but in all the many aspects of building the ecosystem and total solution.

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