I had been anxiously awaiting the Supreme Court of the United States (SCOTUS) ruling on the legitimacy of federal health subsidies under the Affordable Care Act (ACA). Regardless of the decision, we at Pega were ready to spring into action to assist healthcare payers and state governments with handling the new normal, including the possibility of standing up state marketplaces and establishing connectivity for payers to share product and premium information (all to successfully enroll and cover impacted U.S. citizens).
Delivered on June 25th, the SCOTUS decision appeared to signal simply “business as usual”. Indeed, most industry pundits said there was little or no impact on healthcare payers and early commentary generally focused on longer-term issues like what might happen to risk pools and rate setting. In fact, the impact of the SCOTUS decision is far more immediate. It heralds a steeper trajectory for the on-going reconfiguration of the U.S. healthcare landscape.
Earlier in June, the rumor mill overflowed with speculation about possible “mega deals” in the healthcare payer space, leading the Wall Street Journal to compare the situation to Game of Thrones (GOT). In this real-life drama, healthcare companies are pursuing acquisition targets as a means to increase market share and market power – deals that would help them negotiate better hospital discounts and contracts, while also lowering costs through improved efficiency. The SCOTUS decision seemingly triggered new developments in the healthcare edition of GOT as two acquisitions – Health Net by Centene and Humana by Aetna – were officially announced just days after the ruling.
Coincidence? I don’t think so. In upholding the status quo, the SCOTUS decision has relieved the healthcare industry of having to spend resources and time to build new processes, integrations, and materials to enroll and serve the same members they currently serve today. True, many healthcare organizations have begun to invest in technology that supports the accelerated rate of change and level of uncertainty that exists in our disrupted industry, and they can now more easily handle new requirements and market events when they arise. But not having to re-architect the sales process for federal exchange consumers means that healthcare payers now have breathing room to focus on their M&A activities.
Still, just buying market share is not enough to succeed. Healthcare payers need to create value and differentiate their brands so they can actually retain members. This means getting to market quickly with innovative products, helping members find the right coverage throughout their lives, coordinating personalized service across all front-office activities (sales, service and care management) and engaging members in managing and improving their own health. Dr. Mark Boxer, Cigna's executive vice president and global CIO, describes it as meeting the new healthcare customers “where they are” which in today’s digital world means smartphones, smart devices and social media.
My own network is abuzz with commentary about the impact of the recently announced acquisitions and the possibility of more to come. McKinsey & Company predicted this rise in M&A activity a year ago in their article on healthcare disruption. They provided valuable insights by comparing our current disruption to those experienced in other market sectors, notably financial services and communications. There are also lessons to be learned by looking at Game of Thrones. Though the ending has not yet been written, it is clear that George R.R. Martin’s kingdoms will ultimately need to unite to fight the greater enemy. Similarly, our healthcare giants – healthcare payers, hospitals, physicians and policy makers – will eventually need to work together as one to achieve the triple aim of improving the patient experience of care (including quality and satisfaction), improving the health of populations, and reducing the per capita cost of health care.
There’s something to learn about health from GOT as well. The show has taught us that death is not permanent. Healthcare organizations must be wary of those who seem small, weak or motionless. Because when fortified by differentiating capabilities, underdogs can roar back into action and take their rivals by surprise. In GOT, death-defiance comes from many things – bloodlines, gods, magic. For the healthcare industry, technology is the powerful differentiator, a point stressed by Cigna’s Dr. Boxer who, in keynoting at PegaWORLD 2015, challenged the room of more than 3,000 attendees to fulfill their obligation to “use available technology and data to drive the frontier of the healthcare experience forward.” Over 50 healthcare companies, many of which are Pega customers, were in the audience. It kind of makes you wonder if Pega, under the banner of the flying horse, can be the secret winged weapon for healthcare’s victory the way that dragons are sure to play a key role in defeating the White Walkers in the GOT finale?
Disclosure: Pega customers are mentioned in this post.
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