A new game in healthcare value: responsive benefits

Susan Taylor,

Controlling the spiraling cost of healthcare in the U.S. has been a focus of healthcare organizations for more than 30 years. Yet we’re still experiencing cost growth that outsizes the ability of our economy to pay.

Central to the efforts to control costs in the past has been the “professionalization” of healthcare. The problem has been diagnosed variously as: poor adherence to treatment protocol, the “high cost” patient, and lack of clinical best practices. Looking at many cost-containment proposals, they largely have required intervention with additional professional staff to manage resources. While this may contribute to cost reduction, and high-cost patients may be responsible for a somewhat lower percentage of costs, in fact the average consumer has experienced the result of “cost controls” in higher premiums, cost-shares, and perhaps a Fitbit to motivate healthy behavior! Per a recent nationwide survey by the West Health Institute and NORC (University of Chicago), employees on average are now responsible for more than 30% of their healthcare costs. And the response? According to the survey, consumers are skipping necessary care due to cost.

Employers have not ignored the impact of the total cost of healthcare on their employees – and their bottom line.

They are responding with innovations that get employees the care they need at lower cost to everyone; innovations that have the potential of disintermediating care managers. Examples include explicit shared-savings arrangements and reimbursement of travel and expenses for employees who travel to Mexico to fill prescriptions at lower prices, so employees making lower cost choices are financially rewarded. What have employers realized? Healthcare costs are driven by consumer choices – and there are millions of choices happening every day.

To improve cost controls and relationships with employers, shift to responsive benefits.

The incentives of healthcare cost control are misaligned with the every-day consumer healthcare choices that employees are making. If payers are to truly transform the total cost of health and earn the loyalty of employer group health sponsors, they need to partner with employers to design products and benefits that align incentives with consumer needs and engage consumers in decision-making. We call these responsive benefits.

Implementing responsive benefits requires digital technology to: scale through automation, dynamically assemble benefits blending administration and plan of care, create on-demand benefit experiences that create value for end-users, and develop instructions for systems and viewers/users. And they must focus on financial relationship management with consumers. An organization’s responsive benefits, for example, may create on-demand benefit experiences that deliver value for end-users. This requires immediate access to real-time information and the ability to inform ecosystem participants on the right coverage and reward details at time of need. An approach such as this to personalizing benefit plans can serve as an organizational driver to transform the healthcare consumer experience across the healthcare ecosystem.

Consumers experience this kind of personalized responsiveness in consumer value in many other aspects of their lives, such as loyalty programs. The model for mass personalization already exists. Technology and research exist today to create and operationalize these healthcare benefits. With this focus on the “average employee,” there’s a new lever to pull to achieve cost-containment goals and respond to the healthcare cost challenge.

Learn More

  • Discover how the Pega Product Composter System for Healthcare™ helps organizations better manage products and benefits across their entire lifecycle.
  • See how HCSC is transforming its products, plans, and benefits management with Pega.
  • Learn more about the benefits of a modern product catalog.
  • Join us at PegaWorld to learn how the world’s leading organizations are leveraging Pega to personalize customer experiences and accelerate outcomes, including how product modernization is providing enterprise value to the insurance side of Henry Ford Health System, Health Alliance Plan.

Tags

  • Industry: Healthcare
  • Topic: Case Management
  • Topic: Application Development
  • Challenge: Business Agility

About the Author

With more than two decades of experience driving technology improvements in the healthcare industry, Susan Taylor, Pega’s Vice President of payer core administration solutions, helps healthcare organizations plan for and achieve digital transformation to improve operations and health outcomes.