Resnick Unplugged

What to Watch in 2010: Reform. Medicare. Strategy.

I started out 2009 saying political change, economic volatility and competitive rivalry will challenge every stakeholder—customers, employees, business leadership, and investors. As the year closes out, the health care industry remains preoccupied with health reform – what’s the outcome going to look like, who are the big winner and losers, and what can be done now to prepare for a reformed marketplace.

Going into 2010, my advice is to start early evaluating and planning for new opportunities, and focus on designing strategies to protect core lines of business against threats that lie on the horizon. The following provides a few background resources to help guide strategies around health reform, Medicare and strategic trends.

HEALTH CARE REFORM
The country’s health care system will see sweeping change in 2010: over $750 billion in new expenditures and possibly 30 million uninsured individuals set to receive health coverage. The impact will be huge, affecting every citizen, every provider and every health plan: insurance exchanges, Medicaid expansion, Medicare payment adjustments, individual and employer mandates, increased taxes, and far-reaching overhaul of traditional risk management rules.

Now is the time to for health care entities to prepare. Don’t wait. Business assumptions and operating models need to adapt, quickly. Winners will anticipate change and react quickly in a reformed health care marketplace.

One place to start is evaluating the House and Senate health care reform proposals that will guide Conference Committee negotiations prior to sending legislation to the President. A comprehensive review is Kaiser Family Foundation’s Side-by-Side Comparison.

For a more specific look at health care reform’s affect on Medicare plans, Gorman Health Group’s Executive Briefing provides an analysis on reform’s Impact on Medicare Advantage and Part D.

MEDICARE
For consumers, the Medicare landscape is a complex jumble of product and delivery options. Finding the balance between financial and medical choice makes Medicare confusing, if not intimidating for many seniors. After receiving their copy of “Medicare & You” and searching medicare.gov, seniors start receiving dozens and dozens of heath plan solicitations.

From Medicare Advantage to Prescription Drug Plans to Medigap, making an informed choice about what plan best meets a senior’s needs is a very personal decision.  This recent article in the Wall Street Journal titled Medicare Maze looks at resources available to seniors as well as helpful shopping hints.

The flip side is the challenge faced by health plans: educate seniors, communicate value, abide by massive regulatory requirements, and break out of the sea of sameness that characterizes the Medicare competitive landscape. For Medicare plan sponsors competing for the 3 million seniors turning 65-years old, and those seniors seeking to switch from their current plan, one skill becomes more important than ever–lead generation. Execution must be based on data, laser-focused, and grounded in the core principles of direct response marketing. This article, 4 Steps To Generating Quality Medicare Leads discusses the essential ingredients of high-performance lead generation.

STRATEGIC TRENDS
Health care reform is front-and-center on every health care company’s strategic radar screen. But, waiting in the wings are many other important trends such as medical home, cloud computing platforms, socialnomics, accountable care organizations, comparative effectiveness indicators, and customer transparency.

In light of the massive change that lies ahead, a robust strategic planning process is key to sustainability. Amidst marketplace transmogrification business leaders must be prepared to identify and capture opportunity, and have the capacity to absorb change, manage through obstacles and build on their company’s advantages.

Strategic planning calls for analytical thinking and objective decision-making that continuously works to improve corporate vision and strengthen brand. Management needs answers to tough, introspective questions. A sample of how this process can be structured at the most senior levels in an organization is outlined in Strategic Assessment.

Monitoring mega-trends to plan your strategic future can’t get postponed either. What are the hot consumer trends? Who’s Wall Street tracking…and why? How are innovators positioning themselves?

This coming year promises to be as challenging as any other that the health care industry has seen. Monitoring, analyzing and interpreting trends enables smart executives to predict market change, clarify strategic vision and capture new opportunity. It puts today’s decisions in tomorrow’s context.

One resource, Trendwatching.com, provides research to help companies shape their corporate vision. To both inspire innovation and refine customer sensitivity, their year-end review indentifies 10 Crucial Consumer Trends For 2010.

Medicare LifeTime Value: Reaping Benefits From Member Retention

Member-centric Medicare Advantage plans have loyal, trusting customers. It’s not easy to steal a loyal member. More importantly, loyalty equals customer LifeTime Value which translates into stable membership and sustained profitability.

In the Medicare market, competitive rivalry is at an all-time high, with well-orchestrated “switcher” campaigns targeting YOUR members. And, at a time when beneficiaries are seeing big changes in benefits and rates, plans seeing even the slightest uptick in voluntary disenrollment are also feeling the threat to long-term profitability.

Retaining members by creating loyal, satisfied customers has never been more important; particularly when acquiring new members is as much as 5-times the cost of keeping existing ones. By reducing disenrollment just 1% a Medicare Advantage plan can realize millions of dollars in additional revenue and acquisition cost savings.

It’s time to step back and ask some tough questions:

• Has your disenrollment rate been creeping upward?
• Which your customers are unhappy…and why?
• What’s your “post-sale” customer action plan? 
• Is your messaging affirming a member’s purchase decision?
• What’s the “right” mix of mail, email and telephone communication?
• What’s customer satisfaction questions are you asking? 

Successful member retention takes proactive, personal customer service built on an attitude of MEMBERCENTRICITY. Improving customer loyalty is one of the least expensive, most impactful ways to protect membership and improve margins. Successful retention programs are based on three core principles:

1. Data Driven The more you know about your customers, who’s at risk and what’s important to them, the more members you will retain. Understanding your customer demographic and psychographic indicators helps build loyalty.
2. Continuous Interaction Frequent, personalized member outreach has huge payoff by reinforcing plan value and reaffirming a consumer’s purchase— from welcome calls to an array of “after-sale sale” communications.
3. Meaningful Messaging Create a dialogue with customers…not a monologue. Seniors are looking for guidance and interaction that’s meaningful to their situation throughout their membership lifecycle—part customer service, part sales, and part senior advocacy.

Across America, consumers have become much less forgiving of bad service. In a heartbeat, they will just take their wallet and loyalty somewhere else. A member-centric Medicare Advantage experience involves every interaction with a plan’s members―every telephone call, every email exchange, and every written communication.

Make sure your plan embraces a high-touch, high-results philosophy. Retention is the ultimate measure of success in Medicare Advantage. Your payoff will come in member loyalty, improved profitability and a sustainable competitive advantage.

What's the BUZZ?

While all eyes are on economic recovery, health reform, and a year-end push for growth, it’s important to step back and look at what’s influencing market trends. This is particularly timely, as companies enter planning and budget season. Following looks at ten trends creating buzz in health care, technology and strategy circles.

Medical Home is an approach to providing comprehensive primary care with a “whole person” orientation. A personal physician is responsible for coordinating a patient’s healthcare needs across all components of the patient’s healthcare community with a vision of care for all stages of life, acute and chronic, wellness and prevention, and end-of-life.

Accountable Care Organizations are a group of providers held responsible for quality and cost of health care for a population of beneficiaries. An ACO would be a combination of one or more hospitals, primary care physicians and specialists, accountable for total spending and quality of care for patients served.

Socialnomics is the ability of social media to generate exponential returns for individuals and businesses. For business the payoff is leads, sales, brand awareness, customer service. For people, the returns can be social and professional connections, receiving incoming product and service information from friends, and engaging in two-way dialogues with companies.

Transparency is now the primary method consumers make decisions about whether they will buy from you or from someone else…reviewing is the new advertising. No direct-to-consumer business is immune to the transparency of peer-to-peer reviews. In a choice-overload marketplace, this is the most trusted method for buyers to research, compare and scrutinize a purchase based on opinions and recommendations (good and bad) about quality, price, convenience and customer service.

Cloud computing is the latest super-hyped concept in information technology referring to a style of computing in which IT resources are provided as a hosted service over the Internet. Users do not have to have expertise in or control over the technology infrastructure that lives in the "clouds" that supports them. A cloud service has three distinct characteristics: it is sold on demand, it is elastic (users can have as much or as little of a service as they want), and it’s fully managed by the provider.

Mobile technology is a combination of hardware, operating systems, networking and software that support the efficient, wireless transfer of and access to information. From smart phone Web applications to SMS texting to mobile marketing and commerce trends, penetration of information on-the-go is expected to explode. The health sector is expected to be a leader in integrating mobile technology into its processes, both administrative and, clinical management and monitoring.

Crowdsourcing is gathering and using data from a wide array of sources to solve problems or create meaningful, actionable information. It calls on (or challenges) a large, yet targeted group of people to perform a task such as develop a new technology, user-centered Web design, algorithm solutions, or analyze large amounts of data. It leverages mass collaboration or the “wisdom of crowds” to achieve business or social action objectives.

Personal branding is the process whereby people and their careers are marked as brands. As compared to traditional self-improvement trends, personal branding suggests that success comes from self-packaging. It creates an asset that pertains to the individual, from appearance to knowledge. Ultimately the objective is to establish an indelible impression that is uniquely distinguishable.

Reverse Mentoring is the coaching of senior staff by younger people in the organization in areas such as information technology, social networking and mobile communications. By flipping the traditional mentoring concept to start sharing knowledge upward, there’s a shift in organizational power dynamics, recognizing what a younger, more tech-savvy generation of workers have to offer. And, it’s an effective tool for preventing “fogeyism”, the adherence to old-fashioned ideas and intolerance of change.

Minipreneurs represent the vast army of control-driven, innovative individuals turning to self-employment, small business development and entrepreneurship. With job losses high and traditional job options limited, many will turn to “being your own boss” business opportunities – personal, Web and micro ventures, freelancers, franchises, eBay traders and advertising-sponsored bloggers. Gen Y will be more entrepreneurial than past generations and, baby boomers will stay in the workforce…especially given the recent blow delivered to retirement savings.

--------------------------------

Plus, for everyone trying to stay current with the national health reform debate, here’s a quick glossary to new terms and lingo…

Bending the Curve Slowing the unsustainable growth rate of healthcare spending.

Blue Dogs Coalition of moderate/conservative Democrats with centrist economic positions.

Comparative Effectiveness Studies to assess value of treatments, medications, and devices.

Co-op Private, nonprofit health organizations to compete with private insurance companies.

Crowd Out Reduction in private insurance caused by expansion of taxpayer coverage.

Exchange Government-organized market for consumers to shop among competing plans.

Individual Mandate Requiring people to purchase health insurance or pay a penalty.

Medically Disenfranchised Population who have inadequate access to primary care.

Pay or Play Requiring employers to provide health insurance or pay a penalty.

Public Option Government-run health plan to compete with private insurers.

Rationing Allocation of scarce medical services to select patients.

Reconciliation Senate procedure to enact changes by simple majority.

Socialized Medicine Government employs providers, owns/operates health care facilities.

Medicare Survival Guide: Value Chain Analysis

Many moons ago (1985 to be exact) Michael Porter’s bestselling book, Competitive Advantage: Creating and Sustaining Superior Performance, introduced the concept of value chain analysis - the chain of activities within an organization that each adds value to the final product or service. Fast-forward to 2009. Never has the value chain been more important to a Medicare plan than today.

 

Regulatory pressure, competitive positioning, shifting consumer priorities, and sustainable profitable growth make a successful Medicare Advantage plan a dicey venture these days. In a recent posting, “Strategic Stimulus: Setting-Up For Opportunity,” I encouraged companies to take an introspective look at their strategic vision and tactical approach to the markets they serve. 

 

This time, I’m advocating a similar “self assessment” for Medicare plans plotting a course for the future. Six areas of focus deserve attention —

Following is a mini-self review for a Medicare plan’s
value chain:

 

1. Regulatory Compliance – Tracking, managing and reporting on the never-ending stream of CMS rules and regulations has never been easy for Medicare contractors. Costs associated with a Corrective Action Plan or marketing suspension are extensive in terms of financial penalties, brand deterioration, and staff distraction. Most recently, CMS has raised the bar with a set of reporting requirements for Parts C and D that incorporates hundreds of new, complex data points.

- Does your plan have a real-time mechanism able to provide managers a “dashboard” view of critical compliance reporting across key operations or, does your compliance officer have to go “hunting and gathering” each month like a blind squirrel hunting for nuts?

- Is your plan able to withstand the scrutiny of a CMS audit (or even a mock CMS audit) in areas such as routine documentation, policies & procedures, appeals & grievances, and fraud/waste/abuse?

 

2. Revenue Management – Medicare Advantage payment rates are dead center in the Obama administration’s target for cost reduction—within the next five years MA and FFS will be on a level playing field. With the pressure of shrinking payment rates survival depends on aggressive revenue management and flawless enrollment operations.

- Does your plan have expert tools in-place to make sure you’re maximizing reimbursement through Hierarchical Condition Category (HCC) and Part C/D reconciliations on a timely and up-to-date basis?

- What metrics are used to manage and measure your Plan’s enrollment operations to make them an integrated member management function (vs. fragmented collection of data entry staff)?

3. Medical Management – With 80% of seniors having at least one chronic health condition, the knock on Medicare Advantage has been an inability to demonstrate value of care management and improved beneficiary health outcomes. And now, with reduced reimbursement rates, there is renewed demand on plans to improve medical loss ratios to maintain profitability.

- Is your plan linking its complex and chronic care management efforts to its HCC management?

- Are care management tactics such as personal health assessments, medical home, and evidence-based practice guidelines part of your 2010 medical management plan?

 

4. Customer Service – Competitive rivalry means your customers are another MA plan’s prospects. Customer retention now takes a mindset that combines proactive customer service with continuous “after-sale sale” tactics.

- Is there a formal member retention program to protect your customers from competitor “switcher” campaigns, build long-term, and track retention costs…as carefully as you track acquisition costs?

- Are operations and marketing working together to communicate with customers in a way that blends benefit education with ongoing selling of your plan’s value (i.e., an after-sale sale)?

5. Marketing Mix – Data, Data, Data…it’s at the core of every successful MA plan’s marketing mix. Customer and prospect data mining, modeling and profiling deliver tremendous competitive advantages to MA plans, from diversifying product portfolios to customer segmented messaging to new media strategies.

- Does your plan have ready access to accurate intelligence on your competitors’ MA, MA-PD and PDP plans, including detailed plan-by-plan benefit and enrollment information in your service areas?

- Have you segmented your existing customers and prospects using demographic indicators combined with psychographic profiles such as lifestyle priorities, buying habits, and advertising preferences (including Internet usage)?

 

6. Distribution Capacity – Inappropriate marketing and sales practices are by far the biggest problem for MA plans. And, CMS is taking a hard-line approach – secret shoppers, onerous penalties for non-compliance, shutting down sales, and issuance of a glut of new rules. At the same time, organic membership growth gets tougher and tougher. The ability for a plan to deploy multiple distribution channels is separating winners from losers.

- Are your field sales agents (in-house and outside brokers) fully trained, credentialed, certified, and monitored to make absolutely certain you’re limiting exposure to CMS marketing and sales rule violations?

- Have you moved away from a single source distribution strategy to maximize a multi-outlet sales approach: complementary field agent channels, telesales and Web?

 

This self review is a quick start to figuring out if your plan is where it needs to be in today’s tumultuous Medicare marketplace. If answers are hard to come by or, if there’s little internal agreement, it’s an important sign—don’t wait. Your plan needs a deeper dive into those areas that are coming up short. Organize a dedicated effort to attack problem areas, utilize outside experts well-versed in the “ins & outs” of Medicare Advantage, and take corrective action. Most importantly, do it sooner rather than later.

Medical Home: Consumerism Delivered

Consumer Directed Healthcare can be defined as health benefit plans that put consumers and their providers at the center of health care decision-making, giving them greater discretion and power over benefit dollars and medical care choices. These plans often include increased cost-sharing wrapped around an HSA, decision support tools to evaluate choices, “health coaches” to encourage care management, and incentives to promote healthy lifestyles. Rather than shielding consumers, CDH plans engage them directly.

CDH is based on “patient centeredness” which, as defined by the Institute of Medicine, refers to health care that establishes a partnership among practitioners, patients and their families to ensure that decisions respect patients’ wants, needs and preferences; and ensure they have access to education and support to make decisions and participate in their own care.

Consumer Directed Healthcare and patient centeredness has given rise to the next “hot trend” in healthcare – the medical home. A medical home is not a house, clinic or hospital, but rather an approach to providing comprehensive primary care. A medical home is defined as primary care that is accessible, continuous, comprehensive, family-centric, compassionate, and culturally effective.

A “whole person” orientation to healthcare delivery is at the core of the medical home. A personal physician is responsible for providing all the patient’s healthcare needs. Care is coordinated across all components of the patient’s healthcare community – hospitals, specialty physicians, pharmacists, social services, home health, nursing homes, and ancillary providers. And, it includes a vision of care for all stages of life, acute and chronic, wellness and prevention, and end-of-life.

The medical home was introduced in 1967 by the American Academy of Pediatrics. Most recently, several professional medical organizations joined the AAP to redefine the basic tenets of the Patient Centered Medical Home:

Personal Relationship: Each patient has an ongoing relationship with a personal physician trained to provide first contact, continuous and comprehensive care.

Team Approach: The personal physician leads a team of individuals at the practice level who collectively take responsibility for the ongoing patient care.

Comprehensive: The personal physician is responsible for providing for all the patient’s health care needs at all stages of life or taking responsibility for appropriately arranging care with other qualified professionals.

Coordination: Care is coordinated and integrated across all domains of the health care system, facilitated by registries, information technology, and health information exchange to assure that patients get the indicated care when and where they want it (see “Personal Health Records: The Hot Consumerism Tool” at http://www.lindsayresnick.com/healthcare_strategy/2008/07/personal-health.html).

Quality and Safety: This includes using electronic medical records and technology to provide decision-support for evidence-based treatments.

Expanded Access: Enhanced access to care available through systems such as open scheduling, expanded hours and new options for communication between patients and  physicians.

Added Value: Payment that appropriately recognizes the added value provided to patients who have a Patient-Centered Medical Home.

The medical home is the next step toward true healthcare consumerism. With 45% of the U. S. population having a chronic medical condition accounting for $3 out of every $4 spent on healthcare, coordinated care delivery supported by a team-oriented medical management plan-of-action is a direction worth pursuing.

To learn more about the medical home, I recommend a White Paper prepared by the Deloitte Center for Health Solutions entitled “The Medical Home: Disruptive Innovation for a New Primary Care Model” (http://www.deloitte.com/dtt/cda/doc/content/us_chs_MedicalHome_w.pdf).

Personal Health Records: The Hot Consumerism Tool

Consumer Directed Healthcare (CDH) is past the tipping point.  Employers, employees, payers and providers have embraced these free market style health benefit plans that put consumers in the center of deciding where, when, and from whom they receive care---the customer now has more skin in the game (see May 2008. Consumer Directed Healthcare: A High Stakes Game; http://www.lindsayresnick.com/healthcare_strategy/2008/05/index.html).

CDH success means changing the way people think about and deal with their healthcare choices. It takes practical decision support tools, credible information and increased connectivity throughout the healthcare system. Now, the newest consumer trend is allowing individuals and families to maintain their own online health records.

Personal Health Records (PHRs) enable consumers to have easy access to their health history and clinical make-up in order to manage benefit and medical decisions. It gives consumers more knowledge and control over their health information. In essence, it creates a smarter, better informed healthcare customer.

PHRs allow an individual to enter and record personal medical information such as medical history, prescriptions, examination results, office visit tracking and, lab and diagnostic test results. Based on PHR functionality, consumers can input or scan images, charts, graphs, and print reports.

The result is a PHR that provides an accurate, up-to-date summary of a person’s health status and medical history. The information is secured online and only accessible by the individual or, medical professionals with approved authorization, at the PHR owner’s discretion. In addition to a standalone, consumer-driven PHR, other models are emerging that take a more integrated approach allowing information to be input through other, secure sources such as physicians, pharmacists, home care and even linked-in claims data.

In a predominately paper-driven medical record world, online PHRs bring the portability and connectivity that make reliable information available, quickly. The result can be lifesaving in emergency situations, help avoid harmful medication interactions, reduce unnecessary tests and properly prepare consumers with the context to ask the “right” questions. Most importantly, PHRs give consumers the control they need to make informed, confident decisions.

Internet-based Personal Health Records are rapidly emerging. In a State of the Union address, the President called for every American to have one in ten years. This year, Microsoft launched HealthVault and, Google Health is testing its own PHR. It is estimated that there are more than 200 PHR products available in the market with a wide range of functionality, level of integration and “cool” features. To put these PHR products in context, here’s a brief video describing one company’s approach – https://www.activehealthphr.net/dtc/DTCSiteTour.aspx.

With consumers well on the way to being the centerpiece in the future of healthcare benefit and medical decision-making, PHRs will continue to grow in popularity and acceptance. A recent Markle Foundation survey shows that almost 80% of the public believes PHRs would provide significant benefits to individuals in managing their health, although many (57%) express concern over privacy and security of their information. PHRs are here to stay. They represent another step in healthcare’s technological movement built around content, community, commerce and connectivity.

Election '08: The Health Care Debate

We’re in an economy where the Dow, NASDAQ and S&P500 are spiraling downward, and unemployment, foreclosures and the price of oil are soaring. More than 48 million Americans are without health insurance. Hospitals are seeing record levels of uncompensated care and bad debt. Health insurer competitive rivalry is compressing margins and health plans are reporting very little membership growth. There’s no doubt that health care is a leading domestic policy issue for the upcoming presidential campaign.

In an already politically divisive landscape, get ready for a sharp debate over the next five months. In order to set the stage, following is a high-level recap of the candidates’ health care positions to date –

Obama
Barack Obama, a Democrat, has served as a Senator from Illinois since 2004. He served in the Illinois State Senate from 1997 to 2004. Obama says:

“We now face an opportunity – and an obligation – to turn the page on the failed politics of yesterday’s health care debates.... My plan begins by covering every American. If you already have health insurance, the only thing that will change for you under this plan is the amount of money you will spend on premiums. That will be less. If you are one of the Americans who don’t have health insurance, you will have it after this plan becomes law. No one will be turned away because of a preexisting condition or illness.”

Obama’s plan has the following features:

Guaranteed Eligibility No American will be turned away from any insurance plan because of illness or pre-existing conditions.

Comprehensive Benefits The benefit package will be similar to that offered through Federal Employees Health Benefits Program (FEHBP), the plan members of Congress have. The plan will cover all essential medical services, including preventive, maternity and mental health care under a plan with affordable premiums, co-pays and deductibles.

National Health Insurance Exchange Provide help to individuals who wish to purchase a private insurance plan by establishing an Exchange to act as a watchdog group. This Exchange will facilitate the reform of the private insurance market by creating rules and standards for participating insurance plans. It will ensure fairness and make individual coverage more accessible.

Employer Contribution Employers that do not offer insurance, or make a meaningful contribution to the cost of coverage for their employees, will be required to contribute a percentage of payroll toward the costs of the national plan.

Subsidies Individuals and families who do not qualify for Medicaid or SCHIP but still need financial assistance will receive an income-related federal subsidy to buy into the new public plan or purchase a private health care plan.

Mandatory Coverage of Children Require all children have health care coverage. The goal is to expand the number of options for young adults to get coverage; including allowing young people up to age 25 to continue coverage through their parents’ plans.

McCain
John McCain, a Republican, has served as a Senator from Arizona since 1986. Previously he served as the Representative from  Arizona's 1st Congressional District.  McCain Says:

“The key to health care reform is to restore control to the patients themselves. We want a system of health care in which everyone can afford and acquire the treatment and preventative care they need. Health care should be available to all and not limited by where you work or how much you make. Families should be in charge of their health care dollars and have more control over care.”

McCain’s plan has the following features:

Make it easier for individuals and families to obtain insurance. An important part of a plan is to use competition to improve the quality of private health insurance with greater variety to match people's needs, lower prices, and portability.

Change the tax code. While still having the option of employer-based coverage, every family will receive a direct refundable tax credit - effectively cash - of $2,500 for individuals and $5,000 for families to offset the cost of insurance. Families will be able to choose the insurance provider that suits them best and the money would be sent directly to the insurance provider.

Making insurance more portable. Give Americans insurance that follows them from job to job. Provide insurance that is still there if they retire early and does not change if they take a few years off to raise the kids.

Expand Health Savings Accounts (HSAs). When families are informed about medical choices, they are more capable of making their own decisions and often decide against unnecessary options. Health Savings Accounts take an important step in the direction of putting families in charge of what they pay for.

Care for the traditionally uninsurable. Make coverage accessible for those without prior group coverage and those with pre-existing conditions who have the most difficulty on the individual market.

Establish guaranteed state run access plans. Develop a state-run model - Guaranteed Access Plan or GAP - to ensure high risk patients have access to health coverage. One approach would establish a nonprofit corporation to contract with insurers to cover patients who have been denied insurance.

To drill-down into the details of each candidate’s health care position, the following Kaiser Family Foundation website provides a side-by-side comparison of each candidate’s health care platform – http://www.health08.org/sidebyside.cfm.

Stay tuned. There will be flip flops, promises and finger-pointing as the candidates jawbone over one of the most pressing issues facing Americans – our health

Consumer Directed Healthcare: A High Stakes Game

Consumer Directed Healthcare (CDH) promotes increased awareness and consciousness about choice, cost and quality of health care. Rather than isolating consumers from the costs of healthcare, CDH plans engage consumers directly. The customer takes the lead in deciding where, when, how and from whom they receive care and use their benefits.

There are many players in the health care consumerism game these days, and they have a lot at stake. So what is it going to take to succeed?

Employers Winning at the CDH game means changing the way people think about health care and their insurance. The ability to educate a diverse employee population and help them navigate CDH benefits is critical. Education starts with easy-to-understand product guidance and is supported with ongoing communication. Missteps in a CDH rollout can derail the most well-intentioned efforts. Plans won’t deliver the long-term premium savings employers are counting on if employees are not prepared.

Employees The consumer’s new responsibility is to deal with their day-to-day health care expenses. Don’t sell consumers short about managing a health care budget and comparison shopping. The blindfold is coming off as CDH plans facilitate confident decisions, easy-to-read plan guides, real-time account tracking, provider price and quality comparisons, wellness incentives and vast libraries of clinical content. Sophisticated, customer-friendly care management support and personal health records add increased consumer independence.

Health Plans Proof-of-concept is going to make or break CDH over the next 18 months. Tough questions from smart CFOs and concerned benefit managers need answers:

• Can CDH deliver sustained savings once the “low hanging fruit” of young and healthy enrollees is harvested?

• Are assumptions around CDH product pricing realistic, given the years of consumer insulation by $20 co-pays and an entitlement mindset?
• Will CDH patients forgo needed medical care when it comes to dipping into their own wallet and increase costs at the back-end?

Brokers As today’s consumers become tomorrow’s payers, brokers need to move from benefit salesperson to consultative financial counselor—integrate health benefit options into long-term asset protection and evaluate the tax implications of HSA plan designs. It takes disciplined training and detailed, yet practical, product presentations to close a CDH sale. Brokers must demonstrate bottom-line value, and show benefit managers and consumers how to transition to a CDH plan.

Providers CDH often means open access to local provider cost and quality information. This changing competitive dynamic market is encouraging physicians and hospitals to demonstrate value and, change their approach to patient management. CDH reinvents the connection between he provider and patient. As doctors and hospitals adapt to CDH rules, they are beginning to understand what’s in it for them—increased loyalty and improved patient satisfaction. Over time, location of medical services, price transparency and care management will further transform medical delivery.

Consumerism will continue to influence employers and their individual health benefit purchasing decisions. We will see an increased emphasis on employee behavior modification, CDH benefit ROI and medical care delivery. Well-crafted CDH introduction strategies and customer communications will increase product uptake. By removing the intimidation and confusion that usually greets healthcare consumers, CDH can achieve educated buy-in and boost consumer confidence in their healthcare decisions. Ultimately however, only a track record of bottom-line financial impact and customer satisfaction will determine winners in this high stakes game.

 

Health 3.0: Meet Your New Customers

"You better start swimmin, or you'll sink like a stone; for the times they are a-changin"

-Bob Dylan

Managed care got us through the ’90s. Then, Consumer Driven Health Plans emerged to engage employees directly by empowering them through new benefit designs to take a decisive role in where, when, and from whom they receive care. Now, in 2008 we’re seeing the evolution of a next generation health care model – Health 3.0.

Are you ready for:

• patients able to store their personal health record in an online “safe deposit box”
• local physicians and hospitals managing integrated care systems designed around inter-generational, multi-site (even global) services
• customers using Internet social networks to collaborate on a cancer treatment vetted by fellow patients, or collaborating with complete strangers on rating physicians in their community
• innovations crisscrossing genomics, proteomics, nanotechnology, cosmeceuticals and nutraceuticals

Health 3.0 is a term coined by Jeff Gruen, MD, Senior Advisor at Revolution Health, one of the leading Health 3.0 companies. It describes the newest wave in health care structural change. Three areas of innovation characterize Health 3.0—information technology grounded in sweeping web-based connectivity, personalized health care delivered in clinically relevant settings, and insurance financing mechanisms embracing consumer-centric business models.

Digital Customers
Consumers have long been using the internet to shop for an array of products, from books and music to TVs and clothing. Over the last few years, consumers routinely turn to the Web to research and buy health insurance products on websites called Tonik, Insurance Store, Vimo and eHealthInsurance.

Over 150 million people used the web last year to gather information and make purchase decisions involving their health care. They’re turning to websites, both commercial and social networking, to manage their medical and financial decisions:

• prepare for doctor’s visits
• investigate diagnoses and treatments
• sign-on to wellness “frequent flyer-type” healthy reward programs
• explore medical tourism care alternatives
• manage Health Savings Account budgeting
• comparison shop for vaccinations, medications and medical equipment
• evaluate and coordinate in-home caregiver options

And if that’s not proof enough, check-out the new buzz words starting to show-up in health care glossaries – googlediagnosing, personal health simulation, cyberchondria, body hacking, biocitizens, boomer future proofing and theragnostics.

The vast wealth of health care intelligence is turning the digital consumer into a new type of customer—one which many organizations are not prepared to serve. Companies are not yet equipped to effectively manage these enlightened and empowered customers. In order to adapt and survive in this changing technological landscape, health companies (insurers and providers alike), need to find ways to maximize web tools, video content and mobile technology to communicate with, and service digital customers.

In a recent article I addressed the marketing and sales challenges of this changing world. One in which the consumer’s healthcare comfort zone is being squeezed and “new media” is quickly becoming status quo - http://www.lindsayresnick.com/Articles/Marketing2008.pdf.

Health 3.0 is the convergence of innovative medical delivery models, a retail-based health insurance purchasing landscape, value-based financing schemes and most importantly, the digital customer—an activated consumer with any time / any place / any device connectivity accessing an almost bottomless information reservoir, with the confidence and savvy to put it to use.

 

 

Medicare's Open Enrollment Big Question: What's In It For Me?

Medicare Open Enrollment’s Big Question: What’s In It For Me?

 
Medicare open enrollment is upon us. Whether first-time buyers or switchers from one plan to another, seniors will be shopping. From regional health plans to national mega-players, competition has never been greater—over 650 plan sponsors competing for enrollments. And, the range of benefit plan options is equally as robust:

•  Medicare Supplement (Medigap)
• Medicare Advantage (MA and MA-PD)
• Prescription Drug Plans (PDP)
• Private Fee For Service (PFFS)
• Medicare Preferred Provider Plans (MPPO)
• Medicare Savings Accounts (MSA)
• Special Needs Plans (SNP)

In a marketplace characterized by intense competition and a wide range of product/price options, it is critical to embrace basic tenets of senior selling. It’s time to sharpen your approach to Medicare marketing by finding a balance between education and selling.

Communicating with Medicare prospects about product features, benefit structure and premiums is crucial. Setting expectations about a Medicare plan’s value and anticipating questions in advance will go a long way toward creating informed, comfortable consumers.

The proper balance between education and selling can help shape a successful Medicare marketing strategy.

Education: Focus on plan features and benefits along with all the rules that go with it; but keep it simple. Medicare collateral or Web content needs to be easy-to-read and informative. Consumer education creates an understanding of a plan’s structure and how it works—basics such as deductible, copays and coinsurance; and complicating features like formularies, plan gaps and benefit extras. And, don’t forget to explain key administrative components such as billing and customer service. It’s a tough balance to achieve—not providing enough information could mean no decision; too much information could result in overload and decision shut down.

Selling: This is where a Medicare plan’s value proposition is communicated and sold. It’s your company’s “why us” and needs to comes through loud and clear—all within a framework of the benefit design you want to promote. Marketing communications need to be persuasive as well as actionable, always driving a prospect into the sales cycle. Most importantly is your ability to answer the big consumer question–what’s in it for me? This may include a range of value-based factors such as premium savings, enhanced benefits, greater freedom of provider choice, comprehensive drug formulary and, your company’s brand value.

Like all direct-to-consumer marketing success, yours will come from connecting with your senior customers logically and emotionally. Integrate senior demographics and psychographics into a marketing and sales strategy. It allows you to understand what’s important to them, what concerns them, and what they want from their health insurance. Market intelligence also helps to know where to find them and how to get their attention (what they read, watch and listen to; what motivates them to respond). Develop customer profiles and use these to target product offerings and match marketing messages. Seniors are not a one size fits all market segment.

Finally, deploying a few indispensable senior communication principles will go a long way toward improving Medicare plan sales. Throw away the jargon and industry acronyms. Use practical explanations, pictures and larger typeface to assure usability and readability…not to mention clickability given rapid adoption of the Internet by seniors. Provide plenty of opportunities to compare plans and display additional sources of information. If its fine print – call it fine print; if there’s a benefit gap, identify it, don’t hide it. Let customers know what’s covered and what’s not. Finally, before you go public, give your communications a test—share your sales presentation, collateral or enrollment materials with seniors, your ultimate buying audience!

Medicare, like most insurance products can be intimidating, frustrating and bureaucratic. There are complex benefits, tricky rules and a lot of options to choose among. Given open enrollment’s condensed timeframe, there’s bound to be confusion. Medicare marketing success hinges on educating seniors, defining value and creating motivated buyers. This is a customer segment that wants to understand, upfront, what they are purchasing, how benefits work, and how your plan fits into their financial and lifestyle situation. And, don’t forget to answer seniors’ number one question—what’s in it for me?