June 3, 2019
Digital healthcare trends have thus far been a mixed blessing for health plans. While migrating the many communications pieces sent to members from print and snail mail to digital represented a huge cost saving opportunity, the realities of the infrastructure changes needed to support this transformation have slowed the pace of adoption for payers. But members live in an increasingly digital world, and their expectations are driving the conversion. In this white paper, we discuss the hurdles and opportunities as health plans seek to satisfy a digitally native member population and prepare for a member-data powered future.
Digital Makes Paperless Possible
On June 15, 1993, Adobe introduced the Portable Document Format (PDF). In that same year, email became the commonly used term for electronic mail and the first web browser, Mosaic, was launched.
Companies that until that time had relied exclusively on print for formal communications with customers now had options to effortlessly, and cost-effectively, share electronic versions of multi-page documents like brochures and policies with 100% fidelity to the print original.
The era of digital business communications had formally begun.
Business communications have been in the throes of a digital transformation ever since. This revolution has been especially relevant to, and a particular challenge for, the paper-dependent health insurance industry.
From Explanations of Benefits (EOBs) to invoices, from member kits to Annual Notices of Change (ANOC), health plans need to communicate to members with what amounts to reams of paper. With the options made possible by digital technology, reducing the quantity of printed material became a priority for both plans and customers.
According to a November 2016 research report from IDC, more than 40 percent of healthcare organizations reported that they had a paper-reduction initiative in place. Healthcare payment provider, Instamed, found in 2015 that 87% of consumers received a paper medical bill from their providers, while only 24% actually want to use checks to make healthcare payments.
The external pressures to go digital have only increased since then. According to a recent study completed by SAP Center for Business Insight, 400 global C-level executives agreed that,
“…digital transformation is critical to survival and healthcare organizations are in the early stages of this journey.”
Easier Said than Done
The first driver for companies to transition to digital was the promise of cost reduction, and for good reason. Between the direct costs of printing and the postage expense of mailing thousands of multi-page documents annually, the opportunity was potentially huge.
In 2016, IDC predicted that by 2017, paper reduction Initiatives would help companies save over $1.5 billion worldwide on supplies and paper alone.
A Gartner study found that cost optimization was “one of the strongest drivers for creating a strong customer communications strategy. In that sense, digital is helping companies do more with less.”
By 2018, the promise of the cost-saving opportunity had come up against the reality of making large-scale institutional change. Forrester’s Predictions 2019: Transformation goes pragmatic report finds that CEOs and CFOs are “wondering how their company goes from where it currently is to digital nirvana without taking on disruptive operational change.
Forrester predicts in 2019, that “25% of firms will decelerate digital efforts altogether and lose market share.”
Forrester attributes this deceleration to legacy technology and institutional gridlock. Enterprises “have too many decentralized and ungoverned output systems,” and “large-scale strategies such as customer experience and digital transformation are hard and costly and, most importantly, challenge the way leaders run their businesses.”
This lag is particularly acute in healthcare. In a recent survey by Adobe, only seven percent of healthcare and pharmaceutical companies said they had gone digital, compared to 15 percent of companies in other industries. This deficit is shown starkly in this industry comparison chart from Cognizant:
Any internal reluctance among healthcare companies to undertake digital transformation will soon be overwhelmed by a powerful external force: the customer. According to a Forbes’ article, Digital Healthcare Growth Drivers In 2019,
“The customer experience has become the driving force of the digital transformation,” and “the digital transformation of healthcare will see significant growth in the next 12 months fueled by institutional interest in driving down costs and improving patient engagement.”
Move Over, the Customer is Driving
As the health insurance market evolves and consumers have more decision-making power, a health plan’s service reputation becomes an invaluable asset. Forrester Research found that:
in customer experience, health insurers rank 15th out of the 19 categories the research firm tracks.
Given the prevailing customer communication attitude in the industry, this should not come as a surprise.
In an article on customer experience in the insurance industry on cmswire.com, Oliver Börner, principal business solutions manager for global customer intelligence at SAS, states that “More than 90 percent of insurers worldwide do not communicate with their customers even once a year; 20 to 40 percent of their customer base will not receive a single communication all year.” In the same article, Clark Wooten, group vice president of insurance services at Acxiom says,
“Customers expect carriers to deliver a seamless, omnichannel and highly personalized experience but organizational and industry obstacles, including data silos and evolving data privacy policies, create a barrier between these expectations and services delivered.”
The Harvard Business Review has delved into the question of what members are looking for from their health care plans: in a word, it’s digital. “Most health plan members indicated that if a transaction can be done digitally, that’s how they want to do it. Of the 1,600 respondents, 84 percent of them said they prefer to interact digitally with their health insurance payer.”
Millennials, But Not Just Millennials
It is easy to assume that the Millennial and Gen Z cohorts are the driving force in the customer desire for digital options in health plan capabilities and communications. That is true to an extent; Millennial and younger members are known digital and mobile natives.
But a Pew Research Center study found that while “almost all Millennials (97%) say they use the internet, and 28% of them are smartphone-only internet users,” surprisingly, the study also found that, “a similarly high share of Gen Xers (96%) also use the internet, as do 83% of Boomers.”
As the Millennial generation takes center stage—they are expected to comprise as much as 75% of the workforce by 2025, according to the Digital Marketing Resource Center—their expectations and preferences for digital engagement will become the cultural norms. Perhaps even sooner than 2025;
Gartner predicts that, “by 2020, a customer will manage 85% of the relationship with an enterprise without interacting with a human.”
Transitioning Today’s Members
Member communications are the first “bite of the elephant” that some health plans are electing to begin their digital transformation. Rather than wrestle with transforming internal legacy systems and mindsets, health plans are outsourcing this discrete functionality as a first “toe in the water.” Forrester Research predicts for 2019 that,
"digital transformation moves from super-wide enterprise efforts to a pragmatic, surgical portfolio view of digital investments with the goal of making incremental and necessary changes to operations.
Tangible efforts, such as shifting customers to lower-cost digital channels, launching digital products, monetizing data assets, and automating processes to improve margins, will come to the fore.”
Those health plans taking the plunge with digital plan management capabilities are finding that they need to encourage participation. A study by Cognizant found that, “adoption rates are low for the digital services currently offered by health insurers, even for those that respondents rated as very important. At the same time, satisfaction rates were generally high among respondents who used these services.”
In other words, once they try it, they like it. But first they have to try it.
To counter less frequent use, Cognizant advises, health insurers must continually promote and drive members to their digital channels.
“Adoption rates are similar across all age groups when payers offer digital features that members want…and this is even true for mobile, which is often considered a Millennial-oriented device.”
Cognizant’s Voice of the Digital Member Survey identified the digital features members most want:
What the Future Holds
While member communications may be the part of the digital elephant that health plans are tackling first, the rest of the elephant could be described as looming and fast-approaching.
Accenture, in its report, The Uncharted, Redefining the Rules of Healthcare, identified five digital healthcare trends reshaping how organizations care for patients, manage their operations and connect with other industry stakeholders:
Key elements of the digital member communications strategy, customer portals, member data gathering, and personalized communications, will be the building blocks for this next phase in digital healthcare trends.
Health plans that have hesitated to take the plunge thus far could soon find that the industry, and customer expectations, have left them behind.
Forrester advises: “Healthcare organizations inherently lack the internal skills (people, culture, resources) to achieve digital scale on their own. Moving to digital requires a new set of competencies best acquired from those who have already won the right to play. Partner with vendors with strong competencies and technical depth to speed up organizational success in the shift to digital.”