Sick Over Health Care Reform: What’s the Prescription for Insurance Companies?

Originally posted April 2010

Much has already been written and said (often in loud voices and with expletives not deleted – who can forget the “You lie” outburst in the U.S. Senate) about health care reform legislation, but one thing that has gotten very little attention is how insurance companies can most effectively adapt their business and people strategies to meet the new Health Care paradigm. 

With the exciting growth opportunities offered by 32 million potential new customers, health care insurers must quickly size up and seize the moment. But doing so, is not as simple as merely refining their marketing and sales strategies.  The challenges are many and include each of the following considerations:

1) Solidifying Core Care: Health Care companies must ensure that current customers don’t suffer delay if a multitude of new subscribers are brought on board.  Protecting their “base” will be critical to health care insurance companies
2) Expand Offerings: The only way to support many new customers is to expand the network:  network building, network maintenance and network relations are key to adding new doctors, new hospital and new labs to the network
3) Reduce Costs:  And last but not least: To make it profitable, companies must do all the above at lower cost.  Eliminating redundancies and wiping out fraud and waste are critical.

All insurers need to figure out how these changes impact their business model and how they will maximize the opportunities offered by the new health care business paradigm. 

For organizations like BCBS, among other considerations, if they are no longer the “insurer of last resort” (since all carriers must now take all comers) they may lose an important competitive advantage which could certainly have negative implications for their business and business strategy.

Determining the business impact and go forward strategy, although of highest importance, isn’t the only thing that health insurers need to do.  They must also look carefully at their people and rewards strategies to ensure that employees are properly incented, then quickly excise any programs that drive counterproductive behaviors.