Instead, most insurers should be looking for areas where there is headroom for growth, such as adjacent markets for care delivery. Because clinical care delivery accounts for almost 80 cents of every healthcare dollar spent in the U.S., products and services aimed at delivering more effective outcomes at lower costs, solving ambiguous clinical problems, and promoting virtual care delivery are rich areas of new opportunity for health plans. Successful plans will consolidate a broad range of platforms, including smartphones, cloud-based computing, and videoconferencing, to launch care products that deliver greater value. They will also master the art of relationship building and creative collaboration to overcome adversarial provider relationships and consumer mistrust.
Keeping Pace with Change
Insurers will succeed either by meeting multiple needs within their chosen markets or by realizing the full breadth of capabilities in their horizontal niches; over time, they may do both. In any of these scenarios, however, health insurers will have to design value chains that can deliver successive waves of innovation. They must be prepared to quickly generate and launch new products and services, learn, adapt, and repeat the process, if they hope to profitably retain fickle customers who traditionally have not taken a great deal of responsibility for or control over their own care. Clearly, existing players won’t be able to depend on their hard-won brand equity. In other industries, established brand names have meant little when the pace of innovation has accelerated (think of Encyclopedia Britannica, displaced by Wikipedia’s open source model). As Charles Fine’s work on clockspeed ultimately concluded, the only enduring competitive advantage is the ability to continuously assess and build value chains that exploit current opportunities and anticipate future ones.
Reprint No. 00097