There has also been movement on the health-care side. UnitedHealthcare is actively pursuing an integrated offering through acquisition, organic business development, and strategic partnerships. UnitedHealthcare acquired CDHP specialist Definity Health, insurer Golden Rule, and IT solutions provider Claredi to form its Exante Bank subsidiary, and partnered with MasterCard, Discover Card, and credit card processor TSYS. WellPoint recently announced that it was seeking an industrial bank charter to become a custodian and transaction processor for HSAs/HRAs. And the Blue Cross Blue Shield Association just received federal approval to create a bank to administer HSAs/HRAs.
Many other players, however, are sitting out the early stages of the health–wealth convergence — and that’s a mistake. With the retail market still fairly unformed, a measure of restraint is certainly prudent; we estimate that there’s breathing room for the next five years. But the opportunities to capitalize on new business opportunities are growing even now.
For financial-services organizations, HSAs/HRAs and other products offer opportunities for new high-margin income streams; account and service fees; interchange fees; and net interest income from a spectrum of services, including borrowing and risk management. For the institution that offers a competitive individual insurance product, something that more and more consumers will have to buy for themselves, there’s a huge opportunity to further cement retail relationships and lock in customers for life. And in dealing with providers, there’s a particular need for services that address the heightened risks of bad debt and the increased administrative burden that the retail evolution will bring.
For health care, potential lies in new finance-related products and innovative lifelong insurance, supplemental high-deductible gap insurance, and savings products. With health plans offering such similar products and provider networks, the new offerings could be critical differentiators. And as more financial-services and health-care organizations move to partner with one another, a health plan that manages its medical costs and demonstrably improves the health outcomes of its members will be all the more attractive to potential financial-services partners.
Although existing players in financial services and health care don’t need to worry about new entrants with the soup-to-nuts offerings, they will probably need to defend themselves against niche players. We expect to see upstarts carve off high-margin health–wealth businesses, just as they’ve already done in health care. For example, we foresee a role for independent aggregators who assemble packages of products and services tailored to particular consumer segments; eHealthInsurance has already moved in this direction, with a retail portal where consumers can compare and select health-plan coverage and get advice from licensed health insurance agents. Healthways and Matria are positioning themselves as health-care support providers that can improve outcomes and reduce costs.
Getting There from Here
The hybrid industry we envision is still years away. It will develop in tandem with the growth of the retail environment. However, leaders in both industries can and should be asking themselves a series of questions:
Are we going to play in this space, and can we afford not to?
If we are going to play, what strengths can we capitalize on, and where are our gaps?
Will our offerings be comprehensive or specialized?
Given our company’s historical strengths and weaknesses, how are we going to assemble our offerings? Will we join a network? Acquire? Make or buy?
It’s vital to recognize that change is coming and to see its contours. Yet the evolution of the marketplace is already under way, and smart players will
begin forming their health–wealth strategies now, before it’s too late.
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Joni Bessler (email@example.com) is a vice president with Booz Allen Hamilton in San Francisco. She specializes in strategy and operational effectiveness for financial-services and health-care companies.
Susanne Leisy (firstname.lastname@example.org) is a principal in Booz Allen’s San Francisco office. She specializes in strategy development for wealth management and banking clients.
Sanjay Saxena (email@example.com), M.D., is a principal with Booz Allen in San Francisco, focusing on strategy development and transformation for health-care organizations.