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 / Autumn 2010 / Issue 60(originally published by Booz & Company)


Health Insurance Gets Personal

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It will require a long-term, transformational change effort and an iterative approach to create the models and build the capabilities needed to capture the opportunities and mitigate the risks posed by health reform. Health plans that choose to compete in the retail market should begin the journey today.

The priorities for the coming months are clear: Health plans should define and develop their approach to the new market by undertaking five initiatives.

1. Decide where and how to participate. They should identify the attractive business and consumer segments in which they will compete and begin developing a robust understanding of consumer needs within these segments in order to define the right to win and capabilities required.

2. Audit the existing brand and start building a retail brand. They should conduct an audit to understand their current brand equity, define the brand in the new retail market, and begin creating a retail brand strategy.

3. Select a retail operating model. They should identify the capabilities needed to compete in the new market and decide how to develop them and where in the company to house them.

4. Create a risk management approach for individuals. Health plans should understand what levers are available to identify consumer risk prior to purchase, and assess medical management and network management strategies to manage risk post-purchase.

5. Begin aggressive administrative and medical cost management efforts. Plans will need to operate profitably in lower-price-point environments, while freeing up funding for investments in new capabilities.

Forward-looking insurers are already acting on these initiatives. They know that the new retail era offers valuable opportunities for companies that are prepared to get up close and personal with consumers — and great risk for those that are not.

Reprint No. 10302

Editor's Note: For a further analysis of how the health insurance exchanges mandated by the U.S. Patient Protection and Affordable Care Act are likely to develop over the next few years, see the Booz & Company white paper “The Health Insurance Exchange Dilemma: To Play or Not to Play” (PDF), by Gary Ahlquist, Ashish Kaura, Patricia Andriolo-Bull, and Robert Pottharst.


Author Profiles:

  • Ashish Kaura is a Booz & Company principal based in Chicago. He specializes in the development of growth strategies and new business models in response to market discontinuities, for healthcare and health-services companies.
  • David S. Levy is a New York–based partner with Booz & Company. He serves clients in the life sciences and consumer products industries, primarily on issues of growth and building capabilities to help drive growth.
  • Minoo Javanmardian is a Booz & Company partner who works with global healthcare clients. Based in Chicago, she focuses on strategy, strategy-based transformation, and innovation in healthcare services.
  • Also contributing to this article was Booz & Company Principal Ihor Bilokrynytskyy.
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