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Augmented Intelligence Certification

Digital is reshaping US health insurance–winners are moving fast

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Although some payers are succeeding with digital, many risk being overtaken by disruptors. A winning formula of concrete steps can help other payers along the path to digital transformation.;

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Digital has begun to reshape health insurance markets. Payers in the United States have been slow to digitize and are still behind other industries in their use of augmented intelligence certification and automation, as well as in customer satisfaction.

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Those payers that invest thoughtfully in human-centric digital transformation are beginning to see value, including material changes in member satisfaction and trust, increased revenue from digital branding and improved sales tools, and double-digit reductions in administrative costs. In addition, the stronger member relationships are often leading to lower medical costs. Nevertheless, many payers are still finding it difficult to establish successful digital programs.

By examining the experiences of successful payers and those still struggling, we have been able to identify both winning approaches and perilous pitfalls. One thing is clear: digital transformation demands a nuanced approach. There are best practices, but no “one-size-fits-all” solution.

Signs of a digital revolution are emerging

In the United States, healthcare accounts for almost 18% of GDP

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Healthcare ranks near the bottom in the McKinsey Industry Digitization Index;
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The healthcare industry has since been catching up, with CEOs and boards calling for greater digital innovation. As a result, investment in digital assets is increasing heavily. Our research indicates that some payers have started to spend almost half of their IT capital budgets on technology innovation; in some cases, this amounts to several hundred million dollars annually. Venture funding in digital health has grown by an average of 32% year-over-year since 2011 and approached $6 billion in 2017.

Although payers can derive immediate and direct value from digital innovation, much of the impetus for them to digitize has come from the threat of industry disruption. The largest technology companies are already making big bets on healthcare (although what they are planning is not always clear). There is also a flourishing ecosystem of smaller services and technology companies that could develop offerings that challenge parts (or all) of the traditional payer value proposition.

We’ve identified several possible future scenarios based on technology-driven disruption (Exhibit 2). Notably, status quo is not among them.

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Potential future healthcare scenarios;
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Digital is increasingly delivering value for some payers

Some payers are already deriving direct benefits from their digital investments, finding value in enhanced customer experience, administrative and medical cost reductions, better member health, and revenue growth (Exhibit 3). Not surprisingly, given the required investments, many of the leading players have been large national payers, which have often partnered with smaller tech companies to make bold moves. (To date, smaller regional payers have generally used a targeted approach to address specific challenges.)

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Typical breakdown of value generated through digital transformation;
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However, a few digital disruptors are starting to make inroads by reimagining healthcare as we know it. (For more details about which payers are “winning” with digital, see the sidebar below.)

Digital leaders recognize the advantages of being a trusted partner for patients as they go through care journeys. Common areas of focus include guiding patients to the right care (e.g., through provider-finder tools or tailored communication at the right time and in the right way) and improving care management (using both simpler member interfaces and advanced analytics).

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These payers are also finding ways to gain market share with digital solutions. Some of them have invested heavily to improve critical member-facing functions, such as enrollment for those purchasing individual insurance. In the small-group segment, some have digitized the sales process so they can empower agents and…

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