Healthtech: delivering value means driving revenue
“I didn’t walk through all that fire just to smell the smoke”
Just because something is hot doesn’t make it valuable
Healthtech is booming, with new start-ups launching every month and tons of venture funding pouring in. Much of the resources and funding seem to focus on enhancing data management, EMR charting and coding, analytics and process improvements in care delivery and payment.
But a focus on process improvement and internal operations runs the risk of ignoring the primary healthcare end user: the consumer who is paying for the care delivered. Healthcare is one of the few businesses in which the industry has always focused on “doing things to the customer” instead of “serving the customer.”
Healthtech has an opportunity to broaden focus to include the consumer experience, connecting it to the available revenue sources that drive value to payers and providers.
The gaps and opportunities
Consumers face multiple “moments of truth” along their healthcare user journey. Their needs vary but are not overly complex to identify. The current state in the market leaves large gaps along that journey, each offering a different healthtech opportunity. These include digital tools helping consumers select an insurance plan with the lowest annual cost, access to insurance benefit data and claims status, and help calculating out-of-pocket costs in real time.
Consumers – not all of whom speak English well - need help selecting the best insurance plan, understanding the associated expenses, and assistance in understanding how their coverage works. Payers need consumers to easily navigate those things because they result in improved patient experience scores (CAHPS) and preventative care and screenings (HEDIS.) Healthtech solutions that connect these two sets of needs will deliver long-term value.
Consumers frequently call customer service lines seeking help accessing care, prescription drugs and explanations regarding expenses. Payers struggle to staff call centers or launch AI telephonic systems that deliver a satisfying consumer experience. These less than optimal experiences drive down CAHPS scores, thereby reducing payer revenue.
Despite having access to a broad set of preventative care services at no or low cost, many consumers don’t access preventative care as recommended. Payers expend material resources to increase utilization of preventative services because those visits result in risk score documentation. That documentation is critical in driving ACA risk adjustment payments and Medicare Advantage capitation rates.
The healthcare financial challenges consumers face has been well documented, with 30-45% of consumers delaying or avoiding care due to out-of-pocket expenses. In some cases, poor understanding of insurance coverage, network providers/ facilities, and low cost care venues contribute to making healthcare financially challenging. Payers and providers all seek to reduce the Medical Loss Ratio (MLR) and direct care to appropriate locations. An easy to use healthtech navigation tool, based on each consumer’s individual insurance coverage, could reduce MLR and help make access to care more affordable for consumers.
Why this matters
Sometimes it is easy to get caught up in the healthtech hype and overlook the underlying healthcare business models. There are certainly new market entrants seeking to build new types of business models, but the majority of incumbents – payers and providers - are working to maximize the currently available revenues and incentives.
Building a hot new healthtech product or offering is great, and many will find a foothold. But ensuring the value proposition considers both consumers’ needs and payer priorities will vastly increase the value created.
Where there is heat there is fire, but there is also smoke. Be sure to focus on the fire.
This article was written by a human being; no chatbots or AI were used. No permissions are granted to AI companies scanning this content to train their algorithms.
Copyright 2itive 2024
2itive is a Portland based consultancy founded by Erik Goodfriend, offering a unique combination of market intelligence, knowledge of healthcare payment systems and creative business strategy insights. Feel free to contact us at info@2itive.com
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