Health plans are no strangers to doing “more with less.” Many have been dealing with IT resource scarcity for decades. From skyrocketing health care costs to constant regulatory shakeups, some health plans may have a difficult time maintaining a technology ecosystem that meets requirements, supports customers and partners and enables innovations that move the needle on key business metrics.
But while scarcity is hardly new, this challenge has risen to the forefront as a potentially significant barrier to bringing Individual Coverage Health Reimbursement Arrangements (ICHRA) plans to market.
This article will cover some of the major contributors to IT scarcity, their impact on health plans’ business and a path forward – particularly when it comes to the ICHRA opportunity.
IT Scarcity is Part of a Larger, Complex Problem
IT scarcity tends to result from a simple equation: limited resources plus too many competing priorities. However, this overly simplistic description misses much of the nuance surrounding IT scarcity, and finding a path forward requires a more in-depth understanding of the problem. Consider these 5 common contributors to Health Plan IT scarcity:
1. Technology reliance by partners and customers
Health plans are heavily reliant on brokers and other partners. If brokers, in particular, aren’t armed with strong technology to support customer acquisition and maintenance, it can have a significant impact on revenue and other critical metrics such as retention, late payments and more. In fact, brokers are a key to health plans selling ICHRA plans as employer and member needs are changing.
Excellent technology is required to support this ecosystem, and a "talent vacuum" is occurring because of the very specialized talent required to build these support systems for health plans.
The same is true for customers. If they aren’t provided with a strong and intuitive technology experience — ideally with additional features that differentiate a health plan from its competitors — satisfaction can quickly dwindle, potentially harming retention and limiting customer acquisition.
2. The need to deliver value across the entire quote-to-pay lifecycle
Balancing their own needs against those of customers and partners, health plans may be under pressure to improve and expand services across a wide range of functions. This includes:
Easing the administrative burden of tasks like quoting, enrollment, data exchange and billing for both internal staff and brokers.
Adding value to the consumer experience to support customer acquisition and retention.
However, as we’ll see, health plans may have precious little resources remaining for this work after attending to the essentials. Hiring IT experts from a limited pool of talent to stand up or modify systems to meet these needs is becoming more daunting.
As pressure increases with new products such as ICHRA coming to market, it’s clear why health plans may find themselves turning to technology partners that can provide speed-to-market – and help demonstrate value in the individual shopping experience without influencing a member's decision – to meet the needs of customers.
Explore what health plans need to know about the individual health market.
3. Regulatory, compliance and data protection mandates
The U.S. health care industry is among the most highly regulated in the world, and the environment continuously evolves. Mandates such as cost transparency often include requirements that are complicated and tough to meet. This forces health plans to invest precious IT resources on a regular basis to stay up to date — or risk non-compliance fines. As ICHRA plans come to the forefront, these considerations remain paramount.
4. Difficulty calculating ROI of technology investments
Before investing heavily in technology initiatives, organizations naturally want to know they will provide an adequate ROI. However, health plans may lack the resources, skills or technology needed to identify the areas and initiatives most likely to generate a strong return.
Aside from ROI, calculating the risk of losses due to rapid changes in the individual market may happen when it's too late. Time will tell, but it’s possible the plans may already be taking losses to competitors in the small group space that are converting their customers to individual plans. Scalable and compliant ICHRA offerings will weigh heavily on health plans' ROI for technology moving forward.
Find out why ICHRAs should be on every health plan’s radar.
5. The ongoing burden of maintenance
Even leaving aside regulatory changes, health plan IT systems are complex, and may require constant maintenance to remain functional. This requires an ongoing allocation of resources that further depletes those available for other functions. Maintaining existing "home grown" or partner "patchworked" systems have the potential to become exponentially more costly over time because health plans – or any organization, for that matter – may not be able to afford the talent and technology to navigate their constituents' needs.
Maintenance is particularly painful for organizations that develop key systems in-house. What’s more, maintenance can account for as much as 70 percent of the Total Cost of Ownership (TCO) for internally developed software applications. As systems age, they can increasingly become a financial and operational burden, forcing entities to invest budget and human resources year after year just to keep them operational.
The IT Scarcity “Fall Out”
The immediate effect of resource scarcity is a forced focus on breadth over depth — the need to do many different things often results in incomplete execution of individual functions. This can lead health plans to build systems or features that are “just enough” to satisfy a need, demand or requirement, but which don’t fully deliver for the health plan, its partners or consumers. Is this a strategic approach to success?
In focusing on “must haves,” there’s a deeper sacrifice: innovation. Given its status as a “non-critical” need, innovation is typically the true casualty of IT scarcity. Naturally, this can impact health plans’ ability to improve business outcomes and differentiate from competitors. Notably, a lack of innovation tends to impact the end user experience for partners and consumers. This is a high price to pay in a competitive marketplace.
This is significant, because if partners and consumers have a poor experience (e.g., of the sales, enrollment or billing process) this may eventually lead to serious consequences for the health plan such as reduced revenue and retention, member dissatisfaction, access to care issues, late payments and more. With customer experience increasingly being the deciding factor in consumer healthcare decisions, health plans neglect innovation in this area at their peril.
Fundamentally, the equation is simple: Less innovation may mean a poorer experience for brokers, partners and consumers — and ultimately a negative impact on financial performance.
Why Hasn’t This Been Solved Yet?
The simple answer is that IT resources are scarce, especially when you consider competing priorities within the health plan organization. Health Plans have limited dollars to invest — and no shortage of ideas of things to do, with siloed business units up against similar challenges. Often these siloed solutions are preventing health plans from maximizing the value of their benefits administration and engagement tools.
What’s more, to be able to execute on opportunities and maximize the value of investments at scale, health plans need engaged users, a large and accessible data set and digital adoption.
It’s no wonder that health plan organizations may continually struggle, having tried a variety of routes to address IT scarcity, including:
- Building systems internally
- Pursuing a “best in class” strategy of purchasing multiple (often SaaS) point solutions
- Purchasing a comprehensive platform that fulfills all necessary business functions
Some health plan IT strategies have “bounced around” over time depending on their CIO’s preference, the current regulatory environment and the availability of attractive technologies. However, no matter which approach they take, health plans may be frustrated in their attempts to balance their three primary IT needs: compliance, maintenance and innovation.
When you consider the health insurance marketplace as a whole – how it’s rapidly changing and bringing new opportunities like ICHRAs – health plans may struggle to “go it alone.” Without a strategic partnership with a benefits administration vendor, health plan organizations may not be equipped to put their best foot forward and meet the needs of employers, brokers and members alike.
The Solution: A Fully Integrated Technology – and Strong Service – Experience
Given the need to constantly maintain systems and address changing regulations, building systems internally is a tough choice for today’s health plans. At Benefitfocus, we believe a health benefit platform that supports the full quote-to-pay lifecycle is the ideal solution to help health plans battle IT scarcity.
Our strategic focus is solving big-picture business problems to better connect the benefits experience – so health plan customers can have a greater impact in the marketplace. This starts with helping to enable you to get to market with new solutions, like ICHRA plans, and digitally engage brokers with what they need to help your mutual customers succeed. It also involves providing a level of service excellence based on a deep understanding of your organization and a shared commitment to achieving your goals.
Working with Benefitfocus can help your health plan:
- Manage the entire quote-to-pay lifecycle from a single technology ecosystem that’s continually maintained and updated for innovation, including ICHRA groups
- Simplify administration, drive efficiencies, and enable you to focus on what’s most important
- Create meaningful connections with your members, brokers, and employer groups year-round through an engaging and hyper-personalized experience
- Deliver an outstanding user experience for all your internal staff, partners, and customers
- Harness powerful data-driven insights to help you identify key cost drivers and improve member health outcomes
There’s no denying that some health plans may lack the resources to respond quickly (and competitively) to the ICHRA opportunity. To find out more about how Benefitfocus can help your health plan, book a demo today.
