Retaining Members in the Digital Era

A strategic approach to solving the retention puzzle for Health Plans!!

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Executive Summary

How do we address this?

We propose an end to end approach and evaluate the People, Process and Technology dimensions across the Organization. The health plan should focus on every customer touch point across the lifecycle, to understand what motivates the customer to leave and how we can address these drivers.

Overview

Two thirds covered under ACA (around 4.5 million) are expected to change plans in 2015 based on a survey1. While most customers are satisfied with their coverage, they would still shop around for better plans.

A 200,000-member plan with a $120 monthly premium and 8 percent annual disenrollment loses $24 million in revenue each year. With such an impact on the top line, health plans are shifting focus to customer retention by implementing retention programs.

Why retention programs fail?

Payers have started investing heavily in analytics solutions and other technologies, but they still face challenges in addressing the key drivers of attrition.The focus has been on processing large data sets and deriving insights, but not on how these insights can be put into action. Most of the existing solutions use analytics to identify customers propensity to churn, when they should be identifying the root of the problem and how these customer can be retained.

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Expect a whopping 4.5 million looking elsewhere!!

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Overview

The healthcare reforms have fundamentally changed the insurance market. With changing healthcare landscape and maturing customer demand, the non-agile will be weeded out of the system with alacrity. Price is slowly becoming less important and the customer today needs a reason to stay. Lack of access, long waiting time, claims management and bad customer experiences will no longer be tolerated and customers are more than willing to change plans (see sidebar for example).With the emergence of exchanges, porting plans have never been easier and even the members who are completely satisfied with their health plans, would shop around for better products and alternatives. In fact 2 in 3 members covered under the ACA are expected to change plans in 2015 based on a survey1.

Highmark recently lost 150,000 members to competitors who were concerned about keeping discounted access to the UPMC's huge network2

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What are payer challenges?

Health plans are struggling and slowly moving towards an inflection point due to numerous unprecedented market challenges:

Falling ProfitabilityWith an annual turnover rate of 40%3, healthcare payers are experiencing unprecedented decrease in profitability. A 200,000-member plan with a $120 monthly premium and 8 percent annual disenrollment loses $24 million in revenue each year, according to The Bayer Corporation Guide

With newer market challenges, Customer Retention is paramount if Payers want to emerge as winners

CompetitionEmerging disruptors like Oscar and HealthLoop are disrupting the conventional market and are competing on customer experience rather than price. With the emergence of exchanges, porting plans have become easier and simpler.

Maturing Customer ExpectationsWith pricing taking a back seat, exceeding customer expectations is the order of the day. With industries like retail and banking way ahead in providing a WOW experience, customers have similar expectations from health plans. Most customers today expect the smooth, fast, secure and individualized services of a bank. Healthcare has no option but to follow.

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How are Health Plans reacting?

Customer retention has always been a concern in every service industry and healthcare is no different. Many health plans have attempted to improve their retention rates but, have met with limited success. Customer retention rates are less than 30% in many instances4.

Customer retention rates are less than 30% in many instances even after health plans have implemented retention programs

Why are Health Plans failing?

Our analysis of payers of different sizes has enabled us to identify the key reasons for the failures of customer retention programs : Payers don’t understand the root

cause of churn Payers have limited understanding

of market flows and customer segmentation to perform effective retention management

Payers are performing marketing and risks functions in silos and there is limited cohesion between the various departments within the organization

Health plans lack analytical capabilities and sometime even the data for effective analysis

Plans use complex analytics programs to process data but are not converting the insights into actions

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Key Drivers of AttritionWe performed a detailed analysis of the healthcare payers across various customer touch points and found that myriad of factors leads to attrition. As discussed earlier, some of the customers leave because of multiple reasons rather than a single reason. Each of the reasons may be insignificant, but multiple small ones often cumulatively frustrate the customer and cause the customer to port to a better plan. Thus, the success of a payer will depend on how effectively the payer can identify the key drivers of attrition.

We have identified the following key drivers of member churn:

Organization Value

Proposition

The organization value propositions do not meet the customer’s

changing needs

Product Design and

Premiums

The factors for increasing the premiums over the years are

opaque

Products are generic and not developed with the consumer in

mind

Ineffective Incentives Incentives are focused on the ‘bottom line’ when it should be

ideally targeted to the customer preferences

Limited Focus on End

Customers

Focus is on the intermediaries and employer groups rather than

the individuals who are the end customers

Customer

Services

Customer’s bad experiences in customer call centers, bill

payments can lead to attrition

Organization Culture

Cost cutting on member satisfaction and bulking up sales does

not help in the long run

No ownership for retention activities

Economic

Outlook

An economic downturn can reduce the affordability of the

products leading to consumers moving to inexpensive plans

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Customer churn is not the result of a onetime event; It is a “snow ball” effect of multiple bad experiences across various touch points

A detailed understanding of the customer journey along with the experience of the customer at each touch point in the journey is key to understand the drivers of attrition. Though the frustrations of the customer may look benign, multiple instances like these lead to an inflection point and the customer ends up porting to a different plan (see Figure 1).

Solving the Retention puzzle – Our Mantra

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Figure 1: John’s journey with a Payer

EnrollManage Benefits

• Why are products so complex?• How do I find the products that

suit my needs?• The products do not cover my

needs? • There are others health plans

offering better products at cheaper price

• Why is it so difficult to find the information that I need?

• How can I update outdated information?

• Why can’t my plan provide better mobile facilities?

• Many time I don’t even get my explanation of benefits. Why can’t I get it online?

• Why is the explanation of benefits so complex?

• Why does not my plan offer me personalized wellness programs and provide me with a coach?

• Why can’t I see my progress towards my wellness goals

• The plan only offers rewards which I’m least interested in

• The doctors recommended by my friends and family are not in the network?

• Why can’t I set up an appointment through my phone?

• None of the specialist providers have any appointment in the near future

• Why do I have to wait so much and press so many buttons to reach an agent?

• Why are the agents so rude and unhelpful?

• Why do I have to repeat my info so many times to different agents to fix one issue?

Visit DoctorClaims Status

Customer Service

Loyalty/ Wellness

Never Again!!

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Customer retention cannot be achieved by working in silos; It takes the focus of the entire organization

In order to implement a successful customer retention program, there should be an organization wide initiative. All the departments interacting with customers at various points of the journey should work together. The initiative should be driven by the executive leadership with a well defined governance structure with representation from across business functions.

Solving the Retention puzzle – Our Mantra

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A WOW Experience

“To WOW, you must differentiate yourself, which means do something a little unconventional and innovative. You must do something that’s above and beyond what’s expected. And whatever you do must have an emotional impact on the receiver.” Tony Hsieh, CEO Zappos 5

Healthcare has always been Business to Business and the focus was on large employer market. The health plans never built a lasting relationships with the end consumers and never really understood what they really wanted. With the rise of consumerism, the focus has shifted to individuals and the healthcare payer market is being disrupted by players like Oscar who rely on digital technologies to embrace the mantra of consumer centricity and focus on user experience, customer service and innovative care options delivering a WOW experience to customer.

Health plans who fail to innovate and focus on customer experience are expected to lose their relevance in the changing healthcare landscape and will become obsolete.

As discussed earlier, to provide a WOW experience, selective focus on the touch points will not suffice. But a focused end to end transformation of all the touch points in the customer journey is the need of the hour (see Figure 3). The change process is complex but will ensure that the plans are fit for future.

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Figure 3: Illustrative WOW Experience

EnrollManage Benefits

• Products designed based on the voice of the customer and customer segments

• Cost effective products for customers and on par with market needs and competitor offerings

• Seamless multi channel enrollment /signup in minutes

• Easy to use portals and call centers, price estimators, free generic drugs, free x visits to doctors

• Multiple options to access benefits – websites, phones, sms

• Multiple channels to check claims status and submit out of network claims through mobile

• Low turnaround time on appeals or claim payments, personalized health timeline

• Easy to understand explanation of benefits

• Personalized and proactive engagements with the members, fitness rewards

• Personalized health coaches• Identify trends in digital and

provide members with smart devices like fitbit

• Networks preferred by the customer

• Low waiting times, quick appointments

• Low out of pocket costs• Support for tele-health and

tele-visits

• Easy to reach customer service and automatic routing to representatives, Low waiting time

• Access through multiple channels and based on customer preference

Visit DoctorClaims Status

Customer Service

Loyalty/ Wellness

WOW !!

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Moving ForwardManaging customer attrition is not a one time silver bullet but is a continuous process requiring focused effort across the organization. There should be ongoing focused efforts across the various touch points in the customer journey to identify what are the customer pain points. The feedback acquired after the customer exits has immense scope for providing insights but is retrospective!! Thus, these processes should be well developed and the feedback loop fully designed and integrated into the organization to rectify issues before hand.

Benchmark your organization to identify areas of improvement

If you can’t identify it, you can’t improve it… We believe that assessing your organization will be the first step in building a strong customer retention program. Benchmarking your existing capabilities with best in class capabilities will help you in understanding how your competitors fare and gain an understanding of what your strengths and weaknesses are.

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We recommend the payers to adopt a three pronged strategy to reduceits customer attrition and to build a strong customer retention program:

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Make customer retention one of the top priorities in the organization

Imbibe a culture of customer retention across the organization. A top down approach using a well defined governance structure would be ideal. To ensure that this vision is sustained, include customer retention metrics in your SLAs and also in the performance evaluation of your employees. And finally ensure that all your employees are empowered to serve the customer in the most effective manner and are not penalized for providing the best customer experience.

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3Invest in analytics and adopt agile processes to refine the model

Invest in the right technology and the right partner to do more than identifying customers who are expected to churn. With analytics moving from predictive to prescriptive models, payers are now more empowered to analyze the data and come up with insights to identify the best action to retain the right customers. It is not enough to focus on data and insights, the highlight should always be on converting these insights into effective actions. From all the insights gained from analytics, perform an end to end transformation on the customer touch points to enhance the customer experience.

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End Notes1 Two-thirds Of Insured Via Obamacare Will Change Plans In 2015 (http://www.radius-global.com/about/news-releases/two-thirds-change-healthcare-plan)

2 Highmark loses subscribers in possible fallout from UPMC fight (http://triblive.com/business/headlines/7707881-74/highmark-company-percent)

3 PWC Experience Radar 2012 - Consumer insights for the US healthcare payer industry (https://www.pwc.com/us/en/advisory/customer-impact/assets/pwc-experience-radar-healthcare-payer.pdf)

4 Curing Customer Churn (http://www.pwc.com/us/en/increasing-it-effectiveness/assets/curing-customer-churn.pdf)

5 Delivering Happiness: A Path to Profits, Passion and Purpose by Tony Hsieh

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About the Authors

Kevin Mathew JohnKevin has completed his post graduate program in management from the Indian School of Business. He has a total experience of 7 years with experience in PMO, business analysis, digital strategy and operational improvement.

https://www.linkedin.com/in/kevinmathewjohn

Bhargava GHBhargava is a Healthcare IT Professional with a rich experience of 16 years in the Payer & PBM domains with a total industry experience of over 18 years. He has extensive experience in supporting large IT applications for Fortune 50 clients in the Payer & PBM space.

https://www.linkedin.com/in/bhargavahukunda