By Angela Riley
With President Obama’s re-election on Tuesday, the Patient Protection & Affordable Care Act (PPACA) looks set to move full steam ahead. And in response, the healthcare sector can now confidently prepare for a series of massive transformations. Perhaps most notably, by January 2014 each state will have set up a Health Insurance Exchange (HIX) – a regulated marketplace in which healthcare insurers will compete head-to-head for consumers and small group members in a way they haven’t done before.
The opportunity is huge. Industry analysts estimate the market for health insurance premiums will rise to $60 billion in 2014, and by 2019 be worth $200 billion. For all the risks presented by the PPACA, a slice of $200 billion may be a seductive goal.
No doubt the super-sharp actuaries behind health insurance companies have been busy reinventing their business models since the PPACA was announced in 2010. But are these companies really ready to face a consumer marketplace? Have they started brand-led transformations that can help them attract new members, maintain current members, and generate positive public perception? Have they figured out how to create a compelling proposition to consumers that shifts their task from ‘selling’ to ‘inviting’?
To be fair, the health insurance companies are no slouches at marketing to members – with sophisticated membership newsletters, plan brochures, direct marketing messages, and a plethora of highly specialized marketing services and advertising agencies to help them. For some time, there’s been talk in the healthcare marketing industry about “building plan awareness”, “educating consumers”, and “creating a new array of touch points.” But this frames the challenge as something they need to ‘do to consumers’, a user-friendly layer to be built on top of their existing platforms.
Instead, this market transformation calls for a greater shift. Health insurers must transform themselves to become consumer-centric through to their core. To get there, they’ll need to be asking themselves some new questions:
– KNOW THE CONSUMER: Do we understand our new consumers – in all their diversity, complexity and individuality? Not just demographically and geographically, but how they think and what motivates them.
– BE SIMPLE & USER-FRIENDLY: Can we build and present our offer in a simple and user-friendly manner, so that a net new consumer, perhaps shopping for health insurance for the first time, can understand what to buy? Think of what Dell did to simplify the purchase of a personal computer - which previously had been a fairly complex, and high-stakes process - making it a simple, user-driven online transaction.
– GO RETAIL: Do we need a new retail-oriented presence that reintroduces our brand and our offer to consumers, particularly in a digital and mobile way? Think of how easy Geico has made it to buy auto insurance online, or Fresh Direct for grocery shopping without going to a store. Or how Geek Squad established a physical presence to sell its services.
– COLLABORATE: What new partners could help us reach our sweet-spot consumer? Maybe the obvious alliances with Geico or All State spring to mind, but what about forming an innovative partnership with a wellness-oriented retailer such as Whole Foods?
On the surface, maybe a health insurance collaboration with Whole Foods is a stretch, but one of the game-changing principles we’ve recognized in many highly successful brands in the 21st Century is what we’ve termed “boundaryless-ness.” Some smart organizations use their brand to focus on what they do well, and then open their arms to partners, customers and outside forces to supercharge ahead of the pack. For example, instead of competing with other retailers, Amazon chose to enable them. Amazon, of course, created an ecosystem of retailers that allows any professional third-party vendor to access billing, marketing, distribution and customer relationship management systems, many of whom are wholly integrated into its fulfillment process and even leasing space in its warehouses. Unusual as this may have sounded initially, Amazon has bucked the downward trend in retail to exceed 50% growth annually.
Sparked by this legislation and driven further by Obama’s continued presence in the White House, the game in the health care sector is most certainly changing. It’s our belief that those organizations that develop the most simple, user-friendly brands, and the most boundaryless partnerships will be the ones that best make the shift from B2B to B2C and capture the consumers they most want to reach.
Angela Riley is a Strategy Director at Wolff Olins New York.
This is an abridged version of a Wolff Olins Whitepaper
Sources: Change the channel, PwC’s Health Research Institute, July 2011; Four Key Findings from Health Reform, PwC, 2011; What Supreme Court ruling could mean for healthcare, Reuters, Nov 2011; Health Insurer WellPoint to buy 1-800 Contacts, Associated Press, June 2012; Healthcare Industry Outlook: If You Liked 2010, You Will Like 2011, The Camden Group, Jan 2011; Health Plans Step Into Retail Operations, Health Leaders Media, Nov 2011; Health, trendwatching.com/premium, June 2011