Library: The Geneva Association – New care models, how insurers can rise to the challenge of older and sicker societies
January 2022 featured report:
Healthcare is increasingly on the minds of the world’s ageing population. We’re living longer and with chronic illnesses for a greater part of the end of our lifetimes. This means we’re increasingly spending more time in health systems, spending a great deal more on healthcare either individually or as a society.
Golden opportunity
There is an opportunity to improve consumer experience and health outcomes while controlling costs, says this report from Geneva Association.
It suggests that new care models (NCMs) will better coordinate these three elements – they’re to improve consumer experience, health outcomes and control costs – to achieve what it refers to as the “triple aim”. And health and life insurers can adopt NCMs to influence care at all life stages.
The need for these new care models is being driven by three major global trends:
- Disease patterns from lifestyle and ageing are increasing the number of people with multiple co-morbidities and the need for long term care. Some of this is exacerbated by social inequalities.
- Rising costs are creating unsustainably high premiums/plans with high deductibles making healthcare increasingly costly for consumers.
- The public purse cannot pick up the slack. Policymakers are looking increasingly at how the private sector could collaborate with the state.
An apple a day…
NCMs focus on the promotion good health and preventative healthcare. This is done by managing chronic diseases proactively and collaborating across health and social care to deal with multiple co-morbidities in the attempt to keep people in their homes rather than filling up hospitals or residential homes.
While there’s evidence to show that not only can this improves the experience of healthcare and could reduce costs, whether it also improves health outcomes is unclear at the moment, says the report. NCMs can be implemented in many different ways and there’s no consistent way of determining whether their results are positive or even comparable.
So while everyone may agree on what constitutes a good or effective building block of an NCM, the context in which it is implemented and measured is critical to understanding its efficacy.
Insurer, heal thy distribution channel
The report suggests that by becoming a strategic player, insurers will be able to more easily correct “the common misalignments found between financial flows and provider incentives”. By so doing moves them from being just a claims processor to a strategic payer which is able to influence models that reward value rather than volume, and manage care between hospitals which are costly and more (cost-effective) community based settings.
The report identifies five purchasing approaches that it considers to have strengths, weaknesses and considerations to improve health outcomes, consumer attractiveness and encourage rational utilisation while still retaining a controlling costs.
- The traditional approach where insurers procure from a wide range of providers to create a network through multiple contracts.
- Accountable care – a group of multidisciplinary providers shoulder the shared responsibility for a certain population and use different governance and contractual models with payers.
- Fully integrated – The insurer operates under a single governance structure with a global budget.
- Direct to provider – Providers offer a package of services directly to consumers through subscription, bypassing primary insurers.
- Consumer directed payments – Policyholders buy services directly from a personal budget.
Cutting edge practices
The most common reason for implementing NCMs is to improve customer experience, then tackle cost inflation. There are strong indicators that life insurers are moving towards health solutions to address mortality in risk based products and high costs of co-morbidities in long term savings products.
And NCMs align well with service innovation, says the report, expanding the range and scope of service, though it’s too early to see if these innovations – new governance and contracting models or value based payments – are working. However, the report suggests customer experiences are improved and there is a decrease in the need for costly care.
But there has to be something in it for the consumer and provider if they are to engage. It may sound like a good idea, but it’s necessary to balance the consumer preference for choice with service standardisation so that the NCMs can be competitive.
But it is also important to dedicate time to improve the providers’ understanding of the objectives and associated benefits of the NCM.
Better health, but also better insurance
There are some obvious benefits from adopting a NCM. Firstly, it generates data that will help insurers to improve their existing products. The data will also improve risk management and targeting of unserviced parts of the population and diversify away from risk-based products to service-based products.
This opening up of untapped resources is useful, but NCMs are more sophisticated than the current traditional distribution channels allow for, which are too transactional. This could limit the effect of NCMs if insurers are not careful.
For NCMs to become scalable, there are a few key requirements. The regulator must be on board and willing to work with insurers on matters of consumer protection.
Data management remains a live issue and needs to be managed carefully.And the leadership needs to understand that NCMs may take longer to mature but that it’s a long term play. Meanwhile provider management and payment reforms are required so that the desired outcomes are actually achieved.
The report identifies three specific actions:
- Insurers need to enhance the value proposition of NCMs.
- Insurers must become strategic orchestrator of services
- Last, but not least, insurers need to capture the opportunities afforded by the convergence of life and health products and solutions. There has been some success in this area in Asia. But insurers need to plan to know again around health licences, price caps provider and payment reforms. And the local ethical and legal climate before engaging with policyholders and quotes.
Miss it and miss out
Ultimately, say the report’s authors, the COVID 19 pandemic has “amplified and accelerated the risks of chronic diseases”. Of the 40 million people killed annually by chronic disease, 15 million of these are premature. That’s almost a third and presents a huge opportunity for the industry, especially as the pandemic threw into sharp relief the gaps between health and social care systems across the world.
COVID-19 has also provided an opportunity for insurers to experiment and innovate across all sectors, and, the report concludes: “health and life insurance can now come forward with new more joined up solutions to bolster health and financial protection. Societies navigate their way to recovery.”
For more, see the full report.
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