Health Insurers: The Customer Engagement Imperative

Insurers know they are not the villains portrayed in recent political debates. They know they are an integral part of a healthcare delivery system that, for all its flaws, has the profoundly noble goal of improving people’s lives. While just one part of the overall healthcare delivery system, Insurers now have a great opportunity—indeed, a responsibility—to take the lead in reforming healthcare delivery by harnessing market forces to curb costs without sacrificing quality,

To succeed, the health insurance industry must take five proactive steps to better engage with its customers: 1. Define a comprehensive Customer Contact Management Capability including strategy and governance, segmentation and Voice of Customer, experience delivery across channels, and supporting infrastructure 2. Micro-segment customers based on three life cycle dimensions—customer, disease and wellness goals 3. Turn data into insights on opportunities to change behaviors 4. Engage the customer and build trust by tailoring communications—send the appropriate message at the right time through the customer’s preferred channel across the healthcare payer/provider network 5. Offer incentives to reinforce important behaviors

Armed with a sound customer engagement strategy, insurers will not only improve the customer experience, but also engage with their customers and help improve their health—all while improving their own cost structures and profits. While each of the five steps is critical for success, the areas most challenging for insurers are effective micro-segmentation and customer engagement.

Micro-Segment Customers

Insurers have built a goldmine of patient data that provides the answers to their—and the healthcare industry’s—biggest challenges. This data gives insurers a unique opportunity to engage patients in a way that reflects a deep understanding of their medical and experience needs. The key is to micro-segment customers along 3 life cycle dimensions:

• Customer life style and cycle including their demo/psycho/techno-graphics • Disease type and stage • Wellness life cycle goals

By using this segmentation to collect and interpret data, insurers can make recommendations that will enrich their customer relationships and help patients make smarter decisions about medical services. “[T]he best way to lower costs… is to obviate the need for the hospitalization altogether,” Aetna’s chief medical officer, Dr. Lonny Reisman, told The Wall Street Journal in October 2010.

Engage the Customer and Change Behaviors

Insurers can reduce costs by changing customer behaviors, and they can change behaviors by engaging with customers and their network of healthcare providers to build their trust. These efforts will yield improved profitability through increased customer loyalty and reduced administrative costs, as more engagement and trust will make administrative efforts more efficient (for example, by conditioning customers to more frequently use self-service options rather than costly phone representatives).

Health insurers’ dismal track record for providing positive customer experiences makes the task of influencing patient behavior more difficult. In a world where leading companies in all sorts of industries are becoming more customer-centric, health insurers industry rank last in customer experience. Many factors contribute to this ranking, including structural aspects such as the claims process and privacy regulations. Whatever the case, insurers have struggled to create effective, positive customer experiences—which makes it that much harder to build trust.

Customer engagement will not solve everything. Many steps toward future profitability will require collaboration with providers and other parties (for example, addressing misaligned incentives in the provider ecosystem). However, to the degree that these other initiatives will also involve urging customers to change their behaviors, improved customer engagement is a useful prerequisite.

Most insurers already have the data and IT to drive better customer engagement, but they need to improve how they operationalize these capabilities to influence customer behavior. Other industries offer a template: meeting the customer on her terms and turf, through her preferred channels, and providing information that meets her needs and messaging that speaks to her aspirations. Insurers can then go one step further: using that engagement to combat disease.

Such complex goals cannot be achieved piecemeal. Rather, they must be part of a customer contact management (CCM) strategy. The CCM strategy aligns all customer-driven operational and transactional activities to the overall business strategy.

Insurers need to pull three key levers to drive health-improving, cost-lowering behaviors:

Provide appropriate communication. Reaching out to patients outside the office is a task doctors and hospitals have traditionally struggled with. But if the insurer can build a trusted relationship with the patient, it can complement the doctor’s voice through multiple channels and provide continuous feedback on patient performance.

Make it easy to do the right thing. Insurers can leverage their customer relationships and contact management infrastructure to overcome the roadblocks that often make it difficult for customers to do the right thing. For example, they can create emails or text messages prompts for patients to take their medications.

Offer additional incentives. Sometimes, patients need an extra boost to get over the barrier blocking them from healthy behaviors. Why not lower the co-payment or offer a premium discount for good behavior? This approach, when driven by rich analysis of micro-segmented data and buttressed by targeted, reinforcing programs, can improve both patient health and insurer margins.

Data Alone Is No Cure-All

A confluence of forces is requiring bold responses from health insurance companies to enhance their long-term viability while also reducing the overall cost of healthcare. Ultimately, however, merely having the data is no cure-all—the key is in the analysis and use of that data. Insurers can capitalize on their uniquely rich data to microsegment customers, offer appropriate incentives, and develop trusted customer relationships—and use these relationships to influence patients’ life choices about healthcare services.

Mike Hales is a partner in the operations practice. Based in the Chicago office, he can be reached at [email protected]. Joe Reifel is a partner in the financial institutions practice. Based in the Chicago office, he can be reached at [email protected]. Adam Pressman is a principal in the strategic information technology practice. Based in the Chicago office, he can be reached at [email protected]. Paul Schroder is a principal in the pharmaceutical and healthcare practice. Based in the Chicago office, he can be reached at [email protected].