When pundits talk about disruptive change in an industry, theyre usually referring to the introduction of a new technology or approach that upsets the status quo. The assembly line in manufacturing, Amazon.com in retail and Uber in transportation are three examples that come immediately to mind.
Health insurers might point to the Affordable Care Act (ACA) as the most disruptive change in our industry since the introduction of Medicare. And theres certainly a case to be made, since it brought health insurance to millions of Americans who had never had it before, and is shifting corporate focus from working with group administrators to working with individuals.
Yet as important as the ACA has been, something else is having a much more profound effect on the way health payers run their businesses. And, unlike the ACA, where health payers had an option of whether they wanted to participate or not, this disruptive change affects every organization at a fundamental level. We are talking about the coming of age of the millennials as health insurance consumers.
The natural question to ask is what makes the millennials so special that they need to be called out? After all, generations change roughly every 20 to 25 years, and each has its own sensibilities and challenges that must be accounted for.
One of the differences is the sheer size of this group: there are 75 million of them, which means they have now surpassed the Baby Boomers as the largest generation of Americans. From a business standpoint, that gap will grow as millennials increase their earning power while the Boomers slowly slip into that good night.
But its not just volume. Its also the diversity of the millennials which differentiates them. America is rapidly becoming more diverse, and the makeup of the millennial generation reflects that diversity. They come from widely varied socio-economic and ethnic backgrounds, life experiences and influences. Which means the one-size-fits-most strategic approaches of the past will no longer work on them.
The 20-year age gap between the oldest and youngest members is also significant. The world the oldest of the group was born into in 1980 was very different than the world of 2000 when its youngest members were born. During that time we went from typewriters to fax machines to computers and the Internet as business communication tools. The mobile phones we take practically as a birthright today were first introduced early in this period. By the time younger millennials started carrying mobile phones in their pockets or purses they were probably smartphones.
The result is millennials expect instant, constant communication. All the jokes and memes about millennials having their noses constantly buried in their smartphones, with their thumbs flying, are based in truth. Most say they would give up many of lifes other conveniences (cars, cable TV and so forth) before theyd give up Internet access. And they expect that access to be ubiquitous, incidentally.
Going along with that factor is the reality that millennials view communication as a single process rather than a series of individual modes of connection. Unlike earlier generations, the technologies they use today didnt appear one by one. They were all there and waiting, which means they are very adept at switching between themand expect the technologies to follow suit. They may start a retail purchase on their smartphone, conclude the transaction on a desktop computer, and pick up the item in a store. Their assumption is that the entire process will be seamless.
This is the mindset payers must understand in order to capture a greater share of the millennial market and continue to grow. Gaining this understanding becomes mission-critical when you consider that millennials are just beginning to enter their prime years of starting families, and that they are expected to make up 75% of the workforce by 2025.
Either the passage of the ACA, with its emphasis on value-based care over fees, or the coming of age of the millennials, would have been significantly disruptive on their own. The convergence of the two factors at the same time has created an urgent need for payers to adapt.
Today millions of Americans are purchasing health insurance through the exchanges. That includes those whose employers formerly offered group health plans but now are offering to subsidize the health insurance employees are purchasing themselves in the marketplace. That is a fundamental shift in the way payers go to market, as they must adjust from a business-to-business to business-to-consumer mindset.
The establishment of marketplaces has made it easy for individuals and small businesses to compare standardized coverage options the way they select lawn mowers, big-screen TVs, shoes and thousands of other consumer products. This has placed unprecedented power in the hands of healthcare consumers. It has also made it easy for them to change plans the next year if they are not happy, creating more pressure for payers to develop strategies and employ technologies to improve loyalty and retention. After all, competitors are just one click away.
Todays consumers dont want to have to climb a companys phone tree for more information. They want access to real-time information online. A member who has no problem texting or chatting with a customer service representative for an hour may give up in frustration if he/she is kept holding for 10 minutes. In fact, 35% of millennials in a Desk.com survey said they prefer to chat online for customer service, and not having their preferred form of interaction available would prevent nearly 20% from making a purchase.
Health plans are beginning to wake up to this trend. An intensely loyal member is an advocate who creates the perception of reliability and credibility in the marketplace. Especially in the social media era. And a critical aspect of engaging members is delivering a seamless experience across channels and devices.
Payers must understand that millennials switch channels based on convenience, and they expect the next channel they choose to allow them to start where they left off on the previous channel. They also expect the use of responsive design to ensure that a brands website or portal is optimized no matter what device or screen size they use.
Simply put, payers should be prepared to meet member needs with self-service channels that help members get the right answer quickly. They must provide multiple channels with cross-channel integration, and the service must be consistent, quick, proactive, guided by preferences, available on multiple channels and focused on optimizing the customer experience.
Getting there may be challenging, given the aging core systems many payers continue to use. Keeping up with the demands of millennials and others may require a cloud-based platform integrated into the business process. The total technology platform must go beyond the member-facing channels to also provide integration with enterprise customer relationship management (CRM) platform to deliver a completely seamless experience between self-service portals and live agents. Especially since 22% of millennials in the Desk.com survey said they would stop patronizing a brand after just one bad encounter with customer service.
From an operations perspective, such a platform would facilitate streamlined health plan setup, claims administration and member lifecycle management. All member participation information could be captured in a CRM system that integrates with multiple back-end systems to inform and accelerate the sales process while facilitating loyalty.
Back-office agents could leverage the data captured within the platform to provide suggestions on how to:
- Balance member costs per month with the best possible outcome
- Adjudicate and pay claims quickly and automatically
- Conduct root-cause analysis before a new plan is implemented
- Proactively look for claims-related savings opportunities and initiate recovery
- Make the entire end-to-end process more efficient and accurate
Payers that embrace digital transformation of this magnitude will achieve substantial efficiency improvements in acquiring new members and providing services over the course of the customer lifecycle.
Millennials present a market challenge unlike any health payers have seen before. They think differently than previous generations, and they expect much more from the companies they choose to do business with. Given how they will dominate the purchasing world over the next 50 years, however, they also represent a tremendous opportunity.
Payers must understand what drives millennials at an elemental level and then adjust their offerings, systems, and business practices to create the best consumer experience for them. Those who do will succeed and thrive as those millennials come of ageand take a leadership position in the world.
Mandeep Singh Kwatra is vice president, solutions and capabilities and CX strategy services leader for HGS. Austin Ridgeway is director of sales support and business development for the healthcare vertical at HGS.