Have you heard? Tech giants are disrupting healthcare, and if they don’t, agile startups will. Incumbents everywhere are doomed.
This narrative is pervasive, but it doesn’t mean it’s true. Harvard Business Review’s recent series on adapting to digital disruption should give you the hope you are looking for. The opening article, How Incumbents Survive and Thrive, reminds us that while the “internet revolution” started over a quarter-century ago (anyone else feel old?), 93% of the Fortune 500 from 1995 are still in business, and 40% are still in the top 500. While the winds of change are indeed blowing, incumbents are not destined to a future that is full of doom and gloom.
The next article in the series, The Strategic Advantage of Incumbency, flips the perception that company age and size are a vulnerability on its head. Age and size can also be a competitive advantage, enabling “market power, trusted relationships, and deep insights.” Incumbents can “systematically eliminate bad complexity and effectively increase good complexity – often by approaching a wide set of customer needs in ways that smaller competitors can’t replicate.” Several examples of success are cited, including John Deere, who used their large installed customer base and long-standing reputation to modernize their products, help their customers thrive, and push transformation in the agricultural industry.
John Deere is also highlighted in our recent Payer to Leader guide as a shining example of how incumbents can double down on building data and technology backbones that capture new customer insights to fuel product and service innovation. John Deere is more than 183 years old – If this old dog can do it, so can even the oldest incumbent health plans, most of whom are only about half Deere’s age.
Incumbent health plans have a unique view into the patient care journey, positioned to lead change, rather than be disrupted by it. Health plans are the only entity in the healthcare value chain that sees (most) everything a patient does as they intake claims for nearly every health care service. They know when their members see primary care physicians, when drugs are prescribed, when lab work is done, when they see a specialist, when they are admitted to a hospital, and more. While the information may not always be timely, no other player in the healthcare ecosystem comes even close to having this view.
Tech giants may be on the hunt to stitch a view like this together, but incumbent health plans can still win. They need to re-focus their digital transformation visions, not on the latest flavors of cost reduction or even member experience enhancement, but instead on creating the technology and data backbone to complete the full view of member care journeys. This full, timely view will allow health plans to understand member needs, identify care gaps, and uncover opportunities for new products that may be otherwise missed. They will position themselves at the center of the healthcare landscape where they can effectively lead the change through innovation. In their 2019 payer perspective on digital health ecosystems, McKinsey states that health insurance providers “need to integrate with other partners in the market to enable seamless customer journeys, actively support data flows as far as possible, and enable new use cases made possible by bringing previously disparate data sources together.”
Such a radical vision reset will admittedly be a giant leap for many health plans. The health insurance industry is incredibly risk-averse, and this isn’t surprising as it is literally a business of risk avoidance. But a radical reset may actually be the safest move here. Health plans that continue to bypass opportunities to take a real gamble on innovation will find themselves in the risky position of remaining stagnant in an industry that is indeed ripe for rapid disruption. Tech giants, who are so well versed in understanding and meeting customer unmet needs with instant, frictionless experiences, can and will pounce.