Who’s Afraid Of The Big Bad Disruptors?

InsuranceNewsNet

By Mark Nathan

Amazon came first, announcing in January it was forming a health care venture with Berkshire Hathaway and JPMorgan Chase. Next came Apple, which a month later said it would form a series of health clinics to serve its 47,000 U.S. employees. And then came Google, which has been developing a population-health risk-sharing model and discussing partnerships with health insurers, according to reports.

Incumbent health providers, payers and other players are understandably nervous about the encroachment of three of the world’s most innovative, deep-pocketed and ubiquitous consumer-technology companies. And I believe we’ll see more headlines like these. Facebook has now bubbled up, but perhaps not in the way they would have liked. These companies have the resources and the know-how, and the colossal health care market – this year consumers are expected to drive more than $650 billion in decisions on health insurance alone – is an irresistible target for their disruptive ingenuity.

So it’s entirely reasonable for legacy players to fear a tech-led invasion of health care. Companies such as Amazon, Facebook and Google have mastered the art of collecting and monetizing vast amounts of consumer data. They get that data by delivering an inviting, valuable consumer experience – for free – that is custom-tailored for each user and backed up by the most advanced algorithms and artificial intelligence this side of the National Security Agency. With projects such as Google’s Verily, the potential exists to combine consumer information with the health care delivery system in a way that creates value on all sides.

But in spite of all that, there’s no need for anybody in the health care business to panic. Because although the Amazons and Googles of the world can and very well might shake up the health market, legacy companies still have significant advantages. They don’t need to transform into Amazon or Google to stay relevant and competitive. They simply need to evolve, and learn to take full advantage of their greatest asset: data.

The Trust Gap

It’s important to recognize that “free” is a misleading term for the bargain consumers get from most internet companies. As users buy products, search for information and exchange vacation pictures with their friends, these “free” platforms are tracking their behavior, analyzing it and reselling it to advertisers or using it to send targeted pitches for their next purchase. They are making money by making the customer experience so easy and rewarding that users flock to them, the pace of commerce accelerates, costs come down and profits rise.

The most successful internet business models are built on trust. Companies such as Google and Facebook have made billions of dollars on the mountains of data we’ve given them about our lives and behaviors – because we trust them to use it to create a user experience that offers us something of value. That value can be faster access to the information we’re looking for, or advertisements that lead us to exactly the product we’re in the market for.

But now that trust is eroding. News that Cambridge Analytica used data it lifted from Facebook to manipulate voters has forced a broad public conversation about whether we can or should trust these companies with all of our data. Facebook’s health initiative has been put on hold with inevitable questions circulating around the idea of trust.

This creates an immense, immediate opportunity for the health incumbents. In fact, I believe that when it comes to helping Americans manage their health, and their health expenses, the incumbent providers have a better opportunity to build trust than the technology companies do. This opportunity existed before Facebook’s Cambridge Analytica fiasco, but that news cycle, which isn’t going away any time soon, gives the incumbents an even better shot at winning the battle for consumer trust in health care.

Just look at health insurers. They have their own trust issues with consumers, of course. Historically, they haven’t been adept at building trust with their customers. But they also have robust systems and decades of experience managing state and federal regulations that protect the privacy of health care information. Insurers have data on the costs of every imaginable health treatment, procedure and visit down to the penny.

Their data also contains all of our medical histories.

That’s a data trove that Amazon, Google and Facebook can only dream about – and that they’re not going to get their hands on easily. So for health insurers, the task is to use that data to deliver value to their users who consume health care and need to interact with the system every day. Health insurers need to mine that data for insights that help people manage their health.

Health insurers must guide consumers to the most cost-effective health measures and medical treatments as seamlessly as Amazon Prime serves up suggestions for bedspreads to match the sheets you just bought. Search and comparison tools must be intuitive and comprehensive; you can’t build trust with consumers if they think attractive options are being withheld, or if they abandon your website or mobile app after a few minutes because they can’t find what they need. And everything must be delivered in terms the average user can understand, free of jargon and acronyms that may have meaning for health care professionals but leave consumers baffled and frustrated.

There are big opportunities for companies such as Amazon and Google to rationalize parts of the health care industry, especially by cutting the fat out of drug distribution and benefits administration. That’s probably going to happen no matter what the existing players do. But capturing the value inherent in hundreds of millions of individual health care consumers is still very much within the grasp of the incumbents. They just have to focus on delivering more value back to those consumers than the “free” internet services can ever provide.

Mark Nathan is CEO of Zipari. Mark may be contacted at [email protected].