InetSoft Webinar: Savings From Good Customer Analytics

This is the continuation of the transcript of a Webinar hosted by InetSoft on the topic of "Business Intelligence for Healthcare Insurers." The speaker is Mark Flaherty, CMO at InetSoft.

So what is the size of the opportunity for savings from good customer analytics? For let’s say a moderate-sized health insurance company, you can be talking $6 billion to $10 billion in medical cost that they are paying out. So the ability to apply analytics to better understand how they can help improve the wellness of their population, to help understand how they can then control those costs, not control the health care treatment, but control the costs of those treatments overtime, you are talking about a massive opportunity on the medical cost side.

Then administratively again, if you work the percentages, you are talking anywhere from a billion to $3 or $4 billion in administrative cost. So applying those analytics to automate some of those internal processes, to eliminate paper, to move to imaging, to move to workflow is an opportunity then to drive cost out of the internal support system, which then overall reduces the overall cost structure for the healthcare system.

When you look at competing in the marketplace today, obviously competition is getting a lot greater. More and more companies need to separate themselves, and they are using analytics to do it. How are companies in the health care industry focusing with regards to customer analytics and operational excellence to differentiate themselves?

I think it's something that the industry is still wrestling with because again, as a group of organizations, as a marketplace, they are not where financial services is, where telecommunications is, where the media industry is as far as understanding their customer at an individual level, understanding their preferences, understanding how they want to be addressed, when they want to be called, the kind of products that number one that they buy, that they have currently, what their lifestyles are, what their consumer behavioral patterns are, all those kinds of aspects that are somewhat second nature for financial services organizations, for media and entertainment companies, for telecommunications.

The ability to engage at a member level as an industry, healthcare providers are significantly behind other entities in other industries. So there is a need to refocus from what is more of a wholesale market where insurers deal with large employer groups to actually servicing and interacting with membership and moving from that employer group i.e. a wholesale model down to a retail model.

Then the insurer is actually touching the end-user, the customer, the consumer, the member themselves. It is a major shift. So they need to understand now not what employer group needs and what their general population is or the economics of the general population but individually those one million, four million, 10 million members that are behind that and deal with them on an individual basis.

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So understanding again, where they are at in their life stage or life products, their health history, not just of their own, but their relatives, what their lifestyles are, how that contributes or detracts from their overall health and well being, understanding that information, capturing that information and driving decision making, devising programs around that is a major shift for an industry that traditionally directed all those kinds of actions based on what claims you did or didn’t post.

So, in fact, it was kind of an interesting paradigm, insurers knew the least amount about those members who were their better customers. In other words, if you didn’t have a claim, you were healthy, they knew very little about you. So how do they engage you? How do they retain you? How do they continue to help you be a healthy person?

And conversely the ones that were probably from a financial perspective the least attractive, they knew the most about then, and unfortunately weren’t really taking the kind of intervention that they could do to help that population improve health and wellness and overall improve the cost effectiveness of the health care system.

Why aren’t analytics more widely viewed by commercial healthcare companies as key opportunities for critical business improvements? I think it’s changing. I think today, it’s recognized. It’s probably not enacted. It may not be fully executed today, but I think at least if you go across the spectrum from what I would say were small local health plans to the largest national health plans, they recognize this is an opportunity for them to be more cost effective, for them to bring to market better designed products more quickly, for them to engage in a more rich member experience.

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I think that is recognized today. A year ago, two years ago, it really wasn’t even a topic of conversation. So, at least, now they recognize that’s an expectation that the industry and that the membership has. Now they need to act on that. Now they have to get serious, and now they have to line up investments. And in many cases, multi-year budgets have been cast two-three years ago. Some of those programs that were all about increasing acuity and agility around transaction processing are now starting to shift.

Those investments are now being analyzed. How do they become much more analytical about customer behavior? How do they become much more focused around information management, not just transaction processing? So I think the good news is it’s recognized. Now the investment and call to action is there, and we are starting to see execution. I think it is going to look very different as an industry 36 months from now than it does today, much like the dialogue today is much different than it was three years ago.

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