As we progress through the 21st century, health insurers are facing a new set of challenges. And cost optimisation lies right at the heart of them.
With the development of chronic diseases, healthcare expenses follow a tremendous inflationist trend. This leads to a deep transformation of the needs in health insurance, with three main levers to improve margins:
- - increase premiums, clearly within the constraints imposed by market forces;
- - reduce medical expenses through medical value management;
- - reduce operational costs through operational excellence.
To reduce operational costs, the keyword is automation. But in order for automation to deliver value, three foundations must be in place:
1. An optimised operating model
It sounds obvious, but its full potential only becomes clear upon closer inspection. To reduce operational costs, the first step is to conduct a holistic audit of the operating model, to identify all the operational improvements that can be implemented. This analysis includes several steps:
- (1) Processes audit: how automated is the current process – and how much margin for improvement is there? The less automated the current process, the greater the gains automation can offer.
- (2) Supporting technology audit: can it be seamlessly synchronised with other platforms to enhance processes? This is key to ensure efficient change management.
- (3) Employee skills audit: are employees’ current key skills the ones required to support future automated processes? This is generally not the case, as automation will cause structural changes in terms of working needs, from administrative tasks to more value-added tasks, such as analytics. This requires an assessment of how HR can help bridge the gap from the current skill set to the required one through training programs.
- (4) Sourcing audit: is the current network management cost-efficient? A review of partnerships should be undertaken prior to implementing the automation process to optimise its benefits.
- (5) Organisational and governance structure audit: depending on the context.
- (6) Performance management audit: how to embed cost consciousness and continuous improvement into the company culture.
2. A streamlined IT platform
In order to enable cost reductions and automation, the supporting technology is key. It might not transform the insurer’s strategy, but it will determine its effectiveness. As a consequence, a big part of any cost reduction project should be invested searching for the technology that best suits the strategic objectives. The four key questions for insurers are:
- (1) Does the technology enable a fast go-to-market strategy? Indeed, pro-activeness is a key competitive and differentiation asset in the insurance market.
- (2) Is it configurable to deal with both premium coverage and associated services?
- (3) Is it flexible enough to be configured to support all the different products in the insurer’s portfolio?
- (4) Does it enable the management of both insurances services and network management?
Your IT platform will be at the heart of your processes industrialisation initiatives. Its ability to enable high levels of automation and of standardization of business logic across channels and lines of business could easily be the difference between success and failure.
3. A digital strategy
Digital is a key asset in reducing operational costs, offering the opportunity to manage end-to-end processes and enhance core operations such as policy issuance, administration and claims.
By digitising their processes, insurers can reduce claims regulation costs by 20 to 30 percent, processing costs by 50 to 65 percent and processing time by 50 to 90 percent – improving customer service, satisfaction and loyalty at the same time. So, long after the processes have been implemented, they will continue to yield stakeholder value across your business.
The benefits are clear and proven. Why delay seizing upon them?
To find out more about this topic, the Cegedim Insurance Solutions team is at your disposal to answer all your questions.