The debate about Healthcare reform is unending and complex. We, at hCentive, have been following both sides of the debate keenly and acknowledge that the reforms are not an all-encompassing solution to all our problems, as is most often the case with other proposals in other industries.

But what we firmly believe in is the fact that the Healthcare Insurance industry; nay, the entire health care industry is riddled with inefficiencies. Inefficiencies owing to factors such as lack of technology use, too many middlemen, complicated laws etc., are contributing to the increasing cost of healthcare that every American is facing today. The industry has been ripe for disruption for a while now and the end beneficiary will be the consumer.

We looked at a number of other industries and companies to draw parallels from and have tried to extrapolate from them. A few of the companies that we looked at are industry-leaders today and had once proposed disruptive ideas that, at the time, drew widespread skepticism. Today, these companies and their leaders are hailed as visionaries. Let’s take a look at a few:

The story of Amazon is inspirational and has changed the way a number of industries now operate – retail, logistics and the publishing industry. It is rare that a company can fundamentally change the way even one industry operates. Amazon managed to upend three!

We all remember the time when shopping was never really about a customer’s pleasure quotient. A customer was offered certain number of choices to choose from and the store more often than not, tried to sell off the items that ensured highest margins for the store. Returns were a nightmare. Simply put – such inefficiencies were hurting the consumer’s interest.

For Amazon, the customer was the primary focus. A customer had access to a huge selection of products allowing one to buy by making an informed decision. Return policies were simplified and customers were acknowledged as the end beneficiaries in terms of both, product and services. The parallel with the health insurance industry is evident. With the new reforms, the emphasis is on the customer – more information, more choices and eventually, better coverage at better prices.

Another example that resonates with our case in question is Expedia. Nowhere else was skepticism about this endeavor greater, than at Microsoft, where the Expedia founder first proposed the idea! To cut a long story short, had Microsoft not been so skeptical at the time, Expedia would not have distended into its current avatar, and we still would have been paying through our noses, for flights, hotels and rentals that really shouldn’t have to cost that much in the first place. Today, the online travel planning experience is seamless, fun to use and saves people thousands of dollars.

But another great lesson learnt from this story is that, Expedia did not signal the end of agents, tourist guides, or airlines. Instead, Expedia forced the service industry to revamp itself and offer better services to its customers. It shows that there is room for multiple sales channels to co-exist harmoniously. Lesson – Create a ‘wow’ experience for the customer and you are destined to become a catalyst for change. It is no secret that the health insurance industry is suffering from a similar disconnect from the customer. With the reforms, the focus will be on better service to the customer. The hegemony of middlemen is about to end and is another obvious analogy with Expedia and the travel industry.

The third example we would really like to talk about is Netflix. Netflix completely changed the way the movie and television industry did business. No longer did customers needed to depend on snooty folks at the video store, be waitlisted to watch their favorite movie or spend a ridiculous amount of money for renting or buying a DVD of their choice. Netflix gave them cheap, 24/7 on-demand access to their favorite movies and shows. Netflix was also prophesized to be the doom of the studios and the movie theater with its disruptive delivery model. That is not what has happened. Netflix has forced movie and television studios to rethink their distribution strategies, cut unnecessary costs and create more appealing content that people would pay to watch. Companies that refused to adapt (aka Blockbuster), learnt their lesson the hard way. Lesson – Customer is king. Disruptive ideas acknowledge that and laggards suffer. The delivery model in the healthcare insurance is ripe for disruption with ACOs (accountable care organizations), public exchanges and private exchanges offering new avenues to the customer to choose their health insurance.

There are a number of other examples like Google (Search and Knowledge industry) and Apple (Music, Cellphones, Mobile Computing) that have been disruptive to their respective industries.

As mentioned above, we’ve learnt the following three lessons:
1.    Inefficiencies primarily hurt the end-consumer.
2.    Create a ‘wow’ experience for the customer and you will become the catalyst for change.
3.    Customer is king. Disruptive ideas acknowledge that and laggards suffer.

With that said, our perspective on the healthcare insurance industry in general is, that the reforms are a significant step in the right direction. The idea is to eliminate inefficiencies, create a model that is a win-win for health plans, brokers, agents and customers and the end game will be a simplified and easy-to-use insurance buying and selling experience for all the players involved.

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