Can 2008 be the year that health communication gets personal?

By Laurie Gelb

It's safe to assume that your organization's 2008 objectives include some combination of member/clinician behavior change and cost containment. To that end, consider the following. 

Scenario 1: An organization sends you snail mail and e-mail that obviously is the same for everyone. It references products you don't need, ignores your previous transactions, frequently repeats the same message and offers you no way to personalize its communication to you.

Scenario 2: (a la An organization sends you snail mail and e-mail that clearly has entailed an analysis of your pre-existing relationship with the organization. Future purchases are recommended, reminders are tailored to the interval at which you made previous purchases, etc. You are also offered the opportunity to personalize the offers and reminders you receive, and to update this information when you see fit.

Which organization are you more likely to do more business with? Recommend?

Now consider what last year was like for one of your members (every example below is from actual MCO communications). He is male and receives a letter that clearly recognizes that fact (it's addressed to Mr. Smith). The letter references the fact that he might be pregnant. It also invites him to call a "local number" to reach a health coach, for which the area code is an hour away and actually a toll call. The signature on this invitation is a typewriter font.

Does any of this seem personalized?

He receives two successive letters "from his doc," via a joint initiative, that encourage him to get an A1c and includes a form wherein he can have a lab tech sign off on the test, send in the form, and receive a trivial incentive. This is right after the visit at which he and the doc went over the results of his recommended interval A1c test.

He receives an EOB with an insert encouraging him to get a flu shot.  The EOB is for his recent flu shot. Every EOB he receives over a six month period includes the flu shot insert, long after he has received the shot. 

He tries to order rx refills from his PBM over the Web. He finds out by trying to do this (over a half hour with increasing frustration) that his former user ID is no longer valid. When he tries to create a new one, he gets repeated, incomprehensible error messages with no information as to how to resolve the issue. Ultimately, he has to call the refills in, but after explaining the issue to the representative, he receives no information on how to fix the log-in.  The member hangs up still unsure whether he will ever again be able to refill rx on the Web, and with no incentive to pursue the matter.

Do personalized mail merges and sorts cost more? You be the judge.  One thing is sure -- if we stipulate that the "informed health consumer" expects a win/win relationship with her payor, it's hard to see how that relationship is fostered by "one size fits all" communication. Consider how easy it is to complete a transaction on (or at any one of thousands of Web sites) that actually begins and maintains a personalized relationship, as opposed to the feedback members receive from an MCO or PBM transaction. It's not just a matter of behavioral change; think of all the goodwill you're losing, and all the adversarial baselines you're creating, by seemingly refusing to treat members as people.

It's easy to say that health communication is a two-way street, that patients need to take responsibility for ontrollable risks and lifestyle factors. It's more difficult, but ultimately more rewarding, to walk the walk from a payor standpoint. Tools that support plan design choices came into being several years ago. Have tools to support health decisions and encourage appropriate behavior matched that early promise? Not yet.

Need evidence that any of this matters? A modest proposal would be to run some pilots that compare "one size fits all" messaging with something that takes previous information into account. Pretend that you're at an organization where "one size fits all" communications simply aren't done.  What would you do to stratify your members? You might begin with gender...

Happy 2008 to all, hopefully a year in which all of our initiatives increasingly facilitate appropriate prevention, screening, diagnosis and treatment.


Top Eight Issues for 2008 (according to PwC)

By Clive Riddle

The other day I received my copy of the "Top Eight Health Industry Issues in 2008", billed as "The third annual summary of current health industry issues by PricewaterhouseCoopers' Health Research Institute."

You have to admire anyone who produces a list of top items that doesn't use the number ten. Here without further The PwC Health Research Institute list is based upon survey research, as opposed to pure thought leadership. Without further adieu, here's a summary of what they found is store for us, in terms of what we must address and that will impact us in 2008:

1) Significant changes in the way hospitals bill Medicare will create some winners and some losers.

2) Renewed focus is on the FDA’s drug safety initiatives.

3) A surge in the number of retail clinics will force states, payers, and policy makers to think about the right model for the delivery of primary care.

4) The market for individual health insurance could take off.

5) Retirees are playing a greater role in funding their healthcare coverage—whether they like it or not.

6) Big pharmaceutical companies will keep buying and collaborating with life sciences companies to stock their pipelines

7) This year, hospitals publicly report their corporate responsibility.

8) Asia is poised to be the largest pharmaceutical consumer and pharmaceutical producer in the world.

Click here to download a copy of their eight page report. 

So what's on your top whatever list?


Health Risk Incentives

Increasingly, payors offer incentives to complete health risk assessments (HRAs) and/or interventions. Not to mention myriad quizzes in magazines, on Web sites ranging from Hoodia hawkers to the American Heart Association , but we'll focus on the MCO-sponsored HRAs today.

When a plan asks "clinical questions," expectations of benefit and/or negative consequences often arise. More transparency around how, when and why HRAs drive payor behavior would be welcome, as well as the role patients' clinicians should play.

Let's assume that inducements for completing a HRA are intended to accomplish some combination of the following:

1. Increase awareness of modifiable risks

2. Increase awareness of less modifiable risks, e.g. family history


3. Increase likelihood that modifiable risks will be addressed


4. Increase awareness of preventive health overall


5. Seek medical advice as HRA suggests appropriate


6. Increase payor awareness of high-risk members, and targeting of appropriate interventions


Studies assessing progress toward #3, 5 and 6 could be claims, survey and/or chart-based. We can track health outcomes, events like hospitalization and drug/medical trend. But there's more than ROI involved. What about unintended negative effects on members? Some possibilities:

--False reassurance, since HRAs cover only a few risk factors

--Catalyst for denial, since "bad news" may not have been delivered in that format previously


--Oppositional behavior, since lack of questions regarding members' known conditions may be seen as unresponsive to their needs


--Resistance to disease management stemming from HRA completion may arise, since the relationship between the two could be perceived as intrusive (careful message crafting can avoid this)


--As an automated tool rather than a one-to-one conversation, HRAs may induce or enhance a feeling of disassociation from the plan / health system


HRAs remain a good idea, but as yet they are a blunt instrument. Hopefully, we are heading toward baseline HRAs and tracking customized by member claims; integration into longitudinal patient data that includes survey and claims data; periodic chart audits to complement these data. Perhaps most importantly, such data can enable plans to act more proactively in partnership with clinicians and third party associations toward eliciting and helping to address health issues that are troubling the member.

For example, payors are generally not helping members with complex and concomitant chronic conditions find knowledgeable and coordinated care, which often would require no more than disciplined claims sifting. Patients often experience a trial and error process that costs both them and the plan extra money, with adverse health outcomes as well. Center of excellence programs are only the tip of the iceberg for optimizing inputs.

It’s strange that HRA data collection forms are less sophisticated than many "marketing research" surveys. For the most part, HRAs do not permit open-ended data collection, branching or piping, so everyone basically sees the same questions. Moreover, HRAs seem fairly far behind the literature. For instance, we are finding that not all LDL is created equal; multiple inflammatory /autoimmune conditions may be related, etc. The "goodwill investment" in HRA completion is fairly substantial and merits the most actionable questions possible.

Yes, the typical subject areas of BMI, depression, smoking, diabetes, cholesterol, HTN and MVAs all relate to health status and cost, but it is not always clear how in what patients, nor how HRAs can optimize care in the year(s) following this snapshot. An HRA may be one of the few plan touch points related to her health that a patient ever sees (EOBs and flu shot reminders notwithstanding). Many plan e-mails, which should be dynamic and personal, are somehow presumptuous, condescending and irrelevant all at the same time -- we can do better.

Industry/MCO collaborations are often based on the flimsiest of targeting algorithms, when the claims, charts, and the humans involved (clinicians, patients, payors) hold so much information that could improve those algorithms. As EHRs and PHRs are developed, how well are they integrating these data?

Incidentally, the methods paper for the first study of patient medication adherence to integrate claims, charts and surveys at the physician and patient levels is now in print (disclaimer: I am a co-author). This kind of project demonstrates that claims can be used for more than cost comparisons, surveys can drive more than product-specific marketing and chart audits can do more than fulfill HEDIS requirements.



Individual Medical: Opportunity Is Now

The individual health insurance market has reached a defining moment. Demographic, economic and workforce trends point to a tremendous market opportunity. These powerful dynamics are creating favorable conditions for individual medical insurance:

§ Shifting work-force (self-employment, early retirement, small business formation)

§ Movement toward Consumer Directed Healthcare, High Deductible Health Plans and Health Savings Accounts

§ Decreasing employer-based coverage options with increased employee cost sharing

§ Favorable Federal tax environment

§ Growing numbers of “non-poor” working uninsured.

An estimated seventeen million people under age-65 are covered by an Individual Medical (IM) insurance policy. Thousands of new eligible policyholders continually enter the market every day. Almost 16% of the U.S. population is has no health insurance. Of these 47 million individuals it is estimated that 20 million could afford an individual policy with tax, employment or other purchasing incentives.

It’s Not Group

Historically, lackluster products, legacy technology, high-cost business acquisition and poor pricing characterized the individual medical market. Few carriers had the resolve to embrace new ways of doing business and learn from past mistakes.

What does it take for success in the Individual Medical market – get in synch with both customer needs and profitable risk management. IM insurance is a blocking and tackling business requiring intense data analysis, administrative efficiency, sales acumen and proactive customer service.

However, the most important factor for health plans considering Individual Medical is recognizing that it’s not group insurance. Time and time again, carriers substitute “group” experience in formulating and executing IM business strategy. They do not fully appreciate the essential differences between the two product-lines.

For example, when pricing an IM product, medical loss experience patterns are vastly different. Underwriting with the “accept/reject” rules has significant consequences on the long-term effect of risk selection and needs to be built into baseline pricing assumptions and performance benchmarks.

Selling is another critical difference. Prospecting and selling IM is a one-to-one venture, impacting both the number of sales agents needed and how they are supported. And, complementing traditional field distribution with telesales can make a significant difference in production volume. On the customer front, servicing individuals without the intermediation of a group’s human resource department takes different front-end customer service training and skills. Individual Medical isn’t group insurance!

Controlled Growth

Competition in the IM marketplace is at an all-time high as health plans seek growth opportunities outside the saturated group market. These plans know that they need to offer a market-segmented product matrix that includes serving the needs of individuals.

The individual health market has attractive fundamentals. There are favorable operating cash flow characteristics and, given current opportunities for strategic outsourcing, fixed cost overhead can be contained while deploying state of the art technology and operating processes.

A successful foray into the IM market requires disciplined accountability. Several areas of focus can be identified:

1) Financial Control

AAAAAAA At the financial core are solid risk management tools and premium adequacy --- a focus on pricing, underwriting guidelines and claims practices. Risk controls are targeted to properly designed products and various customer and distribution segments.

2) Operational Efficiency Competitive advantage will come from innovations in information technology and bandwidth that renders traditional health insurance backrooms obsolete. Alignment with the “right” partners (without yielding accountability) can leverage an investment in intellectual property to contain expenses and broaden a company’s reach.

3) Marketing Expertise Understanding your target customer, whether young invincibles, empty nesters or prime market self-employed, goes a long way to ensuring success. This means data-driven marketing and direct response skills able to deliver the most effective ways possible to connect with customers—capture attention and interest of target audience, answer the question “What’s in it for me?” and, a call-to-action that motivates prospects to start a relationship with your company.

4) Performance Benchmarks Business metrics need to be in place to measure performance across functions: underwriting and claim costs, staffing and productivity, sales production and risk management. These benchmarks need to be buttressed with a robust decision support capability to ensure mission critical information is available and actionable.

Profitable Diversification

If you’re already in the individual medical market, but not meeting expectations, the cost of delay far exceeds the cost of action. Given IM pricing and cost structure volatility, there is a very short timeframe for crucial decisions if growth and financial results are falling short. A “wait-and see” approach can mean trouble comes fast in the form of an “underwriting death spiral” where healthy lives go elsewhere and severe anti-selection causes unrecoverable losses. These companies must act quickly to implement corrective actions and improve performance.

For new market entrants, the advice is simple - - - do it right! Study and learn from others’ mistakes. Establish a business platform built on disciplined management. Recruit knowledgeable leadership and engage expert external resources – risk and care management, marketing and telesales. Bring a commitment to change the way the market thinks about the individual medical insurance in terms of premium adequacy, product design, customer segmentation and sales distribution. Demand profitable growth. And always remember, it’s not group insurance.

For questions and comments contact:

Lindsay R. Resnick
Chief Marketing Officer
150 N Michigan Ave, Suite 2900
Chicago IL 60601


Benefits Cycle

Benefits Cycle

Mercer, the national human resources and benefits consulting firm, in their annual employer health plan sponsor survey findings, recently projected that the average total cost to renew health plans for 2008 with no changes would yield a 9% increase, but actual increases for 2008 are projected at 6.7% dues to changing plans, adding lower-cost options or by altering benefit design. (see “After a three-year lull, health benefit cost growth picks up a little speed in 2008”, Mercer Press Release, September 5 2007,

Thus what health plan premium rate an employer winds up with from year to year is a result of negotiations and changes in the plan design.

Earlier this month, The Wall Street Journal ran an article by M.P. McQueen, “New Health Plans Tout Predictable Premiums” (see Wall Street Jouranl, October 9, 2007; Page D3; - subscription required)

The article cites an example of Guardian Life offering muti-year premium rate contracts and guarantees, that build-in the ability for Guardian to alter cost-sharing provisions if actual costs for the group exceed specified thresholds. The article also cites multi-year rates from Humana, based upon other requirements.

Multi-year rate guarantees are a sign that premium rate competition may be heightening, which is of course is addressed in the concept of the Underwriting, or Premium Rate pricing cycle.

The pricing cycle phenomena has existed for more than four decades. Under the cycle, during profitable periods for health plans, the plans desire to expand or protect market share and intensify price competition. Competing plans keep pace, triggering mini price-wars and multi-year contracts. Depressed pricing in turn triggers unprofitability, which ultimately escalates to the point where market leaders accelerate their price increases. Other plans follow suit, and soon escalating industry wide increases bring the sector back to profitability and the cycle begings anew.

They cycle has softened during this decade, as plans have grown less competitive due to product and market consolidation, and changes in plan behavior. This softening of competitive behavior, combined with the advent of consumerism and cost sharing, brings us to the concept of a benefits cycle.

Under a benefits cycle, benefit coverage and cost sharing can fluctuate based on plan competition for consumer enrollment during profitable and unprofitable points in the cycle. Guardian Life’s strategy would seem a step in that direction.