Health Insurance customer retention – Constructive feedback from our readers

Since the release of our Health Insurance Customer Experience White Paper, we’ve had thought-provoking engagement from health insurance providers, aggregators and customers. These insights uncovered more ‘devil in the detail’ to complement the comprehensive knowledge base in the White Paper.

In terms of observations with customer retention, several funds have had to introduce policies with exclusions, sub-limits and changes to the limits due in order to lower prices and make them more affordable. However, when customers find out later that these changes did not meet their initial expectations and then leave, these products can then become commercially unsustainable and unprofitable over time. This leads insurers to implement more restrictive changes which can further reinforce the ongoing vicious cycle of poorer customer retention.

Customer retention can also be linked to staff retention, particularly on the front line. In Australia, one of the reasons for this is because new staff are recruited into call centre’s particularly during the peak periods of March and June. This is where policy sales increase due to annual price rises and the end of financial year respectively (so tax benefits can be claimed). These new sales staff may not be as well trained on product knowledge or company procedures compared to the usual staff and may provide information that is inaccurate or incomplete.

During this period, the quality of interaction and customer understanding from the call centre may decline and policy sales that occur may be due to aggressive marketing strategies. This is exacerbated by incentives and pressure on front-line sales staff to meet sales targets during a short period of time. It can therefore result in sales of health insurance products that don’t necessarily meet the needs of customers.

There have also been observations on aggregator funds that sell health insurance products on behalf of health insurance funds. To differentiate themselves, these aggregators aim to spend a significant amount of time with customers to understand their real needs and position policies that better suit their needs out of a broader selection. However, they too can sometimes be influenced by policies with the best incentives.

A key issue can occur once a customer has signed up with the aggregator, and their details then have to be handed over to the health insurance fund. This follow up process may occasionally be disjointed. It can result in the customer’s ‘old’ fund continuing to deduct monthly payments while the new fund (that the customer has just switched to) has also begun to deduct payments. Many of these handovers can be messy and as a result cause a lot of customer dissatisfaction and complaints because it relies on coordination between entirely different organisations.

In some cases, this coordination may be seamless, but in others there are competitive reasons why this coordination may be challenging for the customer. This is when the old funds ‘win-back’ teams are not alerted to contact the customer and try and win back the customer that’s looking to change. Although there are regulations to prevent any inappropriate actions from occurring, however there are nuances that allow funds to utilize a variety of different tactics when it comes to trying to retain that customer.

Ultimately, behavior that ends up frustrating customers will cost either the aggregator or the health fund in the short, medium, or long-term, by departure of that customer. Insurers should decide what is in the best interest of the customers when making these decisions before creating solutions or changes to the process.

If you’d like to learn more on ways to empower consumers and improve experience in the health journey, join us in Melbourne for a  breakfast event called Building a Sustainable, Patient-Centred Healthcare System on Oct 30, 2015, 7.30 AM to 10.30 AM (AEST).  Download the brochure here.  Our breakfast event in Sydney was a great success, so if you happen to be in Melbourne, please join us if you are available, and feel free to pass on this invitation to your colleagues in healthcare. Click here to REGISTER

Many thanks to our readers who contributed their knowledge to this article – but who did not wish to be acknowledged – you know who you are!

In your experience, what have you observed in terms of the process of switching health insurance policies?

Empowering Health Journeys by improving Patient Experience (PX)

Improving the Patient Experience or ‘PX’ is becoming an increasingly important objective and metric in our hospitals. While this concept has taken a while to catch on in Australia (compared to countries like the UK), it is encouraging that it is part of many hospitals’ accreditation process these days. Some health CEO’s have stated that a closer eye on PX acts as an ‘early warning system’ to pick up underlying quality and safety issues that may be occurring.

As a parallel story, my 3 years developing start-ups in the technology industry enlightened me to the tech industry’s an absolute obsession with User Experience (UX). A successful technology platform has to be so customer focussed and understand a user’s behaviour in such detail, that it could predict the next 10-20 moves of customer journey and make it as pleasant and effortless as possible, so they don’t have to choose any other option.

Google staff used to say “Remember, our competitor is just one click away”, referring to the ease in which someone could make a choice to switch service if they were dissatisfied. I believe this attitude, combined with data analytics capability, will make Google and Apple major health players in the future, once they understand how traditional health systems work.

How would a strong discipline of improving PX help the health and wellbeing of all Australians?

Like in any system, consumers that are more empowered are more likely to push improvements in the system. In the case of healthcare, particularly in the public sector, users (i.e. patients) may not always have a choice as to which doctor, nurse or specialist they see. This occasional lack of choice therefore disempowers individuals who are then not incentivised to drive innovation in the system.

If that psychology around ‘walking in a patient’s shoes’, empowering them with choices and improving PX can be harnessed, today’s predictive analytics and technology could easily modify behaviours that result in reduced obesity, diabetes and other chronic conditions, simply by making it as effortless and pleasant as possible to do so. These technologies, like the Fitbit for individuals and MES Experience, a digital patient survey platform for hospitals, can analyse feedback data quickly so changes can be made rapidly.

If you’d like to learn more on ways to empower consumers and improve experience in the health journey, you may have received the invitation last week for the breakfast event called Building a Sustainable, Patient-Centred Healthcare System on Aug 11, 2015, 7.30 AM to 10.30 PM (AEST) | Sydney.  Please join us if you are available, or feel free to pass on this invitation to your colleagues in healthcare. Click here to REGISTER

Future Solutions in Customer Experience and Retention for Private Health Insurance

The ‘Future Solutions in Customer Experience for Health Insurers White Paper’ is a research paper developed to help Australian health insurers deliver greater customer experience and customer retention. This White Paper is aimed for CEO’s, General Managers, marketers, sales and customer service leaders as well as analysts, policymakers and researchers in the industry. It is a ‘how to’ guide for getting closer to the consumer from a more complete, holistic perspective in order to drive strategic and tactical decisions.

Insights in this Paper were compiled from analysis of in-depth interviews and presentations from representatives of 10 Australian Private Health Insurance companies. Australia now has a relatively mature Private Health Insurance industry with over 11 million members and over $21bn in annual revenue in 2015. However, industry growth occurs in an evolving Australian market, which is increasingly complex. Consumers have to choose between over 17,000 different policies currently available for sale and over 25,000 policies currently in the market.

 Download the White Paper

Lapse rates can rise to over 20% of customers with some insurers (13). This equates to lost revenue (or switching of sales) exceeding $2bn per annum from lapses of an estimated 940,000 members up to 2014. These considerably high lapse rates have a significant financial impact on insurers due to the relatively tight net profit margins of most funds. In addition, insurers and customers waste a significant amount of time negotiating and resolving issues related to poor purchasing and claims experiences.

Applying a Systems Thinking approach to this complex, problem, we find a Vicious Cycle occurring in the industry in relation to customer retention and experience. From the consolidated analysis of contributor interviews, the real reason for poor customer experiences can be summarised into these 4 major themes. These include customer perceptions of confusion and lack of value, regulatory and competitive forces, sub-optimal systems, processes and data management as well as health system dynamics.

Following the analysis of interviews with industry experts, themes of solutions were consolidated. The solution model must also be robust, resilient to unpredictability and enable an organization to learn over time. In short, its execution must be a ‘Virtuous Cycle’ of CX Solutions, which is as follows:

  1. Define & Refine CX with Vision, Strategy and Objectives
  2. Align Leadership and Culture with Change Management
  3. Implement Systems and Capabilities to support CX
  4. Translate Perceptions into CX Insights & Priorities
  5. Apply CX strategically across portfolio, product design and marketing channels
  6. Extend CX across healthcare ecosystem

For some organisations, the implementation of all these solutions may take months to years and significant financial investment. As such, for those organizations that are time poor and can only do ONE THING to begin moving in the right direction, it would be to start understanding their customer perceptions much better than they are doing now. Every step of the Virtuous Cycle is largely defined by having deep psycho-emotional insights into customer perceptions. It all begins with the customer in mind, or rather ‘the customers mind’.

How to Overcome the ‘silo mentality’ in our Health System

Most leaders in our healthcare system agree that it is very fragmented and uncoordinated due to a high degree of complexity. Due to this fragmentation, some stakeholders unfortunately develop a ‘silo mentality’ on how to solve a problem within their part of the system.

 

For example, when the Queensland Government several years ago introduced a solution to reduce waiting times in their Emergency Departments, it caused hospitals with bed shortages to close emergency departments, causing havoc to ambulance drivers and potentially risking patient lives. They were not aware of the ‘system-wide’ consequences of introducing a solution in one part of the organisation.

 

Everyone knows we need greater integration across silos in healthcare.  To do that, we need to change the way we think and form effective partnerships to jointly share resources, knowledge and solve problems. However, not many stakeholders know how to partner well, and therefore don’t do it very effectively.

 

In my last decade, I have been involved in managing over 100 partnerships of various types – from identifying and targeting partners, negotiating issues, restructuring and advising on strategic resolutions. It takes work to be able to enable effective partnerships, but the health outcomes and financial benefits can be enormous.

 

As such, I would like to share this 10-Step ‘Partnership Development Guideline’  that was developed from extensive research in the Future Solutions in Australian Healthcare White Paper. I’ve personally gained benefit from these guidelines as evidenced by our good relationship with healthcare organisations, industry bodies and the many outstanding contributors involved in this paper.

10-Step ‘Partnership Development Guideline’

1. Identify suitable partners by researching individuals, organisations higher up the healthcare value chain and lower down the value chain. Set your own internal criteria of what you are looking for.

2. Determine the level of partnership intended to be developed. (Partnerships include joint ventures, strategic alliances, coordination, cooperation or collaboration). Every level has advantages and disadvantages and the partnership may be flexible to change levels at any time.

3. Conduct research ~ Understand the value you can bring to your partner by researching all the available value offerings that your organisation can provide. Research what the needs are for the potential partner organisation.

4. Approach potential partner – for initial exploratory discussions. Establish the appropriate contact person, contact details, location and role of the person. (A ‘high touch’ approach is recommended to build an initial relationship e.g. face-to-face meeting. Phone interaction or video conferencing is a recommended alternative if personal meeting is not possible).

5. Establish clear objectives ~ State your individual expectations and identify common objectives, shared values and outcomes. Find out if the partner’s mission, goals and target market align with your organisation. Evaluate the level of trust between all organisations involved. If your assessment is positive then proceed to next step. If not, assess if mutual trust can be developed. If this is unlikely, go back to step four and research other potential partners.

6. Determine mutual benefit ~ What is the type of benefit ~ economic, productivity, safety, effectiveness or health outcome? Discuss complementary skills, capabilities and resources that are mutually beneficial for the partnership. Evaluate if any training needs are required for both parties during the partnership. Identify what trust behaviours need to be implemented to cement the relationship.

7. Negotiate terms ~ Determine with the partner the roles and responsibilities for partnership coordination and evaluation, product or service development, financial, legal and personnel considerations. Agree on clear measures of success and responsibilities for ongoing communication, implementation, management and evaluation. Consider outcome-based or risk-share agreements, as well as transactional terms.

8. Close the deal ~ Finalise contractual terms, timelines for initiation and sign off. Involve appropriate internal stakeholders for approval and buy-in e.g. legal support, senior executive, etc. Obtain and ensure appropriate leadership support and management resources available to execute the partnership.

9. Communicate and celebrate ~ Disseminate information on the partnership to relevant internal and external stakeholders e.g. local healthcare professionals, community, media, other stakeholders and information or authority gatekeepers.

10. Initiate the partnership with a kick off meeting and/or launch. Set up regular review and evaluation.

I would also like to announce our latest collaboration with Australian Health Insurers, the Customer Retention and Experience White Paper. The Paper will be released soon. If you would like a copy, please visit www.energesse.com/whitepaper by first week of May.

6% Rise in Health Insurance Premiums may ignite highest lapse rates

One of the media hot topics this month is certainly the rise health insurance premiums.

The second highest health insurance premium increase in a decade seems to be creating a “perfect storm” for unprecedented lapse rates in the industry. There are a number of reasons why the 6% average rise in Health Insurance Premiums may see far more consumers switch in record numbers to more favoured health insurers.

‘Industry disruptive’ switch campaigns such as Onebigswitch (backed by media conglomerate news.com.au) and the growing adoption of brokers such as iSelect.com.au, Comparethemarket.com.au, Helpmechoose.com.au and choosewell.com.au and are making it easier for customer to “lapse” and switch to another fund. Watch the coverage of Onebigswitch on Sunrise here

A health insurance policy “lapses” when a policyholder decides to stop making payments to an insurer often because they have moved to another fund or decided that they cannot afford health insurance altogether.

However, buyer beware! The act of switching funds actually raises the overall costs of funds to acquire new customers. These costs are then indirectly passed on to consumers, thereby reinforcing a vicious cycle of rising premiums.

Its also becoming increasingly challenging for consumers to compare “apples with apples”; there are now over 20,000 policies in the market with complicated exclusions and restrictions.

To counter the problem, health insurers are revolutionising their ‘customer experience’ efforts to encourage members to stay with their current funds.

Ten health insurers including Medibank, BUPA and NIB are collaborating on a pioneering research White Paper developed by Energesse to better understand consumers and drivers of retention.

I was recently interviewed on radio about these issues and what consumers, particularly older members of funds, should do at this time to protect their health and financial interests. You can listen to the interview here.

More importantly, with all the industry changes and the need to innovate, we have partnered with international strategy consulting firm Palladium, to deliver a cutting edge webinar on “Transforming the Customer Experience in Healthcare”. This will help healthcare organisations, such as health insurers, hospitals and government bodies can get closer to their customers and transform their business models to meet these rising consumer expectations. Its not to be missed – registration details here – please feel free to share the link with your colleagues in the industry.

Webinar: Transforming the Consumer Experience in Healthcare

Tuesday the 31st of March 2015 (Australian Eastern Standard Time):

8:00am AND 4:00pm SESSIONS

Register here for the 8:00am AEST session
Register here for the 4:00pm AEST session
Unless you are 100% aligned with the needs of your consumer or patient in your organisation, this session is for you.

Finally, I am taking my own advice and reviewing my own health insurance policy this year. If you’re reviewing yours, this article from Business Insider may be useful.