• Industry: Healthcare
  • Type: Survey report
  • Date: 4/16/2013

The Emergence of the Activist Payer 

The Emergence of the Activist Payer
There should be little doubt that the world is changing rapidly for healthcare payers, whether these are private insurers, sickness funds or, as is the case in many parts of the world, governments.

Whether they are dealing with subscribers, employers, taxpayers or ministries of finance the requirement is the same – higher quality and lower cost – even in countries such as India and China that are committed to increasing their spending. In countries where people are largely paying out of pocket, policy makers will need to create mechanisms to ensure that the health sector is efficiently producing good quality. Without this there are serious risks to the ability of many systems to continue to provide the current level of coverage.


Recommendations for payers

Payers must make their organization capable of contracting for outcomes and value for the patient rather than simply the volume of cases treated.

  • Much more focus will need to be placed on the management of overall population health.
  • Delivery models need to become more integrated, which means current payment systems, many of which actually encourage fragmentation, will need to reform.
  • Pushing care upstream has become the clear mission for all stakeholders.
  • Payers must find new ways to connect to patients to influence their behavior.
  • They must develop new skills and organizational abilities In data analytics, outcomes measurement, contracting, and care system design.
  • Payers must engage with providers in new ways to shape their behavior, create innovation and, where necessary, stop contracting them to provide care where they fail to comply with quality standards and/or price.
  • Providers will need to be incentivized to change in both the medium and longer term. Payers will need to find innovative ways to support them through the transition.

In the past, public payers played a largely administrative role, while private payers focused mainly on reducing provider prices and managing risk. However, today we see both groups are beginning to recognize that the surest way towards long-term viability lies in improving the value of the care produced, rather than the costs. As such, population health management and value-based purchasing are increasingly becoming a priority for public and private payers, while a focus on value means that private payers are starting to realign their business models with the goals articulated in public policy.


“Today we see both groups are beginning to recognize that the surest way towards long-term viability lies in improving the value of the care produced, rather than the costs."


Essentially, payers are starting to recognize that providing better value often means ensuring that care is consistently high in quality, lower in cost, appropriate and timely. This will require both public and private payers to develop a very different approach to their operations. They will have to become, in the words of one private insurer, truly activist. In other words, payers will need to use their leverage to help redesign care delivery systems that have existed in the same form for more than a hundred years. This will require payers to experiment with innovative payment models to move incentives towards outcomes rather than inputs, build new alliances with consumers and policy makers to help providers reinvent themselves and focus much more on prevention. For government, this means using the full range of policy levers to improve health, change behavior and incorporate health into all policies; for example in the creation of healthy cities, dementia-friendly places, and the use of taxation to create incentives for behavior change.

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