The Piper is Headed for the Health Industry

Let sleeping giants lie, say the folk tales.

In a world of fantasy, this is excellent advice. This is the real world, however, where the giants are health insurance companies and care providers as large as governments.

Letting these giants sleep while faster, more aggressive competitors take over the market may not be so wise. The disruption caused by such an upheaval would leave hundreds of thousands jobless, with an interruption in healthcare services, insurance claims and benefit payments. It’s not what a post COVID-19 world needs. These giants need to wake up, and take stock of their failings, or everyone’s going to be in trouble.

A host of megatrends have been reshaping the world of services since the 90s. Online banking and self-service portals have become the norm, for example. However, insurance companies and healthcare service providers have typically been slow and unwilling to adapt to changing market trends, ignoring consumer demand for the same level of service from insurance that they already enjoy in other aspects of their lives.

Many sectors have been pushing to implement data technology and reduce entry barriers for daily services. Even governments, who typically rank next to glaciers in terms of speed and agility, are now largely digital and allow refined data governance at many levels. The exception seems to be a solid percentage of worldwide healthcare providers.

The Resistance to Change

It is not uncommon to see doctors and insurance companies run entire health provisioning chains on software that still runs on MS-DOS. This ingrained inertia against change of any kind is opening entire frameworks of healthcare to competitors who are not afraid of embracing more agile ways to work, who don’t focus on the prestige of brick-and-mortar locations and just get on with the work of providing better services at less.

In that sense, health insurance companies and the sprawl of services they support ignore both their inability to fund longer lives and empower the customer, and their failure to reimagine their value chains.

In that sense, healthcare providers are behaving very much like the recording industry did before April 2003, when a certain turtleneck-wearing CEO released a service called iTunes you may be somewhat familiar with.

iTunes answered a nexus of consumer dissatisfaction that had been two decades in the making. It empowered users to enjoy music legally: as they liked, when they liked, and most importantly, at the price they liked. iTunes focused on letting users purchase the songs they liked, not the album the record labels said must be purchased. It allowed users to enjoy their music on a range of digital devices that the music industry had been fighting for decades.

It was a slaughter. There was no competition. A decade later, the recording industry was unrecognizable, leaner and still recovering from having their market share reduced to a fraction of what it used to be. They too had ignored the warnings. They too thought they were too big to fail. Just like insurance companies, they believed they’d have time to adapt to change when it came.

Unfortunately, reinventing a value chain for something as complex as human health isn’t a quick fix. It’s not the kind of thing one simply pivots into.

Perhaps, the current crop of health insurance providers are simply too deeply rooted in old school thinking to change. Perhaps they don’t see the need to listen to the new kids and their mobile services.

Waking the Sleeping Giants

The piper’s tune is already playing, though. Whether they are ready for it or not, it will lead the market its way, and the consequences for consumers will be catastrophic. Bloated corporate structures will disappear overnight, and tens of thousands of employees in every country will lose their jobs. Patients will be left in administrative limbo, unable to receive care.

Waking up and shaking decades of accumulated topsoil is a painful process, and many will stumble. But that’s no reason to continue like an ostrich with its head in the sand. Health insurance providers still have a small window to embrace the present that no longer is a remote future. This is perhaps the last chance for the sleeping giants to stop snoring and wake up, and avoid the seemingly inevitable cycle of collapse and rebirth that follows major paradigm shifts.

Picture of Igor Raffaele

Igor Raffaele

Igor Raffaele had already visited three continents and lived in four capitals by the age of five, which is why he decided to take it easy for the next 40 years. Always trying to find either a good argument or a good scotch, he is only truly happy when he has both. His passion is for telling good stories across media, cultures, and common sense.

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