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Competitive differentiation in an era of health plan commoditization | Whitepaper


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Competitive differentiation in an era of health plan commoditizationHealth plans are facing a series of shifts in the competitive landscape that may challenge how they remain relevant over the next decade. Growth in the commercial market has stagnated, replaced only partly by growth in the challenging government sector. A traditional source of competitive differentiation, network pricing, is eroding as the pricing differential between national and local health plans narrows. Finally, cost containment strategies, including care, disease and utilization management, have only been moderately successful in mitigating health care cost trends over recent years.

To maintain and enhance their competitive positions, health plans will need to consider moving beyond their traditional capabilities and embracing a new paradigm with respect to their members and their providers. We call this Total Health Optimization, a conceptual model designed to help a health plan in its efforts to help members maintain their health by improving the plan’s understanding of the individual needs of each member in deep and meaningful ways, and then aligning the information, incentives, programs and services necessary to support that objective.

There is also a more delivery-system-focused approach to accomplishing the same type of objective, and that is the “medical home” model of care delivery. A recent Deloitte Center for Health Solutions'2 study discusses this model, which pays primary care clinicians to serve as advocates for patients and to coordinate their patients’ care, to avert unnecessary tests, procedures and hospital admissions, and avoidable complications. While this model is gaining traction in the market, it is not yet a totally proven model and represents just one potential solution to address the challenge of care management. The focus of this paper is on the future role of the health plan to help advocate and manage member status – a role that is enabled by several health plan technology and resource components.

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