6 Reasons Health Plans Can’t Underestimate the Value of Consumer-Directed Healthcare (CDH) Accounts
Published on November 8th, 2016
Like it or not, the migration toward CDH is fully underway, making the strategic importance of consumer-directed health plans and benefit accounts that much more significant. Health plans must carefully consider their strategies regarding CDH account offerings. Business decisions you make today will set the course of your destiny for the next 3-5 years. If you still need convincing, below are 6 reasons health plans can’t afford to underestimate the strategic importance of consumer-directed health accounts.
1. The CDH train has left the station and it’s not coming back.
The question of if and when the migration to consumer-directed healthcare will take place has been answered and will continue to grow exponentially according to all accounts. HSA accounts are projected to double in number from 10 million accounts in 2013 to a projected 20 million accounts by 2017. According to 2016 mid-year research conducted by Devenir, we are on track with an estimated $34.7 billion currently held in 18.2 million HSA accounts. HRAs and FSAs are also forecasted to grow, albeit at a slightly slower pace, as adoption of these account types gives way to HSAs due to increasing HDHP adoption and the increasing proliferation of private exchanges.
These trends have been preceded by unsustainable cost increases born by consumers who have been burdened with increased cost-shifting by employers, meaning higher premiums and other out-of-pocket expenses in traditional plans. Increasingly, consumers who never meet their annual deductibles are effectively already financing their own healthcare. In addition to short-term cost considerations, consumers are also beginning to understand the importance of planning for long-term, post-work healthcare finances. Alegeus research found that almost two-thirds of consumers surveyed said their level of concern about long-term healthcare costs was above-average.
With increased cost-shifting and consumer financial responsibility, it naturally follows that consumers expect more control to manage their wellness and their healthcare finances. To remain competitive, health plans must move quickly to add CDH accounts to their portfolio offerings. Read on to learn why.
2. Consumers need tools and support, so leverage the opportunity to position yourself as a change agent.
Current consumer engagement levels are low. Consumers are not savvy and they lack the basic tools and resources to make critical healthcare spending and saving decisions, meaning that significant opportunity exists for improvement. But how do you leverage these insights to capture market opportunity and drive meaningful business results?
In this state of great flux, there will be health plans that view these challenges as opportunities, and those who view them as a burden, lagging behind and eventually falling to the wayside of irrelevance. A solid engagement strategy will guide consumers from a traditionally passive role to that of an active and engaged healthcare consumer who seeks necessary information to make better spending and saving decisions through the expanded adoption of CDH accounts.
3. Deepen your relationship with participants by owning it, end to end.
Integrating healthcare benefit accounts with your health plans, in your brand, gives you the opportunity to engage and support consumers throughout their healthcare journey – from utilization and finance management to technological enablement. While you cannot expect to be experts in all of these aspects, the right strategic partnerships will enable you to integrate and execute a consistent consumer experience along all engagement touchpoints – ultimately strengthening your brand, your relationships and positioning you as the industry leader.
4. CDH accounts improve consumer and employer stickiness.
In the new era of healthcare consumerism coupled with accelerated employee turnover, consumer stickiness lies not within healthcare plans, but rather with CDH accounts. The average American changes jobs every 4.6 years and with every job change comes a health plan change. What endures for the long term, however, are CDH accounts. For example, health savings accounts (HSAs) should be positioned like 401k accounts – regardless of how long a consumer remains with his or her current employer, dollars invested are portable and can help fund retirement. Including these type of benefit accounts into your product offerings keeps your relationship in place and on-going even through employment transitions. Pairing plans with integrated benefit accounts also helps to reduce employer recidivism, since transitioning both a plan and account program is a more complex undertaking than moving a plan alone.
5. CDH accounts drive value and improve revenue potential.
Offering CDH accounts opens up additional sources of direct revenue and indirect value. In an era of shrinking margins, the ability to tap potential new sources of income and drive value should not be overlooked. Direct sources of potential revenue include interchange income from card transactions, administration and transaction fees, and interest sharing from account deposits held at a bank or other custodian. Indirect value creation occurs from improved customer retention and core product growth.
6. The right partner will unlock your organization’s CDH potential.
As already mentioned, no one expects any one health plan organization to be an expert in every facet of this complex healthcare ecosystem. Between plan design, healthcare delivery, consumer tools and experience, and the financial aspects of health plans, partnering with vertical experts can strengthen your market position. A trusted partner can help:
- Provide insights into market direction, employer needs and consumer behavior
- Determine the go-to-market strategy to best position your business for growth
- Deliver the best solution and capabilities in the market
- Offer a white label approach that puts your brand at the forefront at all times
- Provide the best service experience for you, your customers and your members
The right partnership and strategy can deliver improved revenue growth, value differentiation, market leadership, improved customer retention, and superior customer and employer experience.
For organizations who wish to climb to the top in the midst of this monumental market shift, the time is now. A strategy for adding and cultivating consumer-directed health accounts should be at the top of your organization’s priorities.
The payoff is clear: CDH accounts will not only help your survive the next 3 to 5 years, but thrive – more profit and security for your business, cost-savings and higher satisfaction for your employers, and healthier and wealthier consumers.