Digital Health Ecosystems Part 1: Insurtechs as connectors

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The business ecosystem paradigm is not alien to the healthcare industry. In the past, players ranging from payers to providers as well as big tech companies, have led initiatives to build ecosystems as a means to integrated, value-driven care. There were notable successes among health maintenance organizations, such as Kaiser Permanente, but most of the sector has been bereft of ecosystem benefits. On several fronts, the tide is turning and broader applications of ecosystem models are seemingly imminent. With Covid, a contactless health care system has sprung up, bringing in its wake a plethora of new digital applications, including advances in telehealth, innovative distribution and coordinated care across geographies.

Entrants equipped with successful platform experiences have emerged. Walmart debuted with lean-cost outpatient clinics and tech giants – Google, Amazon, Microsoft, and Apple – are offering cloud-based healthcare solutions. Newer forms of access and interaction have paved the way for cost-effective data-sharing solutions that enable new ecosystem applications. More enabling regulatory changes are starting to evolve, such as the regulatory framework for telemedicine in Germany, that lets doctors prescribe digital therapeutics backed by system wide electronic health records that were launched beginning of 2021.

Business ecosystems are not a panacea and in many scenarios, extant models will perform better. However, ecosystems are the governance model choice when a high level of modularity is required along with significant need for coordination to align stakeholder activities.

Few prominent healthcare ecosystems failed, owing in large part to the orchestrator’s ability to take the market along. Two major efforts to create Electronic Health Records (EHR) illustrate this. In 2007, Microsoft launched HealthVault and in 2008, Google launched Google Health, attempts to create a repository of health records. Neither company managed to build a sustainable EHR ecosystem: Google Health was shut down in 2012, and HealthVault in 2019. These companies were not accepted as orchestrators by providers and patients. Subsequently, providers started to implement their own in-house EHRs, forgoing the full potential of the ecosystem model.

Some of the successful ecosystems that are covered in next parts of this series reveal – Insurtech can be a vital connector, with its ability to find practical connections between industries that have historically operated based on siloed, vertically constricted data. In health and wellness, for instance, insurers are incentivizing consumers to improve their well-being by reducing costs and offering lower premiums in exchange for completing healthy activities.

Discovery’s Vitality program is a complete wellness system that tracks everything from physical activity to nutrition. Customers earn points by logging workouts with fitness devices that sync up with Vitality. At partner grocery stores, healthy food is offered at discounts upon swiping a Vitality card.

Manulife has teamed up with Apple and Amazon to use their wearable technology products to sway the health behavior of policyholders. Manulife has invested $750 million since 2018 to boost digital capabilities. Investments and strategic partnerships are key to its health ecosystem strategies.

Consortiums are also shaping up. In France, Sanofi (pharma), Generali (insurance), Orange (telco) and Capgemini have created a joint initiative, investing together in health tech companies while developing services that they can subsume into their own offerings.

Much of the focus in healthcare has been on rising costs, resulting in improvements in operational efficiency. However, the chase for efficiency has plateaued. In recent decades, productivity improvement rates in health care in Europe and North America have lagged behind those in most other industries. Hence, the sector is expected to pivot from a focus on efficiency to meaningful innovation. Business ecosystems in health care, guided by insurtech, will play an important role in this paradigm shift.

In the remaining parts of this series, a deep dive is offered into success stories of vibrant health ecosystem leaders.

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