Four data analytics initiatives to implement now

When it comes to business, the old adage still rings true: If you can’t measure it, you can’t manage it.

Luckily, in the age of big data there are few things that can’t be measured. Billions of terabytes flowing from nearly every facet of business allow companies to extract meaningful, actionable insights never before possible.

Health plan leaders are increasingly taking their cue from other consumer industry leaders who’ve utilized advanced analytics to optimize key business performance. For insurers the metrics include attracting and retaining members, increasing engagement, improving brand perception and driving down costs, at a time when revenues are being squeezed.

According to Deloitte, U.S. health plans should expect lower revenue margins in 2015 and beyond. Deflated performance can be blamed on several factors. For one, as the kinks get worked out with the Affordable Care Act (ACA), more plans are willing to participate in the exchanges. In fact, about 70 plans joined the market exchanges in 2015. In addition, the ACA also extended coverage through Medicaid, which typically pays less than commercial plans. Rising medical costs, competition from smaller plans and employers eliminating or reducing employee benefits have also chipped away at profits for insurers.

The cumulative effect of these factors is a driver in the recent wave of consolidation hitting the market. But while mergers can certainly increase efficiency and boost market share, innovation will be necessary to compete for consumers in the new market environment.

Using data effectively can help plans define themselves for this new market. Over the coming months and years, the health plans with staying power will be those investing in meaningful, actionable insights that can focus business investments and yield better, faster results.

The power of analytics

While consumerism and transparency have been key themes, few health plans have truly integrated big data analytics into their strategies. That’s a shame, since the insights derived from key metrics have transformed other industries online.

Consider the humble bookstore, as an example of the retail industry’s transformation. Previously, brick and mortar bookstores tracked books that sold well, and those that didn’t. Loyalty programs could connect purchases to individual customers. But beyond that, booksellers couldn’t glean much about their customers.

Then along came Amazon. Not only did Amazon track what customers bought, it could see what customers browsed and how they interacted with the site. They could measure whether promotions or coupons influenced their buying decisions. Using analytics to derive insights into all of that data, Amazon was soon able to build algorithms to predict what customers would like to read next. And those algorithms only performed better each time a customer responded or ignored a recommendation.  In short, through the power of analytics, Amazon eclipsed not just bookstores, but every other retail segment. In fact, in July 2015, it usurped Walmart as the world’s largest retailer.

As fierce competition grips healthcare, insurers need to understand how to leverage complex analytics in order to measure, track, and even predict consumer behavior as the industry shifts from wholesale to retail.  Analytics derived from big data can help health plans better target members, assess risk, drive down costs, contribute to both product and program development and assist in service and retention, all the elements necessary to transform their business.

For members, the path to better value care derived from data insights can start at the point of log-in. Historical site usage, claims data and demographic information can drive meaningful engagement and results at various stages. For networks, data can provide critical information about provider efficacy, giving payers deeper insights needed to craft high-quality networks and contract models.

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