U.S. insurers examine global markets


The new middle class represents an opportunity to sell health insurance products outside the United States

Healthcare executives estimate that they might derive up to 40% of their global revenues from emerging markets by 2017. According to a survey conducted by Global Intelligence Alliance, the top four markets cited were the BRIC countries-Brazil, Russia, India and China-while Mexico, Turkey, Argentina and South Africa closely followed. Indonesia and Vietnam also make the list.

Many factors are driving healthcare needs internationally. Urbanization and industrialization are increasing individual wealth, which allows people to buy more and richer foods, tobacco and alcohol, as well as technological gadgets that lead to more sedentary lifestyles. Stress levels have also risen. These combine to cause more diseases, including hypertension and other cardiovascular issues, lung cancer, liver disease and obesity-related issues such as diabetes. Longer life expectancies mean populations are also facing mental health issues such as dementia.

In addition, expatriates working abroad, as well as natives in the growing countries, are demanding healthcare benefits as a term of employment.

Eugene Marks, general manager of Aetna International's Americas region, suggests that carriers looking to expand globally eliminate their U.S.-centric way of thinking of healthcare as a bricks-and-mortar business and instead think about what each individual market needs and customize an approach. He says this might mean partnering with an in-country business, which is one strategy Aetna is following. Established U.S. carriers won’t necessarily find success carrying their own brand overseas.

“There is a spectrum of how U.S. ingenuity, technology, expertise and skills are being leveraged around the world,” Marks says.

Medical technology, wellness programs, care management program, credentialing protocols, data analytics and efficiencies that control costs are among the tools companies can bring.

“Some of those things that we take for granted are extremely valuable,” Marks says. “We can help other countries cut through the long cycle of learning and several generations of healthcare we’ve had in the United States.”

While there are compelling reasons for insurers to enter or expand in international markets, there are significant barriers to entry as well. For example, some countries have poor healthcare infrastructure, especially in rural areas. Many have an outdated or nonexistent regulatory structure. Almost all have varying levels of engagement among the public, employees, employers and the government.

Even if managed care companies can overcome the barriers, in-country physicians might be hesitant to align with a U.S. firm. As a result, there might not even be enough willing physicians, other healthcare providers, medical facilities, pharmaceuticals or medical devices with which to deliver care.

Additionally, be prepared to deal with power outages, voltage fluctuations, pollution, high levels of dust and cultural issues not faced within the United States. Most organizations will need to explore how they might interact with political and economic issues, bureaucracy, corruption or business practices acceptable or expected in some countries.

There are also strong global competitors-among them Allianz, Axa and Generali-already operating in key markets, which might increase the risk for new brands.

Marks recommends:

• Evaluate your core competencies;

• Identify the level of risk you can accept

• Enter three to five countries at various stages of becoming emerging markets; and

• Assess your results often.

“Place thoughtful bets, be sober about what you do, double down where it’s working and cut losses when not it’s not,” he says. “There’s return on revenue and, from a more noble standpoint, real value in what can be implemented in emerging markets, even mature markets. There are places to play, and the economic environment is most conducive for most developed insurance practices.”

Specifically, Marks sees opportunities in Southeast Asia, particular Singapore, and Eastern Europe, notably Turkey and Poland. He says Columbia and Saudi Arabia are less crowded from a competition standpoint, but stakeholders there need assistance with systems and technology for sourcing and delivering healthcare. He says not to discount the mature markets-including Europe, United Kingdom and Japan-which can benefit from analytics and protocols. Eventually, he says, the BRIC nations will stall and other countries will rise as more attractive markets.

Francis Coleman, director of international consulting with Towers Watson, agrees that opportunities exist globally for healthcare companies.

“We’ve seen an explosion of private healthcare in the past five to 10 years worldwide,” he says. “Healthcare has become more than nice to have; it’s an essential. It’s not something companies buy just for top managers or senior executives. It’s the number one sought-after benefit and important in attracting talent. Employees worldwide are demanding Western-style care. They won’t put up with long waiting times.”

He also says that hot spots are where multinational companies have expanded. But despite the demand, Coleman notes that infrastructure remains a barrier. For example, the challenge in Africa is that adequate healthcare facilities are not built yet. Vietnam is another emerging country with demand but lack of facilities.

In some cases, an onsite healthcare provider would serve an employer population.

Many employers are recognizing the benefits of wellness in reducing lost productivity from absenteeism, so Coleman sees many wellness providers expanding globally.

“It’s probably a bigger growth market than traditional healthcare,” he says. “The employer starts to connect the fact that wellness can help them stem double digit rising healthcare costs.”

As an example, he sees China, with 300 million smokers, as a target market for smoking cessation programs. But he says that, culturally, it’s not accepted that everyone should stop smoking. It’s a sharp contrast to U.S. attitudes.

Coleman says that some countries have social systems, to varying degrees, to cover residents. However, they are shifting the burden from safety nets to employers and individuals, many of whom are now affluent enough and willing to buy supplemental coverage that provides them with speed of access and quality of care.

Indonesia is bucking this shift, mandating a new universal healthcare system beginning in 2014. The South African government also recently adopted national health insurance and introduced a new regulatory agency to speed up drug approvals and increase foreign investment.

Coleman says that many governments want healthcare companies to come into their countries.

“They want to grow their economies, and healthcare is becoming a big industry, with hospitals and facilities being built,” he says.

Some don’t allow a foreign subsidiary to operate without a partner, which is an important consideration, Coleman says. He cautions companies to be aware of licensing issues, which may be needed by country, province or even city. He advises launching perhaps not across a whole country but in a region of a country.

Claims processing can also be a challenge.

 “It’s not the same as taking a product from one country and translating it into another language,” he says.

According to Marks, if you’ve seen one healthcare market, you’ve seen one, but not all. In the global market, tailored products will be a necessity.


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