More traditional industries have been updating age-old processes to stay relevant in a tech-savvy world, and health insurance is no exception. As consumers raise their expectations for digital services, many health insurers have made digitalization a priority, tapping into the power of ecosystems to gain an edge. McKinsey spoke with Ulrike Deetjen, a partner in the Stuttgart office, about the innovations she has seen so far and how these advancements could benefit insurers and consumers alike.
McKinsey: What are the key trends for health insurers in this decade?
Ulrike Deetjen: I see two main trends. First, customers are expecting the same level of digital service across all aspects of their lives, so insurers need to build up innovative services. Second, insurers need to manage costs to ensure profitability and competitiveness. To navigate both trends, digitalization is essential, but right now, the industry is not at the level it could be. In our McKinsey Digital Quotient, which measures strategic, organizational, technology, and capability aspects, healthcare ranks near last in digitalization.
The future consists of digital health services that are brought together in a seamless way, spanning the online–offline care continuum, and links to the traditional medical appointment or hospital stay. These services should provide the same excellent experience that more digitally advanced industries offer customers. Even insurers who provide digital health services and have access to their own data frequently say that these tools are not adequately used.
McKinsey: Why is it difficult to drive digitization in the health system?
Ulrike Deetjen: Offers should have real benefits for consumers and not just be digitalized. For example, imagine a patient who uses a digital symptom checker. He presents the results to a doctor in a teleconsultation. After, he receives an e-prescription, which he has to print out so he can collect the medicine from a pharmacy. In all three steps, he has to reenter his data. Because it’s inconvenient, the customer goes back to the classic consultation. It is important for companies to consider all actors in the process of creating the platform to ensure that there is a direct benefit to customers—without forcing them to work with different devices or reenter data.
McKinsey: What would be a true innovation in the health space?
Ulrike Deetjen: A real innovation would be well-functioning, scalable health ecosystems. These would bring together patient health data and the results of previously used interventions or tools onto one platform. For example, if a diabetic patient who regularly uses a health-based app frequently has to go to the hospital, insurance companies can evaluate which apps work the best to monitor diabetes and could link part of their reimbursement package to it.
Theoretically, health insurers are optimally positioned in this area. They not only have the billing data of the service providers and can combine this with the activity data of the digital health services, but their core businesses also benefit from these ecosystems. For example, health ecosystems help to steer people to the right care settings and provide care outside the confines of the medical system, which improves claims. Similarly, digital offerings attract new customers and help generate leads. As it stands, however, there is still room for improvement in this area.
McKinsey: Does this add more pressure to insurers, or does it open new doors?
Ulrike Deetjen: I see it more as an opportunity than a risk. If we want to improve healthcare and contain costs at the same time, we need to innovate. There is a lot of institutional knowledge in the classic approach to healthcare, but there are also new, innovative players bringing new services to the market. We should bring both together, and insurers can help orchestrate that.
Customer expectations from other industries have driven the development of ecosystems, and the change is inevitable. Health insurers could play a prominent role in this evolution to move into the digital future.
Ulrike Deetjen is a partner in McKinsey’s Stuttgart office.