Historically, Blues have had the advantage of strong brands, deep provider relationships, and competitive pricing—advantages they must strive to maintain. However, as the basis of competition shifts, a set of no-regret moves will position them to more effectively align with growth in their markets.
First, plans should aggressively seek opportunities to scale, particularly in markets that will be directly affected by the Nationals’ mergers. Strategic partnerships, collaborations, joint ventures, and M&A are all potential avenues to scale. In turn, scale allows health plans to invest in new capabilities required by the market—capabilities that include clinical informatics, consumer-oriented products and services, medical management, and new distribution capabilities.
Second, plans should diversify by pursuing opportunities in higher-growth government and specialty segments that are projected to grow faster than their primary commercial risk segments over the next five years. Also, some acquisition targets could come on the market quite quickly if the US Department of Justice requires any of the big Nationals to divest businesses as a condition for federal approval of their mergers. Now is the time for Blues to start doing the necessary due diligence so they can pounce if such opportunities open up.
Third, plans should relentlessly reduce costs in administrative areas (through more efficient distribution, improved call-center operations, and shared services for back-office functions, for example), as well as in clinical areas.
A word of caution, though; these moves do not constitute a checklist. Almost all of them add complexity, so Blues need to carefully weigh the trade-offs. They run significant risks if they pursue all of them and succeed at none.
Organizational culture is a factor, too. Blues’ management teams must take a hard look at whether their organizations really are agile enough to thrive in tomorrow’s kinetic health care environment. Blues will need new mind-sets and capabilities if they are to remain competitive as the large players widen their capabilities and increase their talent advantages, and as consumers’ and providers’ demands intensify. It is not a question of making a one-time change to a new static state; the Blues must be geared to make constant shifts, ideally ahead of shifts in their markets.