everest-group-peak-leaders-vs-laggards.pdf

Leaders vs. Laggards: How Payers Can Use Outsourcing
to Differentiate
Copyright © 2022 Everest Global, Inc.
This document has been licensed to Optum

2
Proprietary & Confidential. © 2022, Everest Global, Inc. | This document has been licensed to Optum
Abhishek Singh
Partner
abhishek.singh@everestgrp.com
Manu Aggarwal
Partner
manu.aggarwal@everestgrp.com
Introductions

3
Discussion points for today
Payer market trends
Enterprise sourcing
considerations Q&A
Service provider
landscape

4
State of the payer market: market financials continue to be strong; COVID
continues to impact net income and margins
Healthcare payer average revenue
Q4 2019 – Q2 20211, US$ billion
33.2
35.5 35.3
36.9 37.3 38.5
39.8
1.2 1.3
2.4
1.2 1.2 1.7 1.5
5.0%
5.8%
11.1%
5.3%
3.7%
5.8%
4.8%
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Q4
2019
Q1
2020
Q2
2020
Q3
2020
Q4
2020
Q1
2021
Q2
2021
Q4
2019
Q1
2020
Q2
2020
Q3
2020
Q4
2020
Q1
2021
Q2
2021
Operating income Operating margin
Healthcare payer average operating income
Q4 2019 – Q2 20211, US$ billion
1 Financial information includes numbers from Cigna, Anthem, UHG, Centene Corporation, Humana, CVS-Aetna, and Molina Healthcare

5
Commercial plan enrollment declined due to COVID, as employees dropped
out of employer coverage
Healthcare payer membership share
Q3 2019 – Q1 20211, percent of total
1 Membership information includes numbers from Cigna, Anthem, UHG, Centene Corporation, Humana, CVS-Aetna, and Molina Healthcare
65.7%
67.8% 66.9% 65.8% 65.7% 64.3% 63.8%
34.3%
32.2% 33.1% 34.2% 34.3% 35.7% 36.2%
Government
Commercial
Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021

6
Major payer business themes in 2020-2021
Improve access to care
Payers are investing heavily in expanding their home care and telehealth
capabilities through product launches, partnerships, and acquisitions.
Enhance member experience through integrated, coordinated, and
preventive care
Payers are partnering with vendors to promote data sharing between
providers and health plans to enhance member experience.
Increase operational efficiency
With increased COVID-19 care costs and a rebound in healthcare utilization,
payers are focusing on increasing operational efficiency.
Expand MA business
The payer industry is rapidly investing to expand its MA business offering
virtual/digital health capabilities, further increasing enrollment in government
plans.
Enhance member engagement
Payers are introducing enhancements to their medical benefits plans by
embedding analytics and other emerging technologies to improve health
outcomes, increase productivity, and lower costs for members.
Expand COVID-19 vaccination
Payers reported the launch of various initiatives/programs to tackle vaccine
hesitancy and expand vaccination coverage.
Key business themes in H2 2020; pivotal in H1 2021 as well Key business themes in H1 2021

7
Cost continues to be at the center of any healthcare debate; focus is
shifting from the administrative to the medical side of the cost equation
Prescription
drugs
25-30%
Physician
services
20-25%
Outpatient
services
15-20%
Inpatient
services
20-25%
Admin &
IT costs
15-20%
Traditional outsourcing does not
address this component
MEDICAL COSTS (80-85%)
 Payments
 Waste and error
 Fraud and abuse
 Pharmacy claims
 Utilization management
 Case/disease management
 Provider monitoring and
education
ADMIN AND IT COSTS (15-20%)
 IT consulting / ADM / SI
 Infrastructure – hardware, services
 Business continuity
 Support/maintenance
 Finance and accounting
 Procurement
 HR and benefits

8
New approach
Customized
and tailored to
individuals
Linked to
demonstrating
value
Interoperable and
ecosystem-led
Quantifying and delivering on value, with patient experience at the center,
is becoming a major determinant of healthcare’s future
Care financing Care operations
Care management
HEALTHCARE CORE FUNCTIONS
Old approach
One size fits all Transaction-
/volume-based
Siloed and
fragmented

9
This pivot to the future is dependent on payers’ ability to deal with
technical debt and drive operational transformation
Low
Technical debt: High
Product
development
Network
management
Claims
management
Care
management
Policy
administration
Endorsements
and renewals
Provider credentialing
Claims disbursements
Data-driven plan development
Underwriting
Subrogation
Provider contract management
Actuarial assessment
Convergence-led business
models
Initial claims processing
Records management
Member portals
Claims adjudication
Records management and HIX
support
Agent/broker engagement
Fraud detection & management
Billing and collections
Support for PBMs and TPAs
HEDIS and
STAR ratings
Enrollment support
Claims recovery
Disease management
Utilization management
Telehealth / remote monitoring
Wearables / fitness trackers
Population health management
HEDIS and STAR ratings
Risk adjustment
Payer
value
chain-specific
Payer
value
chain-specific
Software and platforms
IT services
Operations

10
Regulators play an important role: a spate of changes suggested by CMS
and challenges accentuated by COVID-19 are compelling payers to
accelerate their investments in digital transformation
Key changes/challenges in the healthcare payer market
Expansion in
telehealth coverage
Changes in risk
adjustment payment
calculations
Changes in the Star
ratings calculation
Allowing End-Stage
Renal Disease (ESRD)
enrollment
More transparency
pertaining to health
plan benefits
Amendment in
Medical Loss Ratio
(MLR) regulations
Codification of
Special Enrollment
Periods (SEPs)
Changes in health
plan enrollees’ annual
cost sharing limit
Patient Access
and Interoperability
Rule
Fraud detection &
management
Initial claims
processing
Claims litigation;
recovery /
subrogation
Claims
disbursements
Claims review and
investigation
(adjudication)
HEDIS and Star
rating support
Risk adjustment
Internal /
external
reporting
Support for PBMs;
TPAs
Provider
management
Records
management
Provider contract
management
Provider
credentialing
Channel
management
(agent/broker
network)
Plan development
Utilization
management
Disease
management
Population health
management
(PHM)
Product
development
Risk &
compliance
Records
management and
HIX support
Handling of
endorsements and
renewals
Enrollment and
eligibility
Risk identification
and assessment
Billing and
collections
Member
engagement
Network
management
Care
management
Claims
management
Two key segments in which the need for
third-party support is likely to be higher due
to an inherent deficiency in payer capability

11
Payer market trends
Enterprise sourcing
considerations
Q&A
Service provider
landscape

12
 Cost reduction
 Access to better technology or operating model
 Better insights or analytics
 Gaining specific expertise lacked in-house
 Impacting top line growth
 Improving agility / flexibility
 Process improvement and standardization / harmonization
Which is the most important factor that determines your relationship
with outsourcing vendors?

13
9.2
7.3
7.4
5.2
5.8
5.8
5.0
9.2
8.9
8.4
8.1
7.2
8.3
8.4
0
1
2
3
4
5
6
7
8
9
10
Payers are now demanding much more from their service providers even
for newer outsourcing levers such as technology and expertise
2016 2019
Level of importance of different metrics
2016-19, ratings on a scale of 1 to 10
Cost reduction
Process improvement and
standardization/harmonization
Areas of interest (in decreasing order of
buyers’ preference) include:
 Interoperability
 End-to-end strategic outsourcing
Improving agility/flexibility
Impacting top-line growth
Gaining specific expertise lacked in-house
Better insights/analytics
 Denial management
 Member analytics
 Population health and care analytics
 Risk adjustment and HEDIS/Star
ratings support
Access to better technology
 Denial management
 Automation
 Analytics
 Platforms
 Blockchain (nascent)
Cost is table stakes for payers; a service provider needs to perform across all parameters to qualify as a strategic partner
Traditional outsourcing lever Newer outsourcing lever

14
However, getting digital transformation right in healthcare is easier said
than done
Vendors and partners Policy and regulations
Change management Access to talent Business case
Of all healthcare executives feel their digital
initiatives are not yielding desired results
Top 5 challenges for healthcare executives
78%
30% 37% 44% 51% 52%

15
A digital front door strategy succeeds only if enterprises get the digital
plumbing (back and mid-office) transformation right
Back office
(e.g., RCM, F&A, HR)
Core mid-office
(e.g., Operations & Production)
Front office
(e.g., Patient engagement)
47% of digital spend
 Claims, RCM
 Data engineering
 Productivity and automation
 Patient engagement
 Omnichannel experience
 Care coordination
 Security
 Risk management
 Compliance
Digital for Efficiency (DfE)
Digital enablement
Digital Front Door (DFD)

16
Enterprise sourcing priorities: contingencies created by COVID pushed
enterprises to look at a variety of swim lanes to drive transformation and
build business resilience
RESCUE
SG&A expenses | financial risks | operations
REVITALIZE
Patient experience| care delivery | workforce
RESILIENCE
Infrastructure | business agility | platforms
!

17
This is translating into an evolved set of long-term considerations for
healthcare executives as they deal with their sourcing portfolios
Economics
How can I free up capital to
fund innovation?
Operating model
Can my product launch sprints
keep up with my business?
Innovation
What if I need another technology
refresh in 5 years?
Risk ownership Run Results
Differentiator Hygiene Differentiator

18
Domain/industry
expertise
Problem
solving
Emotional
intelligence /
empathy
Ability to work
with digital
tools
Manage
multiple
channels
In the short term, however, the big problem is solving for talent
Current and future proficiency levels required
For a customer service agent
Extent of skill gap
CXM EXAMPLE
Limited
Basic
Intermediate
Advanced
Expert
Proficiency
level
Customer service
2020 proficiency level
2024 proficiency level
Process category Ability to
work with
digital tools
Analytics Customer
interaction
Decision-
making
capabilities
Domain/
industry
expertise
Actuarial
Agent, broker, and
member management
Initial policy creation
and eligibility
requirement
Judgment-intensive
claims management
Policy issuance and
records management
Policy servicing
Premium collection
and accounting
Regulatory and other
compliance
Rule-based claims
management
Underwriting
Moderate
Low
Extent of skill gap
High

19
We see four types of enterprise responses to the talent crisis
High
Low
Willingness
to
change
High
Low
Awareness of the issues
Ostrich
 Attrition, what attrition?
 This is a short-term blip, this will go away next
quarter
 Our suppliers are doing just fine, thank you
Headless chicken
 Uh oh, what shall we do?
 Let’s … let’s …. let’s…
Sheep
 The 20% price increase seems fair
 We are accommodating this in our own
employee base, so why not with our
suppliers?
 We are entering enrollment season – must not
take any risks!
Wolf
 A 15% wage increase does not translate to a
similar price increase
 Which locations and providers offer us the
best sustained access to talent?
 Plan, execute, assess, repeat …

20
Irrespective of the category you fall into, service providers will be a major
source of talent; they offer efficiencies and operational model changes that
enable transformation
Strategic partner
Tier-2 providers
Staffing providers
 Cost optimization is the key objective function
 Designed to make sourcing more efficient
 Geared to service efficiency; lacks in resilience and agility
 Relationship becomes focused on sweating the relationship
 Leans toward a single throat to choke
 Business value and growth are the primary objective functions
 Designed to make sourcing more efficient and effective for business
 Geared toward services efficiency, resilience, and agility
 Relationship becomes focused on evolving mutual outcomes
 Leans toward creating role-based owners of outcome
rchestrators
O
taffing
S
egacy aggregators
L
ransformational partners
T
pecialists
S
Conventional methodology to differentiate providers Evolving methodology to differentiate providers

21
Payer market trends
Enterprise sourcing
considerations
Q&A
Service provider
landscape

22
Get a head start on your journey with Everest Group’s PEAK Matrix® analysis
PEAK Matrix® segments
 Service delivery capabilities
 Tools and IP
 Commercial models
 Client satisfaction record
Insights on key vendors
 Healthcare digital services
 Healthcare process automation
solutions
 Healthcare analytics
 Payer operations
 RCM operations
 Clinical and care
management
 Healthcare cyber security
 Payment integrity
 Provider digital
 Healthcare specialist
services
Select any one of the
following priorities
You will get
To request your complimentary PEAK Matrix® insights (enterprises only), indicate your interest or contact Abhishek or Manu
email addresses on an upcoming slide)
HOW
Mission 2021 for ENTERPRISES | update your vendor intelligence on key
priorities

23
Healthcare digital services Healthcare process
automation solutions
Healthcare analytics Payer operations RCM operations
Clinical and care
management
Healthcare cyber security Payment integrity Provider digital Healthcare specialist
services
In the last two years Everest Group has looked at the healthcare service
provider capabilities from a variety of lenses

24
PEAK Matrix® Service Providers of the Year: Healthcare Top 20
Aspirant
Major Contender
Leader
PEAK Matrix Ranking
Optum
Accenture
Cognizant
NTT DATA
Wipro
EXL
TCS
DXC Technology
HCL Technologies
Change Healthcare
Infosys
Conduent
Access Healthcare
CitiusTech
Emids
WNS
Omega Healthcare
HGS
AGS Health
Deloitte
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Star Aspirant
Star Major Contender
Star Leader
Source: Representative snapshot of Everest Group’s 12+ unique service provider PEAK Matrix®
Assessments conducted in the healthcare space from 2019-21

25
PEAK Matrix®: healthcare assessments snapshot
Source: Representative snapshot of Everest Group’s 12+ unique service provider PEAK Matrix® Assessments conducted in the healthcare space from 2019-21

26
Payer market trends
Enterprise sourcing
considerations
Q&A
Service provider
landscape

27
 Access the Questions panel within the Zoom console, which is typically located on the bottom of your Zoom
window.
 Type your question in the dialogue box, then select Send to submit the question to our session
Organizers/Panelists
 Attendees will receive an email with instructions for accessing today’s presentation
 To ask a specific follow-up question, or for a complimentary assessment of your organization’s digital
effectiveness, please contact:
– Manu Aggarwal, manu.aggarwal@everestgrp.com
– Abhishek Singh, abhishek.singh@everestgrp.com
To ask a question during the Q&A session

28
 Healthcare Payer Enterprise Insights – H1 2021
 Healthcare IT Services Specialists PEAK Matrix® Assessment 2021
 Platform-based Modernization of Healthcare Payers
 Salesforce Healthcare Services PEAK Matrix® Assessment 2021
 Healthcare Payer Digital Services PEAK Matrix™ Assessment with Service Provider Landscape 2020
 Healthcare Payer Payment Integrity Solutions PEAK Matrix™ Assessment 2020
 Healthcare IT Security Services PEAK Matrix™ Assessment with Service Provider Landscape 2020
 Healthcare Provider Digital Services PEAK Matrix® Assessment 2020
 Healthcare Payer Operations – Services PEAK Matrix® Assessment 2020
 Open Enrollment 2021 Primer: What to Expect and How to Navigate in the Wake of COVID-19
 Business Process Services (BPS) 4.0: Heralding the Start of a New Era
 Modularity in Medicaid Management Information Systems (MMIS): Has the Silver Bullet Hit Its Target?
 Business Process as a Service (BPaaS) in Healthcare: the Way Forward to Maximize Value and Improve Outcomes
Related content
www.everestgrp.com

29
Stay connected
Website
everestgrp.com
Social Media
@EverestGroup
@Everest Group
@Everest Group
@Everest Group
Blog
everestgrp.com/blog
Dallas (Headquarters)
info@everestgrp.com
+1-214-451-3000
Bangalore
india@everestgrp.com
+91-80-61463500
Delhi
india@everestgrp.com
+91-124-496-1000
London
unitedkingdom@everestgrp.com
+44-207-129-1318
Toronto
canada@everestgrp.com
+1-647-557-3475

everest-group-peak-leaders-vs-laggards.pdf

Recommended

Recommended

More Related Content

Similar to everest-group-peak-leaders-vs-laggards.pdf

Similar to everest-group-peak-leaders-vs-laggards.pdf (20)

Recently uploaded

Recently uploaded (20)

everest-group-peak-leaders-vs-laggards.pdf