Achieving steady-state operations may not be the most glitzy goal for a business leader, but it is a very necessary step towards competitiveness – and often a very challenging one.

As the health insurance market continues to change at a rapid pace, many payers are seeing the maxim, “Past performance is no guarantee of future performance,” play out in their business operations. For health plans, this often means their previously well-running operations are being impacted in new and numerous ways.

News headlines across the healthcare industry tell a story that, in addition to regulatory and market changes, many impacts are self-imposed: expanding into new regions, standing up new lines of business, aggressively growing current markets, etc. Mature, well-performing business operations are being challenged, and many payers are finding that portions of their operating environment have become increasingly destabilized. Typical indicators include:

  • increasing cycle times,
  • increasing variability in outcomes,
  • unclear service level targets,
  • service and quality metrics not being met,
  • compliance issues arising frequently,
  • rising costs, and growing backlogs

When payers lose predictability in business operations, external stakeholders often feel the pain – e.g. claims aren’t paid correctly or on-time, service encounters are not handled effectively, etc. In the current environment, members and providers have more choice than ever before; and not meeting their service expectations has a real impact on the bottom line.

Is this a time to be bold and aggressive? The opportunity to take an approach that leapfrogs the competition with “market-differentiating capabilities” can be very tempting. However, a more effective approach to achieving market-leading capabilities may start with a more mundane first step: stabilizing your current operating environment. And that can be an aggressive goal.

The next step is understanding where the operational performance levels must be. While that sounds simple enough, it is surprisingly common to see management “dashboards” that report actuals only. Gaps and deficiencies in operations are indicated by discrepancies in actual versus target performance levels. And that provides actionable information.

How can health plans effectively address these challenges? By focusing on stakeholders – specifically, the stakeholders’ expectations. The key is to define those expectations in quantifiable terms. For example, if a plan is experiencing disruptions in new member enrollments, how would your target member population define a positive enrollment experience? It may begin with receiving an error-free first bill within a week of enrolling. Timeliness and accuracy are measurable terms, which is a start.

There is no one single answer for target performance levels. Rather, the targets should be set at viable levels based on the current operational environment. Consider a staged approach that will:

  • Focus on stabilizing the environment first with target performance levels that are viable given the current environment;
  • Next, ensure operational performance and service delivery levels are, at a minimum, on par with the market;
  • Then enhance the capabilities that will differentiate the health plan in the marketplace – finally, this is what the payer can compete on!

Evaluating a health plan’s operations in this manner overcomes one of the biggest roadblocks to improving performance: understanding the problem in a manner that is actionable. 

An important consideration that must not be overlooked is how to sustain the improved performance. If operations leaders are not attentive, performance levels will decline. One of the more successful techniques for ensuring that stabilized and advanced operations do not degrade is effective use of dashboards and reporting.

  • Reporting should be customized by level (Operational/Management/Strategic) and perspective (Operations, Service, Financial, Compliance, etc.).
  • Dashboards should only display those key measures that indicate whether you’re performing well or poorly.

Without the visibility and clarity that focused reporting and dashboards create, our experience has consistently shown that health plans struggle to sustain improved service and performance levels. 

With the multitude of current change imperatives (new regulatory requirements, the move to consumerism, commercial and government healthcare market growth, new markets opening up, etc.), all health plans are being impacted in new ways. Payers will find that what has worked in the past is no longer good enough, even for established lines of business. For those plans that are already experiencing disruptions in their operational environments, they must pursue a path that enables them to:

  • Clearly understand, define, and frame what must be addressed;
  • Deliver long-term solutions while providing near-term relief; and
  • Prevent regression.

When coupled with a measured approach to achieve stability first, health plans can protect their current operational performance levels while providing a platform for growth with improved quality, costs, and stakeholder relationships.