Results from the Future Care 2010 e-poll

By Clive Riddle, President, MCOL

MCOL has just released results from our eighth annual Future Care* e-poll survey conducted this month of Future Care web summit attendees and MCOL members. Almost all responses were received after the Brown Massachusetts Senate election. Respondents represented the following perspectives:

• Payor - 30.5%
• Provider - 33.6%
• Vendor - 16.4%
• Other - 19.5%

We ask participants three questions each year. First, which of the following health care business trends do you think will have the greatest overall impact in the coming year? Respondents point to health reform and the recession as the big drivers. Its also interesting to see how cost sharing increases have significantly diminished in importance last year and this year. Here’s this year’s and historical responses:

Trend	2010	2009	2008	2007	2006	2005	2004	2003
Advances in technology	6%	3%	12%	8%	17%	14%	12%	11%
Consumer Driven plans	7%	3%	13%	18%	21%	23%	14%	15%
Compliance issues	7%	1%	1%	3%	1%	1%	6%	18%
Effects of the Recession	26%	57%	NA	NA	NA	NA	NA	NA
Health Reform Initiatives	37%	21%	24%	11%	28%	14%	4%	N/A
Increased cost sharing	5%	9%	34%	40%	26%	38%	36%	39%
Disease Management	5%	3%	13%	8%	3%	6%	24%	N/A
Other	5%	1%	4%	12%	5%	6%	4%	17%

Conversely, we asked what predicted trends do you feel is LEAST likely to occur or have an impact in the next two years? Respondents feel health plan premium increases won’t keep cooling down, and there are plenty of health care reform skeptics:

Response	Percent
Premium Increases will continue to slow down	24%
Significant National Health Care Reform Legislation will be enacted	20%
Major growth of Consumerism initiatives	19%
Health Plan cost sharing activities will level off/slow down	13%
Further growth/adoption of disease management and wellness	12%
Major advances in patient/provider/plan electronic data transfer	11%
Other	1%

Lastly, we asked respondents to rank stakeholders as winners or losers for the coming year.  Respondents feel pharmaceutical plans will by far fare the best among stakeholders, with health plans finishing a distant second, and all other stakeholders ranked way back.  Of course the great unknown is health reform, which could significantly alter the fortunes for health plans depending on the final structure.

Sector	Better Off	Same	Worse Off
Pharmaceutical	39%	40%	21%
Health Plans	29%	30%	41%
Hospitals	16%	34%	50%
Physicians	12%	33%	55%
Consumers	8%	26%	66%
Employers	7%	35%	58%

From a historical perspective, here’s how respondents see health plans future prospects from year to year. Note that despite the potential of health reform, optimism for health plans returned a little this year, after pervasive pessimism from 2007 through 2009:

Health Plans:	Better Off	Same	Worse Off
2010	29%	30%	41%
2009	12%	44%	45%
2008	14%	36%	50%
2007	12%	41%	47%
2006	54%	35%	12%
2005	43%	42%	16%
2004	36%	50%	14%
2003	36%	44%	21%

* The Future Care survey incorporates respondents from MCOL Future Care Web Summit attendees and MCOL members. n = 131 for 2010, 90 for 2009, 127 for 2008, 146 for 2007, 267 for 2006, 110 for 2005; 118 for 2004; 139 for 2003

Five Trends to watch for with 2010

by Clive Riddle, December 17, 2009

As the first decade of the millennium closes, and the new year is just  a limited number of sunrises and sunsets away, the time has come to consider some major health care business trends that should deliver an increased impact for 2010 and beyond.

The big “duh” of course is the health care reform package still being tossed around in Congress, but in fact, much of the anticipated legislation won’t kick in until after 2010 anyway. So, what else is there to consider?

1. Regulation for starters. As the focus shifts from legislation, assuming the reform package finally passes in early 2010, implementing regulations will take center stage. But increased regulation won’t stop with the health benefit coverage-dominated reform package. The Obama Administration has signaled an objective to enhance oversight of health plans, particularly with programs such as Medicare Advantage, and to further crack down on fraud and abuse. And assuming a reform package that improves coverage is adopted, there will be increased pressure from most vantage points to start addressing costs via regulations. So expanded regulation should be a big trend emerging in 2010.

2. Expanding Primary Care Access will gain considerable attention. While coverage from Health Care Reform won’t fully kick in until well after 2010, the debate and discussion about who is going to treat all these people with new or enhanced coverage, and where are they going to treat them? Medical Home Development should gain ground, with altered and enhanced primary care reimbursement mechanisms that help motivate practitioners to stay or train for primary care practices and incorporate information technology and infrastructure that can handle increased patient loads. Retail clinics, while continuing to fluctuate in growth and contraction spurts, will likely serve as an increased marketplace response in urban areas. Programs to develop, train or import more primary care physicians into the pipeline will increase.

3. Provider Information Technology Readiness will grow as a concern during the year, and other stakeholders will be squeezed to help get lagging physicians to where they need to be. While vendors and health plans appear reasonably ready for ICD-10 conversion, providers in general, and medical groups in particular appear to be well behind where they need to be. While hospital and health plan EHR initiatives progress at a reasonable rate, large segments of physicians continue to lag. For health plans, hospitals, vendors and government, their own respective positions will suffer due to the state of readiness of a significant segment of physicians, particularly small practices, and these other stakeholders will undoubtedly have to commit and contribute increased resources in 2010 to help move things along.

4. Integrated Health Care Delivery will continue to expand and evolve with a greater number of regional health systems, as a strategic response to the above issue. A greater focus from all stakeholders on costs will move more systems in this direction, new health reform coverage provisions may motive them in this direction, the need to expand primary care access may force them in this direction, and the infrastructure needs of medical groups may necessitate the move in this direction.

5. Developing and Monitoring Pilot Programs will command significant attention as 2010 progresses. Reform legislation, and Obama Administration initiatives will stimulate numerous pilot programs, and various organizations and stakeholders will scramble to get in on the action. But everyone will have their eyes on the status and progress of these projects, given the implications their success or failure may bring.

Oh, and here’s wishing all of you, a happy new year, and a more prosperous decade ahead.

What Changes To Health Care During The Past Ten Years Have Had The Most Profound Impact

by William DeMarco, October 28, 2009

MCOL asked me to answer the following question for their current issue of their Thought Leaders e-newsletter: "As this first decade of the new millennium draws to a close, what change(s) to health care delivery, financing or structure that have occurred during the past ten years have had the most profound impact, and why?"

My abbreviated response appears in the newsletter, but what follows if my expanded thoughts on this matter.

To review the entire decade I think would fill a library of changes but to get it down to a few changes I would have to say first that moving physicians groups from the small cottage industry of one and two man practices into multi-specialty groups that share a model of care would be something few would have thought necessary or even possible.

In the days of early medicine many physicians worried more about the patients and the noble calling of medicine. There was an entrepreneurial spirit that led many practioners to brave the lack of equipment and resources using their diagnostic skills accumulated over a life time.

Teaching medicine still focuses on watch one, do one, teach one but now we have a narrower funnel of certainty we deal with trying to use diagnostic tests, many of which we are finding have a high false/ positive outcome, and relying on larger complex hospital, clinic and university centers that in the words of medical students “made medicine into a business”.

Driving much of this was a change in reimbursement when insurers and the government stepped in between the patient and the physician offering to handle the payment and coding review and many doctors thought this was great as patients often time did not pay on time if at all and now we can bill these service bureaus claims processors for more and more volume.

That allowed practices to purchase equipment that here to fore was a hospital revenue stream. When Medicare A and B separated the fight between hospitals and doctors turned into a turf war ending with hospitals buying doctors as a bonding strategy. Integration disintegrated except for many providers who owned their own health plan and therefore could control with some precision the model of care and the type of care provided.

Our physician friends and advisors often comment on their observation of new graduates being technically savvy but unwilling to be that entrepreneur to start a practice or work 7 days a week to build a following. Instead working three days a week and having family time is a priority and it often takes 2 doctors to make up one FTE.

This same outline applies for hospitals getting bigger. Hospital systems offering tertiary care even in smaller hospitals is driven to a great extent by reimbursement where more income per patient and high volumes of complex patients are the keys to success according to many managers.

Hospital networks formed to squeeze even more reimbursement out of HMOs and Insurance companies and have succeeded in many markets to chase insurers away or demand 250% above Medicare fees for specialty care as the sole commodity in a given geographic area. This morning I heard the argument that many of these community based not for profit hospitals would eventually have to become for profit in order to survive the health reform legislation. Right now 70% of our nations hospitals are not for profit and although there is a solid economic argument to take equity out of the hospitals to refinance growth and sustainability the opposing argument is that will a for profit hospital focus on the needs of the patients or the needs of the financial enterprise that the hospital would be based upon.

Many not for profit hospitals already act like for profit hospitals forcing projects to have a economic ROI but not really be able to measure their investments in Human return on investment. Do we need tertiary care in every community? Can we even staff these needs with newly minted doctors? Are we driving our own costs up by looking at revenue gain instead of expense of this care? Will our community trust us as the local hospital? Will our physician see us as part of the noble mission or just a workshop and bank?

One only needs to look at the transition of the trusted HMO movement of the early 70s when most plans were built around a community need to inject competition and offer better benefits at traditional major medical insurance plans. Then the government allowed insurers to become HMOs and also the government stopped funding HMOs so many went to the for profit side of the equation. We see more and more consolidation of Blues plans and provider based plans as premium income and utilization go opposite directions. Over time the physician and many consumers lost faith and trust for these plans as money people took the reins of these health plans and the social entrepreneurs left to build medical management and disease management companies.

Consider then the largest single issue that has followed this evolution is the trust of the patient, well or ill, the trust of the community that helped fund and support the not for profit an the fact that as insurance executives bonuses could fund the deficits of a small country that this lifecycle in medicine of moving towards a for profit mindset has eroded peoples respect for insurers perhaps the continuous move by hospitals and even for profit physician structures is not , in itself, a solution but could be the biggest change in a decade that will erode confidence in the healing profession, reduce mutual respect for the leaders of hospitals and insurance companies and stifle the very innovation we now need to carry out the re engineering of our health system to emerge as the admired system of the future.

So loss of some levels of trust is the trade off for moving to an exclusively for profit model too quickly. I fear this more than government run insurance because it is the worst form of rationing that will eventually discriminate between profitable patients and those who restrict earnings per share.

The Future Ain’t What It Used to Be

By Clive Riddle, February 5, 2008

A couple of weeks ago, MCOL in conjunction with the Seventh Future Care Web Summit, conducted its annual e-poll on health care trends for the coming year and beyond. As the same three basic questions are asked each year, results have been tracked since 2003. So, given the massive change in the economy during the past twelve months, how do health care executives and other professionals feel about the future?

Answers were not that surprising to the questions: (1) which trends will have the greatest overall impact in 2009; and (2) which predicted trend is least likely to have an impact in 2009. But I was taken aback somewhat with answers to the question which stakeholders will be better off, worse off, or the same in 2009.

Comparing current answers with previous years is difficult, for the first question: "Which of the following health care business trends do you think will have the greatest overall impact in 2008?" That’s because “Effects of the Recession” was contemplated as a trend in previous years, and over half (57.3%) of respondents list that as the trend that will have the greatest impact, and I would agree with them.

Here’s a table listing responses to this question since 2003:

Trend	2009	2008	2007	2006	2005	2004	2003
Advances in health care technology	3.4%	11.8%	7.5%	16.6%	13.6%	11.9%	10.8%
Consumer Driven health plans	3.4%	13.4%	18.5.%	21.0%	22.7%	14.4%	15.1%
Compliance issues	1.1%	0.8%	3.4%	0.8%	0.9%	5.9%	18.0%
Effects of the Recession	57.3%	NA	NA	NA	NA	NA	NA
Health Care Reform Initiatives	21.3%	23.6%	11.0%	28.1%	13.6%	4.3%	N/A
Increased consumer cost sharing	9.0%	33.9%	40.4%	25.8%	38.2%	35.6%	38.8%
Disease Management initiatives	3.4%	12.6%	7.5%	3.0%	5.5%	23.7%	N/A
Other	1.1%	3.9%	11.6%	4.5%	5.5%	4.2%	17.3%
Grand Total	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%

One way to compare any of the other trends(which have been listed each year) with previous years, you need to multiply this year’s response by two, or divide pervious year’s in half, to factor in this year’s new Recession trend that was missing before. When you do that, it makes the runner-up choice (health care reform initiatives, with 21.3% in 2009) all that more prominent. While all other trends dropped to around a third of their previous levels (except compliance, which still only weighed in at 1.1%) reform stayed basically the same as last year.

So the conclusion for 2009 not surprisingly, is forget everything else, two “R’s - recession and reform, will dominate this year in health care.

When asked “which of the following predicted trends do you feel is least likely to occur or have an impact in the next two years,” respondents had little consensus regarding any particular trend. What is interesting, however, is to compare these answers to previous years.

Here’s a table listing responses to this question since 2003:

Trend	2009	2008	2007	2006	2005	2004	2003
Health Plan cost sharing will level off/slow down	11.2%	15.0%	11.0%	13.1%	19.3%	18.6%	9.5%
Major growth of Consumerism initiatives including consumer driven plans	22.5%	15.0%	17.8%	15.4%	14.7%	12.7%	18.2%
Major advances in patient/provider/plan electronic data transfer	15.7%	22.0%	14.4%	14.2%	16.5%	20.3%	20.4%
Significant National Health Care Reform Legislation will be Enacted*	21.3%	14.2%	16.4%	13.5%	22.9%	11.9%	22.6%
Premium Increases will continue to slow down	22.5%	23.6%	23.3%	30.7%	14.7%	22.9%	N/A
Further growth/adoption of disease management and wellness	6.7%	12.6%	16.4%	12.7%	11.0%	13.6%	N/A
Medicare HMO reforms	N/A	N/A	N/A	N/A	N/A	N/A	15.3%
Medicare prescription drug coverage	N/A	N/A	N/A	N/A	N/A	N/A	13.1%
Hospital Medicare Outlier Payment Reform	N/A	N/A	N/A	N/A	N/A	18.6%	9.5%
Other	0.0%	3.9%	0.7%	0.1%	0.9%	0.0%	0.7%
Grand Total	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%

As you can see, despite the significant segment that views reform as a trend with the greatest overall impact for 2009, the “doubters” have increased in the past year as well. Last year, as the election season was heating up, 14.2% felt reform would be the trend least likely to happen. This year, that number rose to 21.3%.

Also, interestingly, doubts regarding the last most significant innovation have increased. In 2008, 15.0% listed growth in consumerism as the trend least likely to occur or have an impact; that number increased to 22.5% in 2009. But optimism must be increasing for electronic data transfer. In 2008, 22.0% listed this as the least likely trend; that number decreased to 15.7% in 2009.

The conclusions to this aren’t that surprising either: 1) there are plenty of cynics mixed in with those sure that reform will take place; 2) perhaps because consumerism was politically as a Republican agenda, and now we are facing a Democratic agenda, a growing number think Consumerism initiatives will wane; and 3) given the priority the Obama team is giving electronic health records and data transfer, there is less cynicism that this will eventually happen.

I mentioned that I was surprised by answers to the third question: “Which of the following stakeholders do you view as being better off, the same or worse off in the coming year?” Of course, respondents think things are going to be bad all the way around. I just thought they’d be even more negative.

While as expected, few answered “better off” for any category of stakeholder, the level that answered “same” (as opposed to “worse off”) was surprising. I would have expected a resounding “worse off” response for all categories. Even more perplexing was to when these responses were compared to previous years. The change simply wasn’t as large as I would have thought, and consumers were strangely rated in better position for 2009 versus 2008. Perhaps this is due to the specter of reform?

Here’s tables listing responses to this question, compared to the past two years:

2009 Winners and Losers:

By Next Year:	Better Off	Same	Worse Off	Grand Total
Consumers	16.9%	14.6%	68.5%	100.0%
Employers	8.0%	25.0%	67.0%	100.0%
Physician	5.7%	40.2%	54.0%	100.0%
Hospital	3.4%	35.2%	61.4%	100.0%
Health Plans	11.5%	43.7%	44.8%	100.0%
Pharmaceutical	20.5%	44.3%	35.2%	100.0%

2008 Winners and Losers:

By Next Year:	Better Off	Same	Worse Off	Grand Total
Consumers	6.5%	18.2%	75.3%	100.0%
Employers	20.5%	32.1%	47.4%	100.0%
Physician	46.2%	41.0%	12.8%	100.0%
Hospital	21.8%	37.2%	41.0%	100.0%
Health Plans	14.1%	35.9%	50.0%	100.0%
Pharmaceutical	49.4%	32.5%	16.9%	100.0%

2007 Winners and Losers:

By Next Year:	Better Off	Same	Worse Off	Grand Total
Consumers	7.6%	20.7%	71.7%	100.0%
Employers	19.9%	45.2%	34.9%	100.0%
Physician	46.6%	42.5%	11.0%	100.0%
Hospital	17.8%	37.0%	45.2%	100.0%
Health Plans	11.7%	41.4%	46.9%	100.0%
Pharmaceutical	38.9%	31.9%	29.2%	100.0%

Now, that the books are closed on the first month of the last year of the decade, we don’t have to speculate much more on what 2009 will bring. We can just make sure our seat restraints are locked in position, and hang on for the ride.

15 Big Health Care Business Questions for 2009 and beyond by Clive Riddle

by Clive Riddle

The impact of reform, recession, technology and emerging initiatives

Here’s a list of 15 questions to ask as we start to ponder the upcoming new year which will close out this decade:

1. Reform: What final health care reform package will emerge from the new administration and Congress, what will be the timing, and what portions of it will get adopted, given the current recession/financial crisis?


2. Regulation: Will significantly increased regulation ensue, with the compliance environment become even more stringent?


3. Medicare Advantage: Assuming Medicare Advantage health plan compensation is further targeted, will plans accelerate mass market withdrawals as they did prior to the MMA increases?


4. Consumer Driven Plans: Will the Democratic congress and the new administration diminish the viability of account based consumer driven health plans?


5. Patient Collections: How deep will be the impact of provider collection problems with higher consumer cost sharing in the current financial climate, and will there be any new initiatives from the hospital industry or other provider in response?


6. Patient Deferral of Care: In a recession environment, will consumers further defer and adjust their health care utilization and spending, even at long term detriment to their health?


7. Funding Wellness: Will immediate health benefit cost pressures trigger reduced support for initiatives that require longer term ROI, such as wellness incentives?


8. Tighter Managed Care: Will health benefit cost pressures fuel a demand and acceptance for a return to more stringent managed care delivery and care management?


9. Payment Reform: How widespread will provider payment reform initiatives evolve, advance and be adopted?


10. Medical Homes: To what degree will medical homes take hold, and how different vs. standardized will medical home initiatives evolve?


11. Fights over the Shrinking Pie: Will specialty physicians associations organize to more actively combat medical home, p4p and other payment reform initiatives if they are perceived as realigning distribution of physician compensation more towards primary care or further reducing income?


12. Investment Income: How deep will the ultimate impact of reduced investment income be upon health plans and health care institutions, and will it cause fundamental changes in investment portfolios, rate increases or reduced staffing or services?


13. Mergers and Acquisitions: Will the fallout of financial pressures cause an acceleration in Mergers and Acquisitions in the various health care industry components, or will tighter financial markets and conditions combined with increased regulatory scrutiny dampen the M&A environment?


14. EHR spending conundrum: A conundrum exists over the need for massive infrastructure and conversion spending on EHR initiatives and related issues such as ICD-10 coding in order to make the health care system more efficient, versus the immediate need to reduce cost pressures in the current financial climate: So will these initiatives lose or gain momentum?


15. Health Portals: Will one or more consumer health portals/web personal health records, such as Microsoft’s Healthvault or GoogleHealth emerge to achieve the same level of consumer significance as online banking/bill payments or social media such as Myspace/Facebook?

So what questions can you add to the list for 2009?

Can 2008 be the year that health communication gets personal?

By Laurie Gelb

It's safe to assume that your organization's 2008 objectives include some combination of member/clinician behavior change and cost containment. To that end, consider the following. 

Scenario 1: An organization sends you snail mail and e-mail that obviously is the same for everyone. It references products you don't need, ignores your previous transactions, frequently repeats the same message and offers you no way to personalize its communication to you.

Scenario 2: (a la Amazon.com) An organization sends you snail mail and e-mail that clearly has entailed an analysis of your pre-existing relationship with the organization. Future purchases are recommended, reminders are tailored to the interval at which you made previous purchases, etc. You are also offered the opportunity to personalize the offers and reminders you receive, and to update this information when you see fit.

Which organization are you more likely to do more business with? Recommend?

Now consider what last year was like for one of your members (every example below is from actual MCO communications). He is male and receives a letter that clearly recognizes that fact (it's addressed to Mr. Smith). The letter references the fact that he might be pregnant. It also invites him to call a "local number" to reach a health coach, for which the area code is an hour away and actually a toll call. The signature on this invitation is a typewriter font.

Does any of this seem personalized?

He receives two successive letters "from his doc," via a joint initiative, that encourage him to get an A1c and includes a form wherein he can have a lab tech sign off on the test, send in the form, and receive a trivial incentive. This is right after the visit at which he and the doc went over the results of his recommended interval A1c test.

He receives an EOB with an insert encouraging him to get a flu shot.  The EOB is for his recent flu shot. Every EOB he receives over a six month period includes the flu shot insert, long after he has received the shot. 

He tries to order rx refills from his PBM over the Web. He finds out by trying to do this (over a half hour with increasing frustration) that his former user ID is no longer valid. When he tries to create a new one, he gets repeated, incomprehensible error messages with no information as to how to resolve the issue. Ultimately, he has to call the refills in, but after explaining the issue to the representative, he receives no information on how to fix the log-in.  The member hangs up still unsure whether he will ever again be able to refill rx on the Web, and with no incentive to pursue the matter.

Do personalized mail merges and sorts cost more? You be the judge.  One thing is sure -- if we stipulate that the "informed health consumer" expects a win/win relationship with her payor, it's hard to see how that relationship is fostered by "one size fits all" communication. Consider how easy it is to complete a transaction on amazon.com (or at any one of thousands of Web sites) that actually begins and maintains a personalized relationship, as opposed to the feedback members receive from an MCO or PBM transaction. It's not just a matter of behavioral change; think of all the goodwill you're losing, and all the adversarial baselines you're creating, by seemingly refusing to treat members as people.

It's easy to say that health communication is a two-way street, that patients need to take responsibility for ontrollable risks and lifestyle factors. It's more difficult, but ultimately more rewarding, to walk the walk from a payor standpoint. Tools that support plan design choices came into being several years ago. Have tools to support health decisions and encourage appropriate behavior matched that early promise? Not yet.

Need evidence that any of this matters? A modest proposal would be to run some pilots that compare "one size fits all" messaging with something that takes previous information into account. Pretend that you're at an organization where "one size fits all" communications simply aren't done.  What would you do to stratify your members? You might begin with gender...

Happy 2008 to all, hopefully a year in which all of our initiatives increasingly facilitate appropriate prevention, screening, diagnosis and treatment.

Top Eight Issues for 2008 (according to PwC)

By Clive Riddle

The other day I received my copy of the "Top Eight Health Industry Issues in 2008", billed as "The third annual summary of current health industry issues by PricewaterhouseCoopers' Health Research Institute."

You have to admire anyone who produces a list of top items that doesn't use the number ten. Here without further The PwC Health Research Institute list is based upon survey research, as opposed to pure thought leadership. Without further adieu, here's a summary of what they found is store for us, in terms of what we must address and that will impact us in 2008:

1) Significant changes in the way hospitals bill Medicare will create some winners and some losers.

2) Renewed focus is on the FDA’s drug safety initiatives.

3) A surge in the number of retail clinics will force states, payers, and policy makers to think about the right model for the delivery of primary care.

4) The market for individual health insurance could take off.

5) Retirees are playing a greater role in funding their healthcare coverage—whether they like it or not.

6) Big pharmaceutical companies will keep buying and collaborating with life sciences companies to stock their pipelines

7) This year, hospitals publicly report their corporate responsibility.

8) Asia is poised to be the largest pharmaceutical consumer and pharmaceutical producer in the world.

Click here to download a copy of their eight page report. 

So what's on your top whatever list?

Health Insurance Top 10 Issues ‘07

Health Insurance Top 10 Issues ‘07

What’s going to drive change in 2007? How are health plans positioning for the future? Here’s a look at the trends shaping health insurance this coming year.

Technology From cybercondriacs to genomics, healthcare technology will be a huge force. With over 120 million people online searching for health information, the customer has embraced technology! For health plans, integrated benefit card technology promises a new era of administrative efficiency.

Differentiatio n Health insurance products have become indistinguishable. Going head-to-head with competitors means rising above this “sea of sameness”. Differentiation will come from unique brand positioning that connects with customers and has competitive muscle.

Boomers America’s 78 million baby boomers are expected to live longer than any generation this country has ever seen. They are educated, tech savvy and convenience driven. From empty nesters to Medicare, boomers are a growing opportunity for health insurers.

Consumerism “Proof-of-concept” will take center stage in 2007 as health plans justify Consumer Driven Healthcare investments. Employers are expecting premium savings and at the same time employees are suffering deductible shock and benefit intimidation.

Distribution Detailed customer profiles, psych-demographic data and predictive modeling are making multiple sales channels a competitive necessity. The result is improved product awareness and a one-on-one customer relationship that turns into sales growth.

Lifestyle Half of Americans now believe it is fair for people with unhealthy lifestyles to pay higher insurance premiums, deductibles and co-pays. New and innovative lifestyle management programs are embracing wellness and prevention and rewarding members to get healthy.

Individuals As employer-based health insurance shrinks and the uninsured population grows, the individual health insurance market is booming. Products need to be tailored to unique purchaser needs, striking the right balance between benefits, affordability and insurability.

Convergence Health insurers own banks and banks have healthcare business units. Financial planners are integrating benefits into long-term asset protection, and health brokers are weighing tax implications of HSAs. Today’s healthcare consumers are tomorrow’s payers.

Communication Customers are demanding information in user-friendly, readily accessible formats. Communications need to reflect demographic segmentation. It will take a new mix of strategies to ensure that companies are reaching their target customer.

Healthcare Concierge medicine, hospitalists, intensivists, retail clinics and medical tourism are changing health care delivery. Spending on prescription drugs will surge and employers will continue to cut back on sponsoring health benefits.

This year promises to be challenging. Smart health plan executives will set themselves up to anticipate market change, refine strategic vision and capture new market opportunities.