Who runs one of the world's largest personal health records businesses? Today the life insurance industry spends over $1 billion annually on the routine chore of creating and compiling the exams, lab tests, and attending physician statements (APSs) required to underwrite the 10 million plus life insurance applications submitted in the United States. Unlike most health records, these documents and files tend to be imaged or otherwise organized into digital formats to drive down the cost of the underwriting process.
What if this routine expense could be transformed into a value added service that customers appreciate and look forward to receiving? And what if the value of this service shifted the customer's perspective to the point that they didn't really mind the wait for their policy to be underwritten?
Does this sound a little too good to be true? Well, another way to look at the process of compiling health records for the proposed insured is that the industry is already doing over 95% of the work involved in creating a personal health record (PHR) for the customer without delivering the information in a PHR format (see definition sidebar).
According to a 2008 Markel Foundation study, about one out of two people (46.5%) now claim they are either interested or very interested in setting up a web-based personal health record. That would mean that as many as five million life insurance customers a yearin the U.S. alone might be immediately interested in having the insurer transmit their exam and lab reports into a personal health record that they control. With the appropriate investments in marketing, packaging, and promotion, this just might be one of those rare opportunities for transforming an internal cost into a valuable customer benefit at very little additional cost. Let's examine how that might be done.
Creating a PHR pilot project
Many innovation strategies in recent years have focused on trying to avoid lab tests and exams altogether by making increased use of electronic access to prescription profile data, MVRs, and MIB reports at the point of sale for lower face amount policies. However, this innovation strategy involves moving in the other direction by packaging the exam, lab reports, and other health records into a well organized and up-to-date PHR that the customer appreciates as a value-added service. Here are a few things to think about for companies interested in evaluating this strategy:
Pilot A Health Records Transmission Service: This opt-in service might include an offer to transmit lab results and exam data to a customer PHR. With this service a proposed insured can ask that his or her health records be transmitted to one or more PHR services you have decided to support.
Free PHR Services: There are a number of PHR services that have come into the market over the past few years. Two of the biggest players to enter the personal health records marketplace have been Microsoft (HealthVault) and Google (Google Health). Both of these companies have released free services designed to help consumers control their health records in a secure environment. From a risk management perspective, both of these companies also have a great deal to lose if they fail to manage the health records entrusted to their platforms in a secure manner.
Privacy & Customer Control: Any service supported in this pilot project should offer strong privacy protections, including clear and explicit opt-in consent from the proposed insured for any release of their health information for any purpose (including the initial transmission of lab and exam records from the carrier). Some PHR vendors sponsor their "free" services by using the account holder's information in various ways under "blanket" permissions granted at the point an account is opened. We recommend you avoid these services.
Transmission Expense Curve: The added per insured cost of securely transmitting a set of personal health records to a Microsoft HealthVault Account (using an approved application provider) is between $5 and $10. While this is certainly not a trivial expense, companies concerned about covering this added cost might find that many customers will be willing to pay a small fee to gain control over their health records. This cost will probably fall to a few dollars per transaction or less, as volume increases in the years ahead.
The low hanging fruit is to simply take the existing expense of compiling health records and repackage it as a value added service that customers appreciate and look forward to receiving. However, there are forces in play that might create even more significant future opportunities.
Future directions
IDC recently projected that the number of Americans with electronic health records (EHRs) maintained by their healthcare providers will increase from 14% in 2009 to 25% in 2010 due largely to the massive $19 billion investment in health record adoption over the next five years authorized by The American Recovery and Reinvestment Act of 2009. As these systems are implemented, regional health information exchanges (RHIOs) are being established to facilitate the sharing of health records with authorized entities. These networks aren't very impressive looking today in terms of size and scope. But then again, neither was the Internet in 1991 when Tim Berners Lee first released his World Wide Web software.
Another way to look at this effort is that the life insurance industry has the opportunity to channel almost $5 billion over the next five years to assist in this effort by simply repackaging an existing set of expenses into a customer benefit. But there may also be a few unexpected benefits on the other side of this near-term opportunity:
Wellness-based business models: Over the next five years U.S. health care costs are projected to grow to 20% of GDP. There is widespread agreement on very few things surrounding this issue but one piece of common ground is with the idea that investments in wellness and early detection of disease pay off many times over in reducing long-term costs and extending life spans. The health and wellness of the insured is a common objective shared by all parties to the life insurance contract.
