First published in CMO magazine https://www.cmo.com.au/blog/brand-cx/2018/03/27/customer-experience-disruption-healthcare-faces-a-bitter-pill/
Over the past decade, disruptors such as Amazon, Apple and Australia’s Atlassian have delivered technology enhanced customer experiences, which for the most part, have improved customers’ lives and delivered unparalleled growth. Can they do the same for healthcare?
On the eve of annual private health insurance price rises, Australian consumers will again be asked to swallow rising costs; on average 3.95 per cent, twice the rate of inflation. At the same time, US bluechip tech companies are making noises about improving healthcare services that could spell disruption for business-as-usual health insurance.
While their thinking is still future-state, tech brands such as Amazon, Apple, Google and Uber have already interest in reinventing healthcare; an industry that’s long been plagued by inefficiencies and rising costs. At this early stage, incumbents could be lulled into a false sense of security given Google has once tried and failed at disrupting the private health insurance industry.
When it comes to healthcare in Australia, most would agree we are the lucky county. However, if our social news feeds, mainstream news reports and conversations with colleagues and friends are anything to go by, Australian consumers are again questioning the value of private health insurance.
In an opinion poll run by Fairfax, the majority of respondents believe ‘health insurance isn’t worth the money you pay for it’. In addition, 83 per cent of people believe the government should do more to keep private health insurance affordable.
With private health insurance premiums up by approximately 70 per cent over the last 10 years, funds cutting member benefits to reduce their costs and increasing gap fees, customer dissatisfaction is growing.
Like the taxi industry a decade ago, private health insurance has become a service Australians love to loath.
So much so, complaints to the Health Insurance Ombudsman increased by a massive 30 per cent to 5750 in 2016-1. In the last quarter of 2017, 12,000 Australians abandoned private health insurance altogether.
Meanwhile, the big four global disruptors are envisaging a new world of healthcare. Apple is intending to open health clinics, Google is exploring Medicaid and Uber has a desire to disrupt ambulance services.
Their formula for innovation is simple: Create experiences that focus on solving people’s problems rather than focusing on the product or service itself.
When brands such as Amazon have customers at the centre of innovation efforts and seek to solve a customer problem or unmet need, resulting solutions not only enhance customer value, they deliver competitive advantage.
Amazon’s performance is testament to this approach. From day one, Amazon’s purpose has been its customer. Founder, Jeff Bezos, describes this higher ideal as being “customer obsessed” with a mission to be the “Earth’s most customer-centric company.”
Earlier this year, Amazon announced a joint venture with JP Morgan Chase and Warren Buffett’s company, Berkshire Hathaway, to focus innovation efforts on better healthcare for workers. In the announcement, they said they would leverage their collective scale and capability to develop technology that provided “simplified, high-quality and transparent healthcare at a reasonable cost”.
So what might this new customer experience look like?
It’s worth pointing out Amazon, which commands 43 per cent of all retail sales in the US and is a specialist in retailing, has a vast customer base and huge volumes of customer behavioural data. Amazon is perfectly placed to manage large volumes of products, services and payments, presenting the company with an opportunity to develop a technology platform to manage and distribute medical equipment, pharmacy products and even private health insurance.
Industry incumbents won’t be able to rest on their laurels for too long. Waiting in the wings are new market startups with a strong social purpose; hungry to create new experiences.
Late last year, startup healthcare brand, Forward, founded by former employees of Google and Uber, launched in LA. Its CEO, Adrian Aoun, reportedly sold his last venture Wavii, a company that developed specialised language-processing software, to Google for US$30 million.
Featured in an article written by Sheila Marikar for The New Yorker, Forward’s new healthcare experience is inspired by the purpose of improving doctors’ offices, “with their myriad inefficiencies and unpleasantries”.
Marikar writes: “The gee-whiz factor is on further display in Forward’s exam rooms, where a six-foot-long flat-screen monitor supplants the doctor’s clipboard. The monitor is hooked up to a natural-language-processing system similar to the one Aoun sold to Google, or to Amazon’s Alexa.
“As you and your doctor are speaking, the system is following along and taking notes for you.” After an exam, all the data collected—cholesterol numbers, glucose levels, doctor’s notes—get downloaded to Forward’s smartphone app, where members’ full medical profiles sit on their phones alongside Tinder profiles and Seamless orders.”
The danger for health insurance incumbents could well be their apathy towards change based on the status quo of government subsidies, regulatory compliance limiting new entrants and comfortable shareholder returns. Nonetheless, with rising premium costs on 1 April and increasing customer dissatisfaction, disruption could be just what the doctor ordered to improve customer experience – albeit this may a bitter pill for the health insurance industry to swallow.