Health Market 2.0: Reinventing a $3T Industry, Once Consumer at a Time

HEALTH MARKET 2.0: REINVENTING A $3T INDUSTRY, ONE CONSUMER AT A TIME APRIL 28, 2015

Sam Glick sam.glick@oliverwyman.com

HEALTH & LIFE SCIENCES © Oliver Wyman

The world is changing

By 2018, 1

in 3 Americans will be buying a

different insurance product than they do today, through a channel that didn’t

exist three

years ago, receiving 30% of their care outside of a traditional health system.

Š Oliver Wyman

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Individuals are shouldering more of the cost burden

$1,500

$1,250

Legal definition of high deductible Deductible

$1,217

$1,050 $1,000

Average plan deductible

$584 $500 2006

2007

2008

2009

2010

2011

2012

2013

2014

Year Š Oliver Wyman

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Consumers are confused…

Health Insurance Care Delivery Health & Lifestyle

Doctor’s hours don’t match real life hours

I have no idea how my insurance works – it’s so confusing

I have so much stress from work

I'm often surprised by high costs on things I expect to be covered

I had no idea how stressful taking care of my father would be

My doctor controls my referrals, and I don’t know who provides the best care My marriage is in trouble, how am I supposed to worry about my health?

I can't afford a plan that meets my needs

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I feel rushed during doctor visits

I have trouble finding time for healthy activities

I have trouble remembering to take my medication

I don't know which coverage is best for my family

I have trouble getting to the doctor

I don’t feel as safe in my home anymore – I wish I still knew all my neighbors!

I just want this claim to be paid!

It’s difficult to get an appointment with the specialist I need to see

I can't pay my premium / bill electronically

I have trouble getting motivated to exercise 3

…and don’t know how to make smart choices

Volume of procedures (in thousands)

Hip & Knee Replacements 60

Median price 50

40

$45,455

Minimum price

$5,304

Maximum price

$223,373

30

20

10

0 0-5 5-10 10- 15- 20- 25- 30- 35- 40- 45- 50- 55- 60- 65- 70- 75- 80- 85- 90- 95- 100- 105- 110- 115- 120- 125- 130- 135- 140- 145-150+ 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 105 110 115 120 125 130 135 140 145 150

Price (in thousands of dollars)

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They don’t trust their health plans…

2014 Forrester Customer Experience Index Very Poor

Poor

OK Good

Excellent

Retailers Hotels Parcel shipping/delivery providers Industry average

Consumer electronics manufacturers

Individual company score

Banks Insurance providers Investment firms Airlines Credit card providers Wireless service providers Rental cars TV service providers Internet service providers Health insurance providers 0% © Oliver Wyman

20%

40%

60%

80%

100% 5

‌and everyone is gunning for them Traditional Healthcare Players

Traditional Consumer Players

Providers

Retailers

Total consumer healthcare wallet Technology & Consumer Goods

Health Plans

New entrants Š Oliver Wyman

6

Employers continue to spend (do you want to?)

Self-Insured Employers, Non-Claims Healthcare Spending 160

$150B

140 120 100 $B

$90B

80 60 40 20 0 2013

Š Oliver Wyman

2018 7

Other complex markets have simplified

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The new transparent market

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The new front door to health

Virtual Care

Retail Clinics

Mobile apps

Wellness Programs

Providers

Smart Care Team

H

Direct Payment

Telehealth

Health Coach

ATM

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Personalized and preventative health

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What if American Express went into healthcare?

Industry-leading customer service – by phone, web, twitter, email

Cards and rewards designed for your lifestyle/ motivational profile

Easy health account management and mobile bill pay

Dispute resolution for merchant billing questions / issues

Book procedures and pay in advance – transparency in pricing

@AskAmex

Real-time mobile offers, on the go, linked to your HSA & rewards

Question or concern about this charge?

Send a note to the dispute resolution team:

$5,700 9/15

© Oliver Wyman

Knee Replacement Memorial Hospital

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Who will emerge? Who will win? … At stake: $1T+ in value

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© Oliver Wyman

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